OFAC Settlement With Aviation Company Stresses End Use Verification
By Staff Writer Nov 21 2109 / The Export Compliance Journal
The Office of Foreign Assets Control (OFAC) recently announced that it has reached a settlement with the Apollo Aviation Group.
This story began when the Apollo Aviation Group, between 2013 and 2015, leased three of their aircraft engines to an entity incorporated in the United Arab Emirates (UAE). That seemingly innocent transaction turned complicated when the lessee proceeded to sublease the engines to a Ukrainian airline that installed them on an aircraft leased to Sudan Airways—leading to 12 inadvertent violations of the Sudanese Sanctions Regulations.
The original lease between Apollo and the UAE company did include a clause that forbade any further subleasing. However, Apollo did not follow up on enforcing it, resulting in the company only becoming aware of the apparent violations after the lease ended and the engines were returned.
Because Apollo voluntarily self-disclosed these violations, fully cooperated with OFAC during the course of the investigation, and took remedial measures to help minimize the potential for similar violations, the final settlement amount they paid to OFAC was $210,600—far lower than the $3 million maximum for these types of cases.
The remedial steps taken by Apollo include improved Know Your Customer (KYC) screening procedures, enhanced employee training on U.S. export law, and procuring end use statements (in this case, export compliance certificates) from lessees and sublessees.
In a statement, OFAC said that “this enforcement action highlights the importance of companies operating in high-risk industries to implement effective, thorough and on-going, risk-based compliance measures, especially when engaging in transactions concerning the aviation industry.”
This case further demonstrates why U.S. government agencies stress the need for end use verification. Apollo’s liability would have been significantly diminished if they had been able to demonstrate that they had procured the necessary end use documentation—in this case, export compliance certificates from their lessees.