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4/7/2023 Microsoft to Pay Over $3.3M in Total Combined Civil Penalties to BIS and OFAC to Resolve Alleged and Apparent Violati… U.S. DEPARTMENT OF THE TREASURY Microsoft to Pay Over $3.3M in Total Combined Civil Penalties to BIS and OFAC to Resolve Alleged and Apparent Violations of U.S. Export Controls and Sanctions April 6, 2023 The following is being released jointly by the U.S. Department of Commerce and the U.S. Department of the Treasury. WASHINGTON, D.C.—Today, as part of a coordinated enforcement e ort, the Department of Commerceʼs Bureau of Industry and Security (“BIS”) and the Department of the Treasuryʼs O ice of Foreign Assets Control (“OFAC”) imposed a combined $3.3 million in civil penalties against Microso Corporation (“Microso ”) for alleged and apparent violations of U.S. export controls and sanctions laws. Microso voluntarily self-disclosed the alleged violations to both BIS and OFAC, cooperated with the joint investigation conducted by BISʼs O ice of Export Enforcement and OFAC, and took remedial measures a er discovering the conduct at issue, which predated the export controls and sanctions imposed in connection with the current Russian war in Ukraine. “U.S. companies will be held accountable for the activities of their foreign subsidiaries,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “As this coordinated resolution demonstrates, BIS and OFAC will work together to ensure that U.S. export control and sanctions laws are enforced e ectively, wherever in the world the underlying conduct occurs.” “This case demonstrates how BIS and OFAC authorities can complement one another to hold firms accountable and promote compliance with core national security obligations. It further underscores the risks technology companies may face when engaging through foreign subsidiaries, distributors, and resellers and the importance of maintaining e ective controls,” said Andrea M. Gacki, Director of OFAC. ADDIT IONAL B ACKGROUND ON TODAY ʼS ACT ION BIS issued an order today imposing an administrative penalty of $624,013 on Microso . As part of the BIS settlement, Microso admitted to the conduct set forth in a Proposed https://home.treasury.gov/news/press-releases/jy1394 1/3 4/7/2023 Microsoft to Pay Over $3.3M in Total Combined Civil Penalties to BIS and OFAC to Resolve Alleged and Apparent Violati… Charging Letter (“PCL”) involving Microso ʼs subsidiary Microso Rus LLC (“Microso Russia”). In addition to the BIS penalty, Microso entered into a corresponding settlement with OFAC whereby Microso agreed to a $2,980,265.86 civil penalty to resolve 1,339 apparent violations of OFAC sanctions regulations involving Ukraine/Russia, Cuba, Iran, and Syria. In light of the related OFAC action, Microso was given a $276,382 credit by BIS contingent upon Microso fulfilling its requirements under the OFAC settlement agreement, resulting in a combined overall penalty amount of $3,327,896.86. B IS CASE B ACKGROUND On seven occasions between December 28, 2016, and December 22, 2017, employees of Microso Russia caused another Microso subsidiary to enter into or sell so ware licensing agreements that would allow the transfer or access to so ware subject to the EAR by FAU ʻGlavgosekspertiza Rossiiʼ and United Shipbuilding Corporation Joint Stock Company (“United Shipbuilding Corporation”), both of which were on BISʼs Entity List. FAU ʻGlavgosekspertiza Rossiiʼ is a Russian federal institution involved with construction projects, including the Kerch Bridge, which was built to connect Crimea to Russia a er its 2014 invasion. United Shipbuilding Corporation is responsible for developing and building the Russian Navyʼs warships. In the case of FAU ʻGlavgosekspertiza Rossiiʼ, certain Russia-based employees of Microso Russia ordered so ware licenses through one of Microso ʼs Open sales programs in the names of parties not on the Entity List; in the case of United Shipbuilding, an increased number of so ware licenses were added under non-listed a iliatesʼ enterprise agreements. The BIS Order, Settlement Agreement, and Proposed Charing Letter are available online here. Details regarding the OFAC action can be found online here. ADDIT IONAL INF ORMAT ION Report suspected export control violations through the BIS online tip portal. You can also call the Enforcement Hotline at 1-800-424-2980 or email EELead@bis.doc.gov. These BIS actions were taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the EAR. BIS controls exports and reexports of dual-use commodities, technology and so ware for reasons of national security, missile technology, nuclear non-proliferation, chemical and biological non-proliferation, crime control and regional https://home.treasury.gov/news/press-releases/jy1394 2/3 4/7/2023 Microsoft to Pay Over $3.3M in Total Combined Civil Penalties to BIS and OFAC to Resolve Alleged and Apparent Violati… stability. Criminal and administrative sanctions can be imposed for violations of the EAR. For more information, please visit: https://www.bis.doc.gov/index.php/enforcement ### https://home.treasury.gov/news/press-releases/jy1394 3/3
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