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Feds fine Amazon for selling to sanctioned countries

Failure of company’s screening processes leads to $134,523 settlement

Books,music, grocery items part of illegal sales. (Photo: Jim Allen/FreightWaves)

The Trump Administration has fined Amazon (NASDAQ: AMZN) for selling goods and services to people and countries sanctioned by the United States for various criminal activities, including terrorism and the production of weapons of mass destruction.

Amazon agreed to a $134,523 settlement with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for “apparent violations that consisted primarily of transactions involving low-value retail goods and services for which the total transaction value of the apparent violations was approximately $269,000,” according to OFAC’s enforcement announcement on Wednesday, July 8.

OFAC stated that the apparent violations led to sales to people in the sanctioned regions or countries of Crimea, Iran and Syria, as well as to individuals located in or employed by the foreign missions of countries sanctioned by OFAC. The orders from Amazon were processed and delivered between November 2011 and October 2018, the agency noted.

The illicit sales occurred primarily because Amazon’s automated sanctions screening processes failed to fully analyze all transaction and customer data relevant to compliance with sanctions regulations, according to OFAC.

In some instances, orders specifically referenced a sanctioned jurisdiction, a city within a sanctioned jurisdiction, or a common alternative spelling of a sanctioned jurisdiction, yet Amazon’s screening processes did not flag the transactions for review.

“In another example, Amazon failed to interdict or otherwise flag orders shipped to the Embassy of Iran located in third countries,” according to OFAC. “Moreover, in several hundred instances, Amazon’s automated sanctions screening processes failed to flag the correctly spelled names and addresses” of sanctioned individuals.

According to documents filed with the U.S. Securities and Exchange Commission in 2017, Amazon acknowledged it had processed the orders, which included “books, music, apparel, home and kitchen, health and beauty, jewelry, office, consumer electronics, software, lawn and patio, grocery, and automotive products,” and that it had reported them to OFAC.

The relatively small settlement amount, OFAC noted, was based on a determination that “Amazon’s apparent violations were non-egregious and voluntarily self-disclosed, and further reflects the significant remedial measures implemented by Amazon upon discovery of the apparent violations.”

OFAC pointed out that Amazon has since taken, or plans to take, “significant remedial measures” to improve screening processes. They include investing “substantial resources” to improve the company’s sanctions compliance program by adding “significant headcount” to its compliance teams.

“Such large and sophisticated businesses should implement and employ compliance tools and programs that are commensurate with the speed and scale of their business operations,” OFAC stated. 

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.