Aero Parts Distributor Settles OFAC Violations

OFAC announced a $22,172 settlement with a a New York aviation supplies distributior to settle its potential civil liability for six apparent violations of OFAC sanctions related to Russia’s aerospace and technology sectors.

In 2024, SkyGeek Logistics, Inc. attempted two refunds and sent four shipments to two Specially Designated Nationals in the United Arab Emirates sanctioned in connection with these sectors. The settlement amount reflects OFAC's determination that the apparent violations were non-egregious and that certain of its conduct was voluntarily self-disclosed.

Violations:

Flavic FZE (UAE-based aircraft parts supplier):

•Designated on November 2, 2023, under Executive Order (E.O.) 14024 for its involvement in Russia’s technology sector.

•SkyGeek attempted to refund $16,842.21 to Flavic on January 10, 2024, after its designation, without re-screening for sanctions compliance. The payment was blocked by a downstream bank.

Mirage Aircraft Services (UAE-based aircraft parts supplier):

•Designated on February 23, 2024, under E.O. 14024 for its role in Russia’s aerospace sector.

•SkyGeek:

•Shipped four orders (totaling $3,429.76) to Mirage between March 4–8, 2024.

•Initiated a $669.42 refund on March 18, 2024. Both actions occurred after Mirage’s designation, and the refund was blocked by a downstream bank.

Penalty Analysis:

•Total Transactions in Violation: $20,941.39 (shipments and attempted refunds).

•Civil Monetary Penalty:

•Statutory maximum: $2,208,816.

•Base penalty: $27,715, factoring in that four of six violations were voluntarily disclosed.

•Settlement amount: $22,172, reflecting mitigation under OFAC’s guidelines.

SkyGeek’s violations stemmed from inadequate sanctions compliance protocols, including a failure to re-screen parties before transactions.

Mitigating Factors

SkyGeek and its corporate parent Graco-Roberts,  undertook significant remedial efforts, including a comprehensive business review of SkyGeek’s sales to jurisdictions that may present ahigher risk for sanctions evasion and accordingly have ceased all SkyGeek sales to 45 Jurisdictions.

SkyGeek also updated its controls to require the rescreening of all customers requesting refunds, including their billing and shipping names and addresses; using more robust search logic, including improved fuzzy logic for sanctions screening; and providing enhanced training for employees.

SkyGeek also employed a new software vendor to improve the efficiency and accuracy of screening, and now conducts regular screening of customer orders before they are accepted and throughout the process until orders are fulfilled.

OFAC Enforcement Release