International logistics company to pay $6 million for alleged violations of sanctions
An international freight forwarding and logistics company based in Australia will pay more than $6 million to settle allegations that it violated U.S. sanctions programs.
The U.S. Department of the Treasury said April 25, 2022, that Toll Holdings Limited violated Office of Foreign Assets Control (OFAC) sanctions programs nearly 3,000 times between 2013 and 2019 by originating or causing to be received payments in connection with sea, air, and rail shipments conducted by Toll, its affiliates, or providers and suppliers to North Korea, Iran or Syria, or an entity on OFAC’s list of Specially Designated Nationals and Blocked Persons.
While OFAC itself doesn’t reward whistleblowers directly, it’s often possible to file whistleblower claims for such sanction violations with another whistleblower program, noted Scott Williams, CEO of Ethic Alliance.
“In many instances, whistleblowers can receive related awards from the SEC or the Treasury or the IRS even. When a company is violating sanctions, there are almost always violations of other laws that do provide a reward. It’s critical for the whistleblower to file with the right agency, which is just one area that we assist them,” said Williams.
Ethic Alliance is a for-profit corporation and law firm whose purpose is to empower, educate and protect whistleblowers, ensuring they receive the protection they need and the rewards they are entitled to under US law (the US government will typically reward whistleblowers 10%-30% of the amount recovered or sanctioned under various whistleblower laws). Ethic Alliance protects whistleblowers through a secure, encrypted reporting and messaging platform, attaching the strong legal protection of attorney-client privilege from the moment a report is filed with us, and access to a network of specialty attorneys that have made careers protecting and supporting whistleblowers, and working with the US government to win whistleblower lawsuits.
On May 8, 2022, the Treasury Department announced a number of new sanctions on individuals and entities critical to Russia’s ability to wage war against Ukraine.
In the Toll Holdings case, OFAC determined that the company’s apparent violations were non-egregious and voluntarily self disclosed, the Treasury Department said. “This case highlights that foreign companies who use the U.S. financial system to engage in commercial activity must take care to avoid transactions with OFAC-sanctioned countries and persons,” the Treasury Department said.
The value of payments allegedly made by Toll Holdings to a “designated person” or made in connection with a sanctioned jurisdiction totaled more than $48 million, according to the Treasury Department. The payments were processed through at least four financial institutions in the United States or foreign branches of financial institutions incorporated in the United States, in apparent violation of OFAC sanctions.
The payments were generally originated or received by Toll’s overseas units, altogether involving 23 different Toll entities across Asia, Europe, the Middle East and North America, the Treasury Department said.
In processing such payments through U.S. financial institutions, Toll failed to adopt or implement policies and controls that prevented it from conducting transactions that involved designated parties or persons in sanctioned jurisdictions. The absence of such policies and controls resulted in part from Toll’s rapid expansion over the preceding period without a requisite increase in compliance resources. Beginning in 2007, Toll began to acquire a number of small, local, or regional freight forwarding companies, including in the Asia Pacific region. By 2017, Toll had almost 600 invoicing, data, payment, and other system applications spread across its various business units, the Treasury Department 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 U.S. financial institutions to make or receive payments related to U.S.-sanctioned jurisdictions and persons, the Treasury Department said.
By or before May 2015, some Toll personnel knew or had reason to know that the subject payments were in potential violation of U.S. sanctions prohibitions, the Treasury Department said.
Toll ultimately took extensive actions to remedy its compliance gaps, the Treasury Department said.
Contact Ethic Alliance at info@ethicalliance.com
Related link: https://home.treasury.gov/system/files/126/20220425_toll.pdf ; https://home.treasury.gov/news/press-releases/jy0771