A Thailand-based resin distributor will pay a $20 million fine to the U.S. Department of the Treasury for using U.S. firms to buy resin from Iran.
In an April 19 news release, treasury officials in Washington said that SCG Plastics Co. Ltd. of Bangkok has agreed to pay the fine to settle potential civil liability for 467 apparent violations of sanctions placed on Iran by the department's Office of Foreign Assets Control (OFAC).
According to the release, SCG in 2017-18 caused U.S. financial institutions to process $291 million in wire transfers for sales of Iranian-origin high density polyethylene resin made by a joint venture in Iran whose owners included SCG's parent firm and state-owned National Petrochemical Co. of Iran.
In that same time, SCG also initiated U.S. dollar wire transfer transactions on behalf of the Iranian-based JV to pay the JV's outstanding debts to third-party vendors. According to the release, SCG used shipping and documentation practices that obfuscated the product's Iranian origin and Iranian parties' involvement. These actions caused U.S. financial institutions to process the wire transfers in violation of OFAC's sanctions on Iran.
"As a result of these transactions, significant economic benefits were conferred to Iran's petrochemical sector, a major source of revenue generation for the Iranian regime," officials said.
In January 2022, SCG transferred its assets and liabilities to Thai Polyethylene Co. Ltd., a subsidiary of SCG's parent firm. As a result, SCG is no longer an operating business. SCG's parent firm was SCG Chemicals Public Co. Ltd. of Rayong, Thailand. That firm still owns Thai Polyethylene.
In connection with the settlement, Thai Polyethylene has entered into an independent agreement with OFAC to maintain U.S. sanctions compliance commitments for five years.
The $20 million settlement "reflects OFAC's determination that [SCG's] apparent violations were egregious and, with the exception of ten transactions, were not voluntarily self-disclosed," officials said.
They added that the enforcement action "demonstrates OFAC's intent to impose significant penalties on non-U.S. companies that obfuscate the involvement of sanctioned persons…in shipping or payment…so that U.S. financial institutions process those financial transactions."