What the Decision on Epsilon’s Sanctions Violations Means for Companies
Michael Volkov discusses Epsilon’s sanctions violations, the resulting “reason to know” requirement and the potential impact to companies going forward.
The Department of Treasury’s Office of Foreign Asset Control (OFAC) recently announced the settlement of the Epsilon enforcement action (here). This case requires a theme song and there is none better than Truckin (here) from Grateful Dead’s second compilation album, What a Long Strange Trip its Been.
This case involved two separate OFAC investigations for violations of the Iran Sanctions Program, an appeal to the U.S. District Court for the District of Columbia (here), and an appeal at the U.S. District Court of Appeals for the District of Columbia Circuit (here). The case is important because it confirms a broad reading of third-party risks for companies when dealing with the Iran Sanctions Program (and the Cuba Sanctions Program).
As we all know, companies can be held liable for a sanctions violation when they ship a product to a third party in another country and know or have reason to know that the third party intends to reship the product to Iran. Consequently, companies have to conduct due diligence and document appropriate assurances that the…
