Apple will pay $467,000 to settle allegations that it violated U.S. laws by dealing with a blacklisted app developer for more than two years.
The company hosted, sold and facilitated the transfer of apps made by a Slovenian software company blacklisted by the United States.
“In 2017, we found that we had inadvertently paid a developer on [the] U.S. Treasury’s List of Specially Designated Nationals,” said an Apple spokesman. “We reported it to the authorities and fully cooperated with their investigation, which has now been completed.”
Apple reportedly entered into an app development agreement with the company, SIS d.o.o., in 2008. The Office of Foreign Assets Control blacklisted SIS and its majority owner, Savo Stjepanovic, in February 2015. At the time, the company faced allegations about being part of an international steroid trafficking network. (It was removed from the blacklist in May 2017.)
Apple reportedly made 47 payments related to the company’s blocked apps while SIS was on the blacklist. Cupertino also collected $1.2 million from customers who downloaded SIS’ apps.
Apple and blacklisted app developer
According to The Wall Street Journal, Apple’s “sanctions-screening tool failed to identify SIS as a blacklisted entity because Apple’s system listed the company as ‘SIS DOO,’ rather than ‘SIS d.o.o’ on OFAC’s list.”
The situation got even more complicated, according to the Journal:
Apple allegedly failed to identify Mr. Stjepanovic as a blacklisted individual in its system as well, because Apple didn’t screen all individual users associated with an App Store account at the time, according to the agreement.
Apple also allegedly helped transfer the ownership of SIS’s apps to two other companies several months after the designation, according to OFAC.
In February 2017, after making changes to its sanctions screening tool and related processes, Apple identified SIS as a blacklisted entity, OFAC said. Apple then suspended making payments to the company that administered SIS’s App Store account, but continued to make payments to the other company that owned some of SIS’s apps for several months after the discovery, according to OFAC.
This sounds more like an oversight than anything. But the multiple points of failure found within Apple’s sanctions-compliance program represent its apparent “reckless disregard” for U.S. policy.
A $467,000 fine would be a pretty large amount for most companies. However, Apple is currently valued in the region of $1 trillion. This settlement is therefore more of a slap on the wrist than anything. Still, I’m sure Apple won’t make the same mistake again.