Extreme Networks settles with OFAC and DOJ over sales to Russian missile maker
OFAC announced a $1,529,685 settlement with Extreme Networks, Inc., and the Justice Department announced a non-prosecution agreement with a $975,721.84 criminal penalty, over networking equipment that reached a blocked Russian defense manufacturer.
On 27 October 2026 the US Treasury's Office of Foreign Assets Control (OFAC), which enforces US sanctions, announced a $1,529,685 settlement with Extreme Networks, Inc., a North Carolina-headquartered cloud networking solutions provider. OFAC said the case involved nine exports of networking equipment and related services from the United States to JSC Moskovskiy Mashinostroitelniy Zavod Avangard, a Russian defense manufacturer, between September 2018 and March 2022. OFAC described the manufacturer as blocked by operation of law and majority owned by JSC Concern Almaz Antey, a designated company. OFAC determined that the apparent violations were voluntarily self-disclosed and egregious.
On the same day the Justice Department announced a non-prosecution agreement with the company under its 2026 Corporate Enforcement and Voluntary Self-Disclosure Policy. According to the department, it is its first non-prosecution agreement in a "near miss" case, where a company fully cooperated and remediated but did not qualify for a declination. The criminal penalty totals $975,721.84, made up of forfeiture of $487,860.92 and a criminal fine of $487,860.92.
According to the Justice Department, Russia-based employees of the company's former Russian subsidiary concealed the customer's identity from the company's global trade compliance group. The department says this led to false electronic export information being filed and goods being shipped from the United States. The department described the customer as a primary producer of the S-300 and S-400 anti-aircraft missile systems.
The Justice Department said the self-disclosure was not timely because it came under imminent threat of disclosure by a news publication. It said the company's remediation included ending its contract with the third-party distributor used for the sales, improving screening procedures, hiring additional compliance staff and adding diligence procedures for mergers and acquisitions.
Why it matters to AML professionals
Sanctions exposure often sits with a firm's own staff or distributors in another country, not with the customer file seen at head office. A blocked party can be hidden behind a reseller or a local subsidiary, so screening only the names on an order is not enough. AML professionals who support trade, sanctions or corporate banking teams should expect regulators to ask how ownership of end customers is checked.
Red flags in this case
- Orders from a subsidiary or distributor in a high-risk country where the end customer is not named or is described vaguely
- Local staff resisting or bypassing central compliance review of customer identities
- End users connected to defense or military production, or majority owned by a sanctioned group
- Export paperwork whose consignee or end-user details differ from sales records
If this landed in your queue
- Identify the true end user and check its ownership against sanctions lists, including the 50 percent ownership rule
- Compare shipping, invoice and export data for mismatches in party names or destinations
- Ask the business how orders from overseas subsidiaries or distributors are routed through central compliance
- Escalate any possible sanctions match and document the facts for a potential voluntary disclosure decision
What control failed
Insider misconduct. According to the Justice Department, Russia-based employees concealed the customer's identity from the company's global trade compliance group, which led to false export information being filed and goods being shipped.
Key terms
- Non-prosecution agreement
- A deal in which prosecutors agree not to bring criminal charges against a company if it meets set conditions, such as paying a penalty and cooperating.
- Blocked by operation of law
- A company is treated as sanctioned without being named on the list, for example because sanctioned persons own 50 percent or more of it.
- Voluntary self-disclosure
- When a company reports a possible violation to the authorities on its own, which can reduce the penalty.
Interview angle
How would you check whether a customer is owned by a sanctioned party when its name is not on any list?
Explain the 50 percent ownership rule, the need to map ownership through registries and documents, and how to escalate and record a possible indirect match.
Sources
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