So What?Iran Sanctions: Investigations and Penalties

Presented by:Erich C. Ferrari, Ferrari Legal, P.C.

How will they ever find out?

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Common ways that investigations are initiated

• Blocking and Reject Reports• Most common way; thousands of these reports are sent every year

• License Applications• Revealing information about violations

• Federal Investigations• Very common when investigating havaleh brokers

• Self-Disclosures: Intentional and Unintentional• Voluntary self-disclosures vs. contacting OFAC and informing them of

violations

• Anonymous Tips

Blocking and Rejecting Reports

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Wire Request

Intermediary U.S. Treasury

Interdiction

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2

3

SWIFT

Blocked/Rejected4

Subpoenato Sender/ Recipient

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Sender

U.S. Bank

What kind of trouble can you get in?

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• Problems with the banks• Bank Investigations• Freezing of Accounts• Closing of Accounts

• OFAC Investigations • Administrative Subpoenas• Penalty Process• Coordination with other agencies

• Criminal Investigations• Agents• Target/Subject Letters• Exports and Money Transferring

• Banki, Seifi, Amirnazmi, Mousavi, Vaghari, Hariri, Lahiji, Socara, etc.

OFAC Investigations

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Administrative Subpoenas• 30 days to provide information and documents• You can request an extension, but may have to sign a tolling agreement• Your response is under penalty of perjury

• Not only false statements, but also misleading statements• OFAC will refer cases to DOJ for false statements (5 year max)

Voluntary Self-Disclosures• Self reporting a violation• 50% reduction in base penalty• If a violation occurred and you need a license to transfer funds, then VSD

Penalty Calculations• Base Penalty Calculations• Enforcement Guidelines• Settlement

Enforcement Responses

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Sanctions Enforcement Options

Base Penalty Calculation Matrix

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One-Half of Transaction Value

Capped at $125,000 per violation

One-Half of Statutory Maximum

Applicable Schedule Amount

Capped at $250,000 per violation

Statutory Maximum

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Egregious Case

Volu

ntar

y Se

lf-D

iscl

osur

e

No Yes

No

Yes

* The base penalty amount will not exceed the applicable statutory maximum amount.

Violation Schedule Amounts

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Amount Transaction Value$1,000 < $1,000

$10,000 >= $1,000 and < $10,000

$25,000 >= $10,000 and < $25,000

$50,000 >= $25,000 and < $50,000

$100,000 >= $50,000 and < $100,000

$170,000 >= $100,000 and < $170,000

$250,000 >= $170,000

Criminal Prosecutions

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US Attorney’s Offices across the U.S. have been actively prosecuting these cases.

There are a number of individuals under investigation across the United States for these types of violations.

• Testimony of Special Agent Pelczar (JTTF)Hearing Transcript from the Vaghari Case: Much of his work involves investigating Iranians.

If the FBI comes knocking….• Don’t speak to them without counsel• People get nervous and may say something that mischaracterizes• Proffer Letter

Conclusion

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Enforcement cases are on the rise:• 2009: 1,000 investigations• 2010: 1,200 investigations• 2011: 1,300 investigations

Difficulty in transferring funds is leading to more creative ways to get around sanctions which is leading to more investigations

Talk to a lawyer with experience before acting• Prior to engaging in the transactions• File a request for interpretative guidance• Map out how the transaction will occur

Iranian Transactions Regulations

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If you have questions after the event please contact me:

• Phone: 202-280-6370 or 310-270-9930• Email: ferrari@ferrari-legal.com• The Iranian Transactions Regulations

Practice Guide• www.sanctionlaw.com

THANK YOU!