Microsoft Faces Heavy Combined Penalties

Microsoft Faces Heavy Combined Penalties of Over $3.3 Million by OFAC and BIS Amid Violations of U.S Export Controls & Sanctions

The U.S. Department of Commerce and the U.S. Department of Treasury jointly released the news.

A coordinated effort by the Bureau of Industry and Security (BIS) and the Office of Foreign Assets Control (OFAC) imposed a combined $3.3 Million penalties against Microsoft Corporation. The charged company voluntarily disclosed the violations to BIS and OFAC. It also cooperated with the joint investigation and took measures to remedy the issue.

Matthew S. Axelrod, Assistant Secretary for Export Enforcement stated that “BIS and OFAC will work together to ensure that the U.S. export control and sanction laws are enforced effectively.”

Andrea M. Gacki, Director of OFAC stated that “Microsoft’s case is an example of a joint effort of BIS and OFAC where they can complement one another to enforce laws and ensure compliance. Also, it underscores risk technology where companies may face risks when engaging in business with foreign firms.”

Further Discussion

Microsoft has a robust compliance program and it is hard for anyone to imagine such a loophole in its compliance system. But this stringent move from compliance regulators has proven to be a warning for the third-party distributors to comply with the US export sanctions and regulations. Microsoft supported sales and arranged services benefitting prohibited parties via distributors and resellers.

Violations were caused due to a lack of information on the identities of the customers, intentional circumvention of screening controls, and imperfections in restricted party screening.

BIS documents related to the case are available here:

   

Also Read: US Treasury Demands DeFi Compliance With Anti-Money Laundering Regulations

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