On October 9, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $175,015 settlement with California-based freight forwarder Pegasus Worldwide Logistics (Pegasus) for apparent violations of U.S. counter-narcotics sanctions and OFAC reporting requirements. The enforcement action arose from Pegasus’s involvement in shipping a $5,950 machine supplied by a sanctioned Chinese company that had changed its name following its designation. Despite the relatively modest transaction value, OFAC imposed a substantial penalty, citing deficiencies in Pegasus’s sanctions screening, failure to investigate red flags, and incomplete response to an administrative subpoena.

OFAC found that Pegasus failed to conduct sanctions screening at the outset of the transaction and subsequently screened only the supplier’s new name, overlooking email and telephone information that would have identified the company as a sanctioned party. Pegasus also continued processing payments after receiving a U.S. Customs and Border Protection detention notice referencing OFAC. Compounding these failures, Pegasus initially certified that it had no documents responsive to an OFAC subpoena, only to produce responsive records months later. OFAC treated the incomplete response as a separate basis for liability and an aggravating factor in calculating the settlement.

The action underscores OFAC’s heightened compliance expectations for logistics companies and other intermediaries, regardless of their size or the value of the underlying transaction. It also highlights the importance of screening all available identifying information before engaging in transactions, promptly escalating sanctions-related red flags, and ensuring complete and accurate responses to government inquiries. OFAC further emphasized the availability of financial incentives for sanctions whistleblowers, reinforcing the importance of effective internal reporting and escalation procedures. Click here for the full post.