The US Treasury Department said on Wednesday that international freight forwarder Fracht FWO Inc. has agreed to pay $1.61 million to settle violations of US sanctions, including dealings involving Iran’s Mahan Air, a carrier long accused by Washington of supporting terrorism.

Treasury’s Office of Foreign Assets Control (OFAC) said the Houston-based company contracted in May 2022 with Venezuela’s state-run airline EMTRASUR, a subsidiary of CONVIASA, to transport car parts from Mexico to Argentina.

The flight used an aircraft that had previously been blocked for being operated by Mahan Air and was crewed by Iranian nationals.

OFAC said the transactions amounted to apparent breaches of US sanctions on Iran, Venezuela, weapons proliferation and terrorism.

“Fracht conferred a direct financial benefit of approximately $935,000 to the blocked entity EMTRASUR, providing substantial revenue to the Maduro regime and specifically relating to use of an aircraft blocked for terrorism and proliferation,” the Treasury statement said.

Washington blacklisted Mahan Air in 2011, accusing it of supporting Iran’s Islamic Revolutionary Guard Corps. Although the aircraft later changed registration to a Venezuelan tail number, OFAC said it remained blocked property because of its origin and continuing links to the Iranian airline.

The Treasury added that Fracht executives disregarded internal compliance procedures and red flags, such as the aircraft’s Venezuelan registration and EMTRASUR’s ownership, when approving the charter. The case was deemed “egregious” and not voluntarily disclosed.

Still, the penalty was reduced from a potential $2.1 million after Fracht cooperated with investigators and undertook extensive compliance reforms, including firing the employee who arranged the deal and hiring nine sanctions specialists.

The United States has repeatedly accused Mahan Air of using commercial cover to move military equipment and personnel to support Tehran’s allies in the Middle East.