Contract analysis

I. Executive Summary This memorandum presents the results of a comprehensive assessment of the sanctions and export controls compliance program maintained by Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH") as it existed on April 19, 2022, the date on which the U.S. Department of Justice ("DOJ") inquiry was initiated through the issuance of grand jury subpoena GJ No. 22-418 by the U.S. District Court for the Distric

1. Organizational structure and resourcing — The compliance function was critically understaffed, underfunded, structurally subordinated, and lacked adequate authority and Board-level oversight.

2. OFAC and sanctions screening — Screening was performed using an inadequate tool, applied only at counterparty onboarding, and failed to incorporate the SSI List, the 50% Rule, or any non-U.S. sanctions lists.

3. Export control classification and licensing — No formal export control classification or licensing program existed, resulting in the shipment of controlled oilfield equipment to Russia without required BIS authorization.

4. Third-party and counterparty due diligence — Onboarding procedures were superficial, risk-tiering was absent, beneficial ownership verification was not performed, and ongoing monitoring was nonexistent.

5. Training and awareness — Training was generic, infrequent, not mandatory for the highest-risk personnel, and failed to address the specific sanctions and export risks facing Dunmore's trading operations.

6. Escalation and reporting — Escalation procedures were vague and informal, no red flag identification framework existed, and whistleblower mechanisms were ineffective at the most exposed subsidiary.

7. Internal audit and testing — No sanctions-specific audit or testing program existed; the internal audit function did not include sanctions compliance within its scope.

8. Recordkeeping — Compliance records were maintained in an ad hoc fashion without centralized systems, standardized formats, or retention protocols aligned with OFAC requirements. These deficiencies, individually and collectively, allowed the conduct at issue — fourteen (14) crude oil swap transactions (approximately $218.7 million in aggregate notional value, of which nine transactions, approximately $156.3 million

II. Background A. Dunmore Energy Holdings Ltd. — Corporate Overview Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore") is a Cayman Islands exempted company (Registration No. MC-334821) with its operational headquarters located at 1200 McKinney Street, Suite 3400, Houston, Texas 77010. Dunmore operates in the oil and gas exploration, production, and trading sectors, with an expanding renewable energy development busine

III. Organizational Structure and Compliance Resourcing The organizational structure, resourcing, and governance of a company's compliance function are foundational to the effectiveness of any sanctions and export controls compliance program. Both the OFAC Framework and the DOJ Evaluation identify "management commitment" and "adequate resources and empowerment" as threshold requirements. A compliance program that lac

IV. OFAC and Sanctions Screening Sanctions screening — the process by which an organization identifies whether its counterparties, transaction participants, and other relevant persons are the subject of sanctions designations or otherwise restricted — is a cornerstone of any effective sanctions compliance program. The OFAC Framework identifies screening as a core "internal controls" component and states that organiza

V. Export Control Classification and Licensing In addition to its sanctions compliance deficiencies, Dunmore lacked a meaningful export control compliance program. Export controls — administered primarily by BIS under the EAR — impose licensing requirements on the export, re-export, and in-country transfer of controlled items, including dual-use goods, technology, and software. For a company engaged in the global tra

VI. Third-Party and Counterparty Due Diligence Effective third-party and counterparty due diligence is a critical safeguard against sanctions violations. The use of intermediaries, front companies, and opaque corporate structures to evade sanctions is a well-documented typology, and both OFAC and the DOJ have consistently emphasized the importance of robust due diligence as a means of detecting and preventing indirec