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The U.S. Office of Foreign Assets Control (OFAC) fine Hong Kong trade financing firm $5.2m for Iran export compliance failures

19 January 2022 Byron McKinney

Enforcement Action Summary

Latest Compliance Failure - The Hong Kong subsidiary of Japanese firm, Sojitz, has been fined $5.2m by the U.S. Office of Foreign Assets Control (OFAC) in January 2022 for U.S. dollar payments through U.S. financial institutions for Iranian-origin high density polyethylene resin (HDPE) from its bank in Hong Kong to the HDPE supplier's banks in Thailand. From August 2016 to May 2018, Sojitz Hong Kong employees purchased approximately 64,000 tons of Iranian-origin HDPE from a supplier in Thailand for resale to buyers in China. 60 separate USD payments from Sojitz's Hong Kong bank were made to Thai supplier banks in Thailand. Each USD payment was processed and settled through multiple U.S. financial institutions, including the U.S. correspondent banks of the Hong Kong and Thai banks. OFAC states that the case highlights why "U.S. and foreign companies should conduct robust risk assessments to identify activities that pose greater sanctions risks, including their supply chains, products, and services, and institute appropriately tailored risk-based procedures designed to minimise violations".

Did You Know

IHS Markit Maritime & Trade manages the biggest commercial military products dataset that allows supply chain and trade finance organisations to effectively identify and manage export compliance risk. In addition, IHS Markit also processes goods descriptions from over 20 million bills of lading per year from a variety of countries. The data generated from these documents is standardised and cleaned to provide a unique layer of business intelligence covering the opaque nature of dual-use and military items regulated by various regulatory bodies. IHS Markit's bill of lading database also maps all goods descriptions to the Harmonised Commodity Description System (HS Code).

For more information visit Trade Compliance Secure, or subscribe to our complimentary Risk & Compliance quarterly newsletter for more insight.

Posted 19 January 2022 by Byron McKinney, Director - Product Management, Maritime & Trade, IHS Markit

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