Global freight forwarder Toll Holdings settles with OFAC for $6,131,855

 Posted on May 02, 2022 in Firm News

All participants in the global supply chain ecosystem face the risk of noncompliance with sanctions issued by the U.S. Treasury's Office of Foreign Asset Control (“OFAC”). These participants include not only sellers and buyers engaged in international trade, and but also include the array of service providers that support international trade including banks, factors and other non - bank trade finance providers, trade credit insurers and freight forwarders and trade logistic companies. Strict observance of OFAC sanctions requires a robust and vigilant compliance program.

However, managing a compliance program that dynamically responds to evolving business practices and evolving OFAC sanction requirements is very challenging. The failure to meet such challenges can expose companies to significant financial penalties and reputational damages.

The challenges of OFAC compliance, and the risks of non - compliance are sharply on display in the Enforcement Release issued by the OFAC on April 25, 2022 (“Enforcement Release”). In this Enforcement Release OFAC announced a $6,131,855 settlement entered into with the Australian based freight forwarding company, Toll Holdings Limited (“Toll”), regarding potential civil liability arising from 2,958 apparent violations of multiple OFAC sanctions programs.

The settlement of these apparent violations serves as a warning to all participants in the global supply chain ecosystem. Toll is a sophisticated company with a global footprint spanning Asia, Europe, Africa and the Middle East, and both North and South America. According to the Enforcement Release, Toll has an internal sanctions compliance policy, and internal compliance program with personnel and controls. In addition, the Enforcement Release, describes efforts by Toll's compliance office to cease all business with U.S. sanctioned countries due to ongoing compliance risks. It would thus appear that Toll was fully equipped to meet the sanctions compliance challenges. Yet despite the OFAC described compliance infrastructure and efforts Toll apparently did not implement internal compliance policies and procedures necessary to prevent payments involving sanctioned persons though the U.S. financial system.

The OFAC Enforcement Release presents us with three important takeaways. First, all participants in the global supply chain ecosystem should periodically undertake a 360 - degree self - audit to ensure that their compliance program effectively responds to OFAC's evolving sanction requirements and to the company's evolving business practices. Secondly, sanctions compliance is not only the responsibility of a company's compliance program personnel - it is a companywide responsibility that must involve all employees. And thirdly, potential liability exposure due to compliance failures may be mitigated by voluntary self - disclosure to OFAC.

For the full text of the OFAC Enforcement Release, please click here.

For inquiries regarding the Enforcement Release and OFAC compliance please contact:

Friedrich von Krusenstiern
fvonkrusenstiern@copeehlers.com
(312) 599 - 0723