The Australian company Toll Holdings must pay US$6.1m for its “reckless disregard” of US sanctions targeting terrorism, the manufacturing of weapons of mass destruction and regimes in North Korea, Iran and Syria.
Toll committed almost 3,000 apparent violations of the sanctions when it processed $48.4m through the US financial system between January 2013 and February 2019, the US treasury department said.
The apparent violations meant people in “comprehensively sanctioned jurisdictions” were able to continue participating in international shipments and business, the treasury’s Office of Foreign Assets Control (Ofac) found.
In a statement, Ofac said the freight and logistics company had been told about “problematic transactions” by a US bank in May 2015, but did not take immediate or adequate steps to stop them occurring again.
It was not until February 2017 – after further warnings from the same bank, including a threat that it would stop handling payments from the company – that “hard controls” were implemented that largely stopped the transactions, Ofac found.
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Toll self-disclosed the apparent breaches, and Ofac found they were “non-egregious”, but said the company had still shown a “reckless disregard” for the sanctions.
About 14% of the apparent violations were for transactions involving entities blocked because of concerns over terrorism or weapons of mass destruction.
Ofac found that Toll processed 424 payments involving Iran’s Mahan Airlines, which the US has accused of providing funds and transport for Iran’s elite forces and flying weapons to Syria, and 97 involving the Hafiz Darya Shipping Lines Company, which has been sanctioned on suspicion of involvement in transporting parts necessary for Iran’s nuclear weapons program.
The other payments were for shipments to, from or through North Korea, Iran or Syria.
Ofac found that Toll failed to implement policies and controls ensuring it complied with sanctions when it processed payments through the US.
This was in part because Toll’s rapid expansion in the years immediately before the breaches had not been matched by “a requisite increase in compliance resources”, Ofac said.
“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 US financial institutions,” Ofac said.
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Toll Group’s managing director, Thomas Knudsen, said in a statement that the company was pleased to have resolved the matter after disclosing the potential breaches.
He said none of the people involved in the “transactions at issue” were still employed by the company.
“Regrettably, this situation occurred because of a misunderstanding about regulations regarding payments through the US financial system related to otherwise permissible shipments.
“We take compliance seriously and have acted to keep this from happening again, instituting rigorous control systems and enhanced training and accountability.”
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Ofac said the maximum civil penalty applicable in the matter was $826m, but as Toll self-disclosed the apparent violations and they constituted a non-egregious case, the applicable base penalty was $15m.
Toll’s reckless disregard of sanctions, failure to heed the repeated warnings of the US bank, and its position as a major global freight forwarder were considered aggravating factors, but Ofac found that in mitigation that Toll had not been responsible for similar apparent violations in the five years before the payments were made, and had ultimately taken “extensive actions to remedy its compliance gaps”.