SCG Plastics Co., Ltd. Settles with OFAC for $20,000,000 for Apparent Violations of the Iranian Transactions and Sanctions Regulations

April 19, 2024

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SCG Plastics Co., Ltd. (“SCG Plastics”), part of a multinational enterprise headquartered in Bangkok, Thailand that sells plastic resins, has agreed to pay $20,000,000 to settle its potential civil liability for 467 apparent violations of OFAC sanctions on Iran. From 2017 to 2018, SCG Plastics caused U.S. financial institutions to process $291 million in wire transfers for sales of Iranian-origin high-density polyethylene resin (HDPE) manufactured by a joint venture in Iran owned by, among others, SCG Plastics’ parent company and the National Petrochemical Company of Iran (“NPC”), an entity that is part of the Government of Iran. HDPE is a strong resin commonly used to manufacture a wide variety of injection-molded plastics, including food and beverage containers, shampoo and cleaning product bottles, and other industrial items. During the same timeframe that SCG Plastics received these wire transfer payments for Iranian-origin HDPE, it also initiated U.S. dollar wire transfer transactions on behalf of this Iranian-based joint venture to pay the joint venture’s outstanding debts to third-party vendors.

SCG Plastics employed certain shipping and documentation practices that obfuscated the product’s Iranian origin and Iranian parties’ involvement, which caused U.S. financial institutions to process these 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.

In January 2022, SCG Plastics transferred all of its assets and existing liabilities to Thai Polyethylene Co., Ltd. (“TPE”), a subsidiary of SCG Plastics’ parent company, that is based in Thailand. Accordingly, following this entire business transfer, SCG Plastics is no longer an operating business. In connection with SCG Plastics’ settlement agreement with OFAC, TPE has also entered into an independent agreement with OFAC to maintain U.S. sanctions compliance commitments for five years. The $20,000,000 settlement amount with SCG Plastics reflects OFAC’s determination that SCG Plastics’ apparent violations were egregious and, with the exception of ten transactions, were not voluntarily self-disclosed. This enforcement action demonstrates OFAC’s intent to impose significant penalties on non-U.S. companies that obfuscate the involvement of sanctioned persons or jurisdictions in shipping or payment documentation so that U.S. financial institutions process those financial transactions.