A Bangkok-based plastics firm, SCG Plastics Co., has reached a settlement with the U.S. Treasury to pay $20 million to resolve 467 violations of Iran sanctions. The violations involved the use of U.S. banks to process $291 million in sales of Iranian high-density polyethylene resin from 2017 to 2018. The resin was manufactured by an Iranian joint venture partly owned by SCG Plastics’ parent company and the National Petrochemical Company of Iran. SCG Plastics used shipping and documentation practices that obscured the product’s Iranian origin, leading banks to unknowingly process transfers in violation of sanctions.
The violations were deemed “egregious” by the Office of Foreign Assets Control (OFAC), and the company was fined $20 million for conferring significant economic benefits to Iran’s petrochemical sector. Despite SCG Plastics no longer being in operation, the agreement between OFAC and the firm releases SCG Plastics from any liability related to the sanctions violations. This settlement comes amid plans by U.S. administration officials to impose further sanctions on Iran following an attack on Israel that could escalate tensions in the Middle East. The U.S. and U.K. recently imposed new sanctions on Iranian individuals and entities linked to drone production.
Treasury Secretary Janet Yellen stated that the U.S. will continue to deploy sanctions authority to counter Iran with additional actions in the coming days and weeks. The enforcement of sanctions, including levying fines and exposing evasion schemes, aims to make it more difficult and costly for Iran to engage in destabilizing behavior. The fines levied on SCG Plastics highlight the U.S. government’s commitment to holding companies accountable for violating sanctions and contributing to Iran’s revenue generation through prohibited transactions.
The settlement with SCG Plastics underscores the importance of compliance with U.S. sanctions regulations and the consequences of failing to adhere to these rules. The use of U.S. banks to process transactions involving sanctioned entities can result in severe penalties, as demonstrated by the $20 million fine imposed on SCG Plastics. The involvement of SCG Plastics’ parent company and a government entity in Iran’s petrochemical sector further emphasizes the serious nature of the violations and the impact on Iran’s economy.
The agreement between SCG Plastics and OFAC serves as a reminder to companies operating internationally to conduct thorough due diligence on their transactions and ensure compliance with applicable sanctions laws. Banks and financial institutions are also urged to exercise caution when processing payments to mitigate the risk of inadvertently facilitating violations of sanctions. The U.S. government’s continued enforcement efforts and imposition of penalties on violators demonstrate its commitment to combating illicit activities that support Iran’s destabilizing actions in the region.
Overall, the settlement between SCG Plastics and the U.S. Treasury reflects the ongoing efforts to enforce Iran sanctions and hold violators accountable for their actions. By imposing fines and taking decisive action against companies involved in prohibited transactions, the U.S. aims to deter entities from engaging in activities that support Iran’s petrochemical sector and contribute to the regime’s revenue generation. The U.S. government’s commitment to enforcing sanctions and combating evasion schemes highlights the importance of compliance with international regulations to maintain global security and stability.
