Toll Holdings to pay $6.1M for widespread sanctions violations

The agency said in its web notice the settlement amount reflected its determination the apparent violations were voluntarily self-disclosed and nonegregious.

The apparent violations occurred between approximately January 2013 and February 2019 when Toll originated or received payments through at least four U.S. financial institutions or foreign branches of financial institutions incorporated in the United States involving sanctioned jurisdictions and persons, according to OFAC.

Specifically, Toll “originated or caused to be received 2,958 payments in connection with sea, air, and rail shipments conducted by Toll, its affiliates, or providers and suppliers to, from, or through the [Democratic People’s Republic of Korea], Iran, or Syria, and/or involving the property or interests in property of an entity on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List),” the agency stated.

The value of the alleged payments totaled approximately $48.4 million, according to OFAC.

Compliance considerations: OFAC stated Toll’s expansion efforts beginning in 2007 were not accompanied by a proper increase in compliance resources.

“While Toll had a sanctions compliance policy in place, its compliance program, personnel, and associated controls failed to keep up with the pace and complexity of its growing operations, including with respect to the risks associated with the use of U.S. financial institutions to make or receive payments related to U.S.-sanctioned jurisdictions and persons,” the agency explained.

Even after Toll decided to cease all business with U.S.-sanctioned countries in June 2016, it wasn’t until February 2017 that the company put in place “hard controls” to prevent shipments to or from sanctioned countries, according to OFAC.

“This enforcement action highlights the importance of instituting strong internal controls and procedures to govern payments involving affiliates, subsidiaries, agents, or other counterparties when any of them conduct business with sanctioned jurisdictions or persons,” OFAC stated. “… Entities should also respond promptly and fully to address compliance weaknesses when issues first arise, identify their full extent and causes, and implement necessary changes to their compliance programs, practices, and procedures.”

Remedial measures: According to OFAC, Toll “ultimately took extensive actions to remedy its compliance gaps,” which the regulator said included the following:

• Conducting a risk-mapping exercise to identify the root causes of the compliance lapses;
• Restructuring its compliance division to address procedural issues and streamline approaches to sanctions screening;
• Granting elevated sanctions-related responsibilities to its most senior compliance executive;
• Implementing a sanctions compliance training program for all relevant employees;
• Applying its sanctions compliance standards to anyone acting on behalf of Toll; and
• Ending all franchise relationships, introducing enhanced due diligence measures for onboarding agents, and instituting a due diligence screening process where all third parties adhere to the same compliance standards as Toll.

Other OFAC actions

In unrelated enforcement actions, OFAC on April 21 announced separate settlements with Newmont Corp. and Chisu International, both resulting from violations of Cuban sanctions.

Newmont, a multinational mining company, reached a $141,442 settlement for four apparent violations of the Cuban Assets Control Regulations (CACR). OFAC determined Newmont voluntarily disclosed the apparent violations and the case was nonegregious.

According to OFAC, between approximately June 2016 to November 2017, Newmont Suriname, a wholly owned subsidiary of Newmont and person subject to the jurisdiction of the United States under the CACR, purchased Cuban-origin explosives and explosive accessories from a third-party vendor involving four separate transactions.

OFAC reached a $45,908 settlement with Chisu, an entity affiliated with a distributor of explosives and accessories for mining operations, for four apparent violations of the CACR.

In that case, Chisu and its affiliates in Suriname and Panama on four occasions, between June 2016 and November 2017, “procured Cuban-origin explosives and related accessories originating from Cuban entity Unión Latinoamericana de Explosivos (ULAEX) on behalf of a U.S. company for the U.S. company’s mining project in Suriname,” according to OFAC.

The regulator determined Chisu did not voluntarily disclose the apparent violations and the case was nonegregious.