Skincare Company Murad Agrees to Settle Iran Sanctions Violations

Murad has agreed to pay about $3.3 million to settle allegations it conspired to illegally export goods and services to Iran over an eight-year period

By Mengqi Sun

Skincare company Murad has agreed to pay about $3.3 million to settle allegations that for almost eight years it conspired to export goods and services to Iran, in violation of U.S. sanctions on the country.

The El Segundo, Calif.-based company, founded by dermatologist Howard Murad in 1989, allegedly entered into agreements with an Iran-based distributor to sell its products in the Middle East, according to the U.S. Treasury Department. 

The agreements, which lasted between December 2009 and 2018, resulted in at least 62 exports of Murad’s products and services to Iran, totaling more than $11 million, according to the settlement agreement issued by Treasury’s Office of Foreign Assets Control, which enforces U.S. sanctions. The agency said the company itself disclosed the alleged violations. 

A former senior company executive was involved in signing agreements with the Iranian distributor to export goods to the Middle East, with the understanding that the distributor, first through a firm based in Iran and later through one in the United Arab Emirates, would export the products to Iran, OFAC said. The executive has also agreed to pay $175,000 to OFAC. 

The U.S. has broad sanctions on Iran, prohibiting U.S. individuals and companies from exporting U.S. goods, technologies and services to Iran, unless exempted by OFAC. 

OFAC said Murad applied for specific licenses, but the company didn’t receive any from the agency that would permit these exports.

Murad was acquired by consumer-goods giant Unilever U.S. in September 2015, and the exports to Iran continued until January 2018, despite Unilever having become aware of Murad’s Iran-related business two months after its acquisition in 2015, according to the agreement. The shipments stopped after Murad’s bank asked whether certain payments might have involved Iran.

“Murad is committed to complying with U.S. economic sanctions laws and has adopted appropriate sanctions and export control policies and procedures. We extended our full cooperation to U.S. authorities to resolve this matter,” a company spokeswoman said in an email. Representatives for Unilever didn’t respond to a request for comment.

Factors at the cosmetics company that contributed to the violations included the conduct of senior company executives, who facilitated the exports to Iran, as well as the lack of a sanctions compliance program at the company, OFAC said. It added that the company’s compliance-reporting structures were inadequate relative to the sanctions risk even after the acquisition by Unilever.  

BY: The Wall Street Journal