As part of a settlement with the Treasury Department's Office of Foreign Assets Control (OFAC) on alleged violations of Iran sanctions over an eight-year period, the California-based cosmetics firm Murad agreed to pay $3.3 million.
According to OFAC's enforcement announcement from Wednesday, Murad entered into an exclusive deal with an unnamed Iranian distributor in December 2009 to distribute the company's goods across the Middle East, including Iran. The suspected misconduct of senior executives allegedly drove the scheme, which persisted until January 2018.
According to OFAC, one unidentified former senior executive at Murad separately consented to pay $175,000 to satisfy their potential civil liability for three alleged violations of Iran sanctions resulting from their position as a manager at the business. The regulator stated that the person's acts, which took place between June 2016 and September 2017, were not voluntarily revealed.
According to OFAC, Unilever, which acquired Murad in 2015, made numerous attempts to thwart the alleged scam. The regulator received the company's voluntary self-disclosure of the alleged infractions and deemed the situation to be "egregious."
According to the regulator, Murad started exporting its goods to Iran through the Iranian distributor after its 2009 agreement, despite not getting a particular license or other necessary guidance from OFAC. None of the exported commodities were either generally authorized or exempt from prohibition, so the company applied for a license that was not approved.
According to OFAC, Murad entered into a deal in May 2015 with an unnamed United Arab Emirates (UAE) distributor that led to the shipment of goods to Iran as well.
OFAC claims that Unilever was not informed of these actions when it acquired Murad, including the opening of a company-branded store in Iran. Unilever learned of the alleged scheme over two months after the agreement was finalized, and its corporate counsel instructed the unnamed executive to stop exporting firm goods to Iran. Work with the UAE distributor, however, continued up until 2018, when the business eventually terminated the activity and came to the conclusion that more than $11 million worth of products were exported to Iran on at least 62 separate occasions over the applicable period, according to OFAC.
According to OFAC, Murad's compliance issues were caused by a number of variables, most notably the actions of its senior officials. The corporation was also discovered to have a weak sanctions compliance program, which was made worse by the fact that the regulator received compliance reports from a Unilever division in the UK that "lacked an adequate understanding of OFAC sanctions," according to the regulator.
According to OFAC, "B]ecause businesses that lack a robust sanctions compliance function face significant risks, clear and efficient reporting streams that can rapidly identify red flags for further evaluation and action are important. In some circumstances, placement of a U.S. entity under the compliance structure of a non-U.S. entity that may lack sufficient familiarity with U.S. sanctions laws could prevent the prompt identification of and response to potentially prohibited conduct."
The company's collaboration, corrective action, and the "benign consumer nature" of its products were all mitigating factors in the case.
"Murad is committed to complying with U.S. economic sanctions laws and has adopted appropriate sanctions and export control policies and procedures," a company spokesperson wrote in an email. "We extended our full cooperation to U.S. authorities to resolve this matter."
By fLEXI tEAM