Eagle Shipping International will make a handful of enhancements to its compliance controls as part of a $1.125 million settlement with the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced Monday with regard to apparent sanctions violations.

OFAC says Eagle Shipping committed 36 apparent violations of the Burmese Sanctions Regulations in a case it deemed “egregious.” The maximum penalty in the case was $9 million; OFAC listed the compliance enhancements as mitigating factors in assessing the final settlement amount.

Eagle Shipping’s apparent violations involved the property interests of Myawaddy Trading Limited, which was identified on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) throughout the duration of the alleged misconduct, identified to be between 2011 and 2014. The apparent violations were voluntarily brought to OFAC’s attention in 2014 by Eagle Shipping after the company had changed management following a bankruptcy filing.

According to OFAC’s Web notice of the settlement, former management at Eagle Shipping became alarmed in June 2011 when a shipping document related to a contract with a sand buyer in Singapore to transport sea sand from Kawthaung, Burma, to Singapore listed Myawaddy as the shipper. When the concerns were raised by Eagle Shipping’s affiliate in Singapore, Eagle Bulk Pte, the Singapore buyer sent new documents with an alternate shipper listed.

Former Eagle Shipping management accepted the change and moved forward, despite concerns raised by a captain regarding the legitimacy of the alternate shipper. Eagle Shipping requested OFAC license to authorize the sand cargo, but before OFAC could respond to the request and after it was pressured by the Singapore buyer that delays “would results in negative repercussions with the Burmese government,” Eagle Shipping went ahead with the transport.

In May 2012, the company filed a new application with OFAC requesting to carry sand from Myawaddy and was denied.

“While the application was pending with OFAC, and despite the absence of OFAC’s authorization, Eagle resumed shipping sand procured from Myawaddy,” OFAC explained. “The former President of Eagle Shipping later received OFAC’s denial letter, but allegedly failed to forward it to others within Eagle. Eagle thereafter continued carrying sand cargoes supplied by Myawaddy from Burma to Singapore.”

In considering the settlement amount, OFAC determined Eagle Shipping “demonstrated reckless disregard for U.S. sanctions requirements by ignoring OFAC’s license denial and other warning signs about Myawaddy’s involvement in the sand voyages.” Mitigating factors included Eagle Shipping’s clean record with OFAC the five years prior to the apparent violations, its new management’s cooperation in the investigation, and the following sanctions compliance enhancements:

  • The appointment of a dedicated compliance officer;
  • Development and implementation of a formal sanctions compliance program with specific policies and procedures for screening, transaction checklists, and red flag identification tools;
  • Provision of sanctions training to employees and institution of a practice of requiring continuing education and training on sanctions-related matters for personnel;
  • Enhancement of its screening procedures and updating and strengthening of its sanctions compliance provisions included in standard contracts; and
  • Preparation for and development of contingency plans in the event Eagle Shipping identifies the interest of an OFAC-blocked or -prohibited party after cargo is loaded on an Eagle Shipping vessel.

OFAC removed Myawaddy from the SDN List on Oct. 7, 2016, in accordance with Executive Order 13742.

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Kyle Brasseur is Editor in Chief of Compliance Week. His background includes expertise in user personalization with ESPN.com.

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