Amazon Settles Allegations of U.S. Sanctions Violations

By Mengqi Sun 

Amazon.com Inc. agreed to settle allegations that it violated multiple U.S. sanctions regulations, the U.S. Treasury Department said Wednesday.

The Seattle-based e-commerce giant allegedly provided goods and services to individuals or entities subject to U.S. sanctions, primarily due to deficiencies in the company's automatic screening processes, according to a settlement agreement between Amazon and the Treasury's Office of Foreign Assets Control, which enforces U.S. economic and trade sanctions.

An Amazon spokeswoman declined to comment.

The amount Amazon agreed to pay to settle the allegations -- about $135,000 -- is paltry compared with the size of the company, which has a market cap of about $1.5 trillion. But the agreement highlights the importance of implementing and maintaining effective sanctions-compliance tools and programs, and how such tools can sometimes fail even the largest and most sophisticated companies.

Apple Inc. last year settled allegations it violated U.S. sanctions by dealing with a blacklisted entity for more than two years because the company's sanctions-screening tool failed to identify a blacklisted entity due to apparent differences in punctuation and letter cases.

Amazon, which voluntarily disclosed the alleged violations and took remedial measures -- factors that played a role in the settlement total, according to OFAC -- had a similar issue.

OFAC said Amazon's automated sanctions-screening processes failed to fully analyze transaction and customer data, such as common alternative spellings of a sanctioned jurisdiction, and that the company's screening system failed to flag orders that could have run afoul of U.S. regulations.

Amazon accepted and processed these orders of consumer goods and services for individuals and entities located in regions under U.S. sanctions, such as Iran and Syria, or that had been blacklisted by the U.S., such as designated as drug traffickers, global terrorists or proliferators of mass destruction weapons, according to the settlement agreement.

In several hundred instances, Amazon's system allegedly failed to flag the correctly spelled names and addresses of people and entities on the U.S. blacklist, according to the agreement.

Amazon's sanctions-screening system also failed to flag orders containing addresses with variation of the spelling of Crimea and had failed to comply with reporting requirements for certain transactions involving the Black Sea peninsula, OFAC said. The U.S. generally prohibits the import and export of goods, services and technology to or from Crimea, unless allowed under licenses.

OFAC credited Amazon for cooperating with the investigation by providing data analysis of the alleged breaches and implementing significant remedial measures to address the sanctions screening issues. These efforts included adding head count to the company's compliance team and employing internal and third-party sources to review its sanctions compliance program.

Write to Mengqi Sun at [e-mail]

(END) Dow Jones Newswires

July 08, 2020 20:03 ET (00:03 GMT)

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