The sanctions check was not defeated. It was skipped, because a customer needed a plane.
The charter
In May 2022 a major manufacturer asked Fracht’s Mexico affiliate to move car parts from Mexico to Argentina urgently. Fracht found no available aircraft and turned to a freight-forwarding logistics broker in Mexico, recently recommended to its vice president of airfreight. Senior executives worried in internal discussions about losing the customer.
On 28 May 2022 Fracht signed a charter contract with the broker. It named the carrier as EMTRASUR, a freight charterer wholly owned by the designated Venezuelan state airline CONVIASA, gave EMTRASUR’s address in Venezuela, and specified tail number YV-3531, where “YV” marks a Venezuelan aircraft. The itinerary showed the aircraft arriving from Venezuela and stopping there before Argentina. The vice president executed the contract without sanctions screening or legal review, contrary to Fracht’s own procedures. Fracht then paid the broker $885,000, of which $825,000 went to EMTRASUR.
The aircraft
The plane had been Mahan Air’s. OFAC added it to the SDN List in 2012 as blocked property of Mahan Air, under tail number EP-MND (“EP” marking an Iranian aircraft) and manufacturer serial number 23413. In late 2021 Mahan Air transferred it to CONVIASA, and EMTRASUR changed the tail number to YV-3531. The transfer did not unblock it. It stayed on the list under the old tail number, and the unchanging serial number linked the two. Mahan Air continued to coordinate its use, with operations training and maintenance, and an Iranian crew flew the Fracht flight, which Fracht did not know.
The flight was late and too small for the cargo. On 4 June the senior executives discussed the delay in a group chat; the vice president of strategic development described EMTRASUR as a “subcompany of … CONVIASA”, and the CEO, unaware that either company was blocked or that screening had not been done, deferred to the group’s decision to keep the aircraft and pay a $110,000 late fee. In all Fracht’s two payments came to $995,000, about $935,000 of which reached EMTRASUR.
The penalty
OFAC found the violations egregious and not voluntarily self-disclosed. Fracht made its own submission only after the aircraft’s charter and detention in Argentina were already known to US agencies. The penalty was $1.61 million against a $2.15 million maximum, reflecting Fracht’s substantial cooperation and remediation: firing the employee who signed the contract, mandatory legal and sanctions review of every contract, nine full-time compliance staff and over $1 million a year in compliance spending.
What the record shows
- A changed registration does not change what is blocked. The aircraft kept its status through a new tail number, like a ship that changes name or flag. See flag hopping for the maritime equivalent.
- The warning signs were in the contract. The carrier’s parent, the Venezuelan address and the “YV” tail number all appeared on the face of the document.
- Property can be blocked without being listed under the name in front of you. OFAC’s compliance note says aircraft and vessels may be blocked through ownership by a blocked person whether or not they appear on the SDN List.
- The broker did not hide the carrier; nobody asked. The contract named EMTRASUR outright. See professional enablers for the trade intermediary’s role.