SkyGeek Logistics, Inc. (SkyGeek), a New York-based company that supplies aviation products, including avionic equipment and instruments, engine parts, tools, and specialty chemicals, has agreed to pay USD22,172 to settle its potential civil liability related to six apparent violations of sanctions related to Russia’s aerospace and technology sectors. In 2024, SkyGeek attempted two refunds and sent four shipments to two Specially Designated Nationals (SDNs) in the United Arab Emirates sanctioned in connection with these sectors, key elements of Russia’s military-industrial base that enable its illegal war in Ukraine. The settlement amount reflects the Office of Foreign Assets Control’s (OFAC) determination that SkyGeek’s apparent violations were non-egregious and that certain of its conduct was voluntarily self-disclosed, as well as SkyGeek’s cooperation with OFAC.

Between January 10, 2024 and March 18, 2024, SkyGeek made shipments and attempted refunds to two entities, Flavic FZE (Flavic) and Mirage Air Craft Services Sole Proprietorship LLC (Mirage), after they had been added to the List of Specially Designated Nationals and Blocked Persons (SDN List) pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR”), 31 C.F.R. part 587. Both Flavic and Mirage are United Arab Emirates (UAE)-based aircraft parts suppliers.

Refund Payment to Flavic

OFAC added Flavic to the SDN List pursuant to Executive Order (E.O.) 14024 on November 2, 2023 for operating or having operated in the technology sector of the Russian Federation economy. Flavic imports and exports aviation equipment and technology to and from Russia for repair, reconstruction, testing, and other maintenance; at the time of its designation, Flavic was certified to work with the Russian Ministry of Defense. Prior to its designation, in August and September 2023, Flavic placed and received five orders with SkyGeek. Between September 2023 and November 1, 2023, Flavic placed and paid for another six orders; each of these was put on hold due to supply backlogs. On November 2, 2023, the date of its designation, Flavic placed and paid for another three orders. Although SkyGeek scanned these orders for possible sanctions issues, its screening software did not yet reflect that day’s designation of Flavic, resulting in no sanctions flag. These additional three orders were also put on hold due to supply backlogs.

On December 28, 2023, Flavic notified SkyGeek that it had ceased operations and requested that its outstanding orders be cancelled and its payments refunded. SkyGeek cancelled the outstanding orders and attempted to send Flavic a refund payment. Because its compliance protocol at the time was not to re-screen previously approved parties, at the time it initiated the refund, SkyGeek neither re-screened Flavic for sanctions issues nor took other sanctions compliance measures with respect to the refund payment. Accordingly, SkyGeek initiated a refund to Flavic for USD16,842.21 on January 10, 2024, which a downstream bank then blocked.

Shipments and Refund Payment to Mirage

OFAC added Mirage to the SDN List pursuant to E.O. 14024 on February 23, 2024 for operating or having operated in the aerospace sector of the Russian Federation economy. Before its designation, on August 3, 2023, Mirage placed an order with SkyGeek, which SkyGeek partially fulfilled on December 6, 2023. Mirage cancelled the remainder of the order on January 26, 2024. On February 29, 2024—after its designation—Mirage requested a refund for the cancelled remainder of the order.

On March 18, 2024, SkyGeek initiated a USD669.42 wire transfer to Mirage for the refunded items. Again, a downstream bank blocked the refund.

Separately, between March 4 and March 8, 2024, prior to making the refund payment but after its designation, SkyGeek shipped to Mirage four orders placed between January 19 and March 7, 2024 of basic goods, such as paints, coatings, film release agents, and tapes, valued at USD3,429.76.

Although starting in February 2024 SkyGeek required the rescreening of customers prior to issuing refunds, it nevertheless failed to identify that Mirage was designated when it made the shipments and attempted the refund payment in March.

By attempting two payments totalling $17,511.63 and sending four shipments totalling $3,429.76 to blocked persons, Mirage and Flavic, SkyGeek dealt in property that was blocked pursuant to the RuHSR, 31 C.F.R. § 587.201 (the “Apparent Violations”).