SITA settles nearly 10K alleged OFAC sanctions violations for $7.8M

The settlement, announced Wednesday, covers alleged violations of Global Terrorism Sanctions Regulations (GTSR) between April 2013 and February 2018. OFAC deemed the case “non-egregious,” though the maximum civil monetary penalty applicable was north of $2.4 billion. The total transaction value of the apparent violations was $2,428,200, according to OFAC.

SITA, headquartered in Switzerland but membership owned by air transport companies across the globe, caught the eye of OFAC when the regulator identified several specially designated global terrorists (SDGT) as member-owners. Those airlines were Mahan Air, Syrian Arab Airlines, and Caspian Air, all entities designated as SDGTs between 2011-14. During OFAC’s investigation, SITA also revealed dealings with Meraj Air and Al-Naser Airlines, which were designated by OFAC in 2014 and 2015, respectively.

Services alleged to have been provided to the preceding airline companies include Type B messaging (TBM), Maestro DCS Local (Maestro), and WorldTracer—all services subject to U.S. jurisdiction.

“SITA described its compliance program up until that point as primarily reactive, in that it would address compliance concerns as they arose.”

OFAC

According to OFAC’s findings, SITA management initiated a global risk management assessment in 2016 that covered its sanctions compliance associated risks. “SITA described its compliance program up until that point as primarily reactive, in that it would address compliance concerns as they arose,” OFAC said. As such, in the case of Mahan Air, as presented by OFAC, SITA responded to the airline’s OFAC designation by reviewing its agreements with Mahan Air and terminating its ticketing, airfare, e-commerce, and other services, but continuing to provide TBM, Maestro, and WorldTracer services that benefitted the designated company.

OFAC states SITA’s responses were similar to the designations of the other SDGT airlines.

SITA has since expelled Mahan Air, Syrian Arab Airlines, and Caspian Air from the organization.

“Prior to OFAC’s investigation, SITA knew it was providing services to SDGTs and implemented periodic measures to comply with U.S. economic sanctions laws and regulations,” OFAC stated. OFAC adds SITA ceded its sanctions compliance program was not properly maintained prior to its 2016 risk assessment.

Upgrades since made to SITA’s compliance program, according to OFAC, include:

• Establishment of a global trade board to expressly monitor and vet compliance risk involving customers, suppliers, and other parties;
• Establishment of a trade compliance committee to act as an information sharing and advisory body in relation to trade and sanctions law matters that affect SITA or its members;
• Appointment of a dedicated global head of ethics and compliance that has focused its efforts on developing and improving the compliance function as a whole;
• Implementation of new sanctions legal compliance reviews when onboarding new customers and suppliers and when extending or adding new products or services to existing customers in sanctioned countries;
• Update and creation of new compliance policies and guidelines to bring awareness of sanctions compliance issues to the business;
• Commitment to monitoring and auditing its messaging, Maestro, and WorldTracer systems periodically to verify that they are not being used to support SDGT airlines; and
• Requirement of all new SITA employees to attend sanctions compliance training and required sanctions compliance training for all SITA employees every year and on an annual basis.

The upgrades were determined to be a mitigating factor in the case, along with SITA’s cooperation, clean OFAC record over the last five years, remedial efforts, and the fact the alleged violations represented a “small percentage of its business.” Aggravating factors included SITA’s alleged knowledge of the dealings with the SDGTs and status as an entity that operates across the globe.

The apparent violations were of sections 594.201 and 594.204 of the GTSR. By the case being termed “non-egregious,” the base civil monetary penalty applicable dropped to $13,384,000. The settlement amount was $7,829,640.

“This enforcement action highlights the benefits companies operating in high-risk industries can realize by implementing effective, thorough, and on-going risk-based compliance measures, especially when engaging in transactions concerning the aviation industry,” OFAC stated.