Majority of OFAC’s 2019 Enforcement Actions Targeted Supply Chain Violations, Report Says



In a report published by a sanctions advisory firm, Kharon in December, supply chain violations formed most of the sanctions issued by the Treasury Department in the last year. Deficiencies from companies that operated heightened-risk jurisdiction, existing and newly acquired foreign subsidiaries, and those that are deficient with monitoring actors in its supply chain. Using the enforcement action against e.I.f Cosmetics in January, which involved the company importing over 150 shipments of false eyelash, the Treasury’s office has stated that indirect product supply chain is likely to result in violations, thereby pointing to the essential need to identify their sanctions exposure. OFAC has therefore urged companies to ensure a thorough supply chain monitoring and evaluation whenever they import from international suppliers.

OFAC has pointed to its penalty on Stanley Black & Decker in March, the General Electric in October, and Apple in November examples of penalties that show the need for companies to engage on due diligence before and after supply, and to keep a close watch on their subsidiaries. The report also highlighted the need for companies in the supply chain to be cognizance of the overlap of sanctions between export control violations from the Commerce Department and those from OFAC.