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Cuba Sanctions Violations Net $615,000 Penalty

Wednesday, February 24, 2016
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Feb. 22 that a French company has agreed, on behalf of itself and several affiliated companies, to pay $614,250 to settle potential civil liability for alleged violations of the Cuban Assets Control Regulations. These companies provide services, spare parts and equipment for oil and gas exploration and seismic surveys, and OFAC alleged that they exported spare parts and other equipment to vessels operating in Cuba’s territorial waters. In addition, one of the affiliated companies was charged with engaging in five transactions involving the processing of data from seismic surveys conducted in Cuba’s exclusive economic zone benefiting a Cuban company.

The statutory maximum civil monetary penalty for the alleged violations was $2.34 million and the base penalty amount was $975,000. The settlement amount reflects OFAC’s consideration of the following aggravating factors: (1) the company acted with reckless disregard for U.S. sanctions requirements by exporting U.S.-origin goods to Cuban waters, especially after its U.S. affiliate informed it that such exports could be a violation of U.S. sanctions; (2) one of the affiliated companies acted with reckless disregard for U.S. sanctions requirements by performing data processing related to seismic surveys conducted in Cuban waters without determining if there was a Cuban interest in the data; (3) the company was aware of the conduct giving rise to the alleged violations because it knew where the vessels were located and the origin of the goods; and (4) the underlying transactions had a total value of $2.76 million and were related to oil exploration, which likely caused significant harm to U.S. sanctions program objectives by providing a substantial economic benefit to Cuba. OFAC also considered the following mitigating factors: (1) the company and its affiliated companies have not been the subject of a penalty notice or finding of violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the alleged violations; (2) the company took some steps to avoid OFAC violations as part of its compliance program, including removing U.S. personnel and equipment for one vessel prior to it entering Cuba’s territorial waters; (3) the company has adjusted its supply procedures to minimize the risk of future sanctions violations; and (4) one of the affiliated companies agreed to toll the statute of limitations and substantially cooperated with the investigation.

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