OFAC Settles with Fracht FWO Inc. for $1,610,775

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) is the administrative agency responsible for investigating and enforcing against potential violations of U.S. sanctions programs. On September 3, 2025, OFAC published an enforcement release detailing its agreement with Fracht FWO Inc. (Fracht), an international freight forwarder. Fracht agreed to pay $1,610,775 to settle its civil liability for violations of U.S. sanctions programs.

How did Fracht violate U.S. sanctions?

OFAC determined that Fracht engaged in apparent violations of U.S. sanctions on Venezuela by contracting with Empresa de Transporte Aéreocargo del Sur S.A. (“EMTRASUR”), a wholly owned subsidiary of the OFAC-designated Venezuelan state airline Consorcio Venezolano de Industrias Aeronáuticas y Servicios Aéreos (“CONVIASA”). CONVIASA has been blocked pursuant to Executive Order 13884 (Aug. 5, 2019) and was added to the SDN List on February 7, 2020, as part of the Government of Venezuela.

EMTRASUR was selected as the freight carrier in a contract arranged by a Mexican logistics broker hired by Fracht to secure an aircraft for an urgent client delivery. The broker informed Fracht’s Vice President of Airfreight of the aircraft’s Venezuelan origin and tail number, and these details were also shared with Fracht’s Vice President of Strategic Development. Despite these red flags, Fracht executed the contract without sanctions screening or legal review, contrary to its internal compliance procedures.

The aircraft used by EMTRASUR was a Boeing 747 that had been identified on the SDN List since September 12, 2012, as blocked property in which Mahan Air (a designated Iranian airline) had an interest. In or around October 2021, Mahan Air transferred ownership, custody, and control of the aircraft to CONVIASA, but the aircraft remained blocked because it was listed by serial number. EMTRASUR staffed the flight with a crew of Iranian nationals.

EMTRASUR ultimately received $825,000 out of the $885,000 Fracht paid the broker, as well as an additional $110,000 late fee that Fracht paid directly. OFAC therefore found Fracht responsible for two apparent violations of the Venezuela Sanctions Regulations (VSR) for these transactions, totaling $995,000.

OFAC also concluded that by indirectly using blocked property in which Mahan Air had an interest, Fracht committed apparent violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations (WMDPSR) and the Global Terrorism Sanctions Regulations (GTSR). Finally, by procuring the services of an Iranian crew, Fracht was liable under the Iranian Transactions and Sanctions Regulations (ITSR).

How did OFAC determine the settlement amount?

OFAC determines civil penalties for apparent violations using the General Factors in its Economic Sanctions Enforcement Guidelines.

This case was deemed egregious and non-voluntarily self-disclosed. While Fracht did submit information to OFAC, the conduct had already been identified by OFAC and other U.S. government agencies. As a result, OFAC could have imposed a statutory maximum penalty of $2,147,700. The $1,610,775 settlement reflects aggravating and mitigating considerations.

Aggravating factors included:

• Reckless disregard for U.S. sanctions requirements, demonstrated by failure to conduct due diligence or compliance checks.
• Actual knowledge at senior levels that EMTRASUR was the carrier.
• Significant economic benefit to the Government of Venezuela through payments to EMTRASUR.
• The size and sophistication of Fracht’s global operations.

Mitigating factors included:

• No prior OFAC enforcement history in the past five years.
• Immediate remedial measures, including terminating responsible employees, implementing new sanctions screening and mandatory legal review processes, hiring nine additional compliance staff, and committing over $1 million annually to sanctions compliance.
• Substantial cooperation with OFAC, including prompt and complete responses to requests for information.

What compliance lessons did OFAC highlight?

As with all enforcement releases, OFAC highlighted broader compliance lessons for companies engaged in international trade:

Scrutinize intermediaries and service providers - Third parties (e.g. brokers) can expose companies to sanctions risk if not properly vetted.

Assess property risks - Assets like aircraft or vessels may remain blocked due to prior ownership, even if not individually listed on the SDN List.

Strengthen internal controls - Written policies matter only if they are followed, particularly under commercial or time pressure.

Act quickly when issues arise - Timely remedial measures and cooperation with OFAC can significantly reduce penalties.

About Sanctions Law Center

This action highlights the importance of implementing and adhering to a well-designed sanctions program, as well as cooperating with OFAC when any compliance issues arise. The OFAC Lawyers at Sanctions Law Center have years of experience helping our clients craft compliance programs and navigating OFAC investigations. Whether you need help dealing with compliance issues or preventing them from arising in the first place, our OFAC Lawyers can help. Contact us today or call (202) 914-1545 here to schedule a consultation.