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New Penalties for Exports to Iran, Violation of Cuban Embargo

Wednesday, May 07, 2014
Sandler, Travis & Rosenberg Trade Report

Exports to Iran. The Treasury Department’s Office of Foreign Assets Control announced May 6 that a Washington state individual has agreed to pay $29,340 to settle charges that from May 2007 to November 2009 this individual exported, sold and/or supplied unlicensed medical goods and/or related financial services from the U.S. to Iran. The alleged violations involved 19 separate transactions valued at $49,341.

The base penalty amount for the alleged violations totaled $163,000. On one hand, the individual did not voluntarily self-disclose the matter to OFAC and demonstrated recklessness by continuing to engage in the conduct after OFAC issued a warning letter for similar past conduct. On the other hand, the individual had not been cited for a violation in the previous five years, the goods were medical devices that are potentially licensable by OFAC under existing licensing policy, the individual cooperated with OFAC's investigation and agreed to toll the statute of limitations, and OFAC “considered the totality of the circumstances to ensure that the civil monetary penalty is proportionate to the nature of the alleged violations.”

Travel Arrangements for Cuba. OFAC also announced May 6 that a Delaware company with headquarters in Argentina, together with its subsidiaries and affiliates, has agreed to pay $2.81 million to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations. OFAC alleges that from March 2009 through March 2012 this company’s foreign subsidiaries assisted 17,836 persons with flight reservations for travel between Cuba and countries other than the U.S. and/or hotel reservations for stays in Cuba without authorization from OFAC.

The base penalty for the apparent violations is $4.46 million. Aggravating factors include that the company failed to ascertain the U.S. sanctions requirements applicable to its business operations and relied instead upon a third party's oral assurances that its conduct did not require an OFAC license, the company’s senior management appears to have been aware that its foreign subsidiaries were providing Cuba-related travel services to third-country nationals and reasonably should have been aware of the applicable prohibitions, the apparent violations appear to have resulted from a pattern or practice of conduct, and the company is a sophisticated travel services provider but had no OFAC risk-based compliance program at the time of the apparent violations. Mitigating factors include that the company voluntarily self-disclosed this matter to OFAC, the apparent violations occurred “prior to agency notice,” the Cuba-related transactions appear to have been a very small portion of the company’s overall business, the company has not been the subject of any prior OFAC enforcement action in the previous five years, and the company immediately stopped offering any Cuba-related travel services to any of its customers upon discovering the apparent violations, recently adopted OFAC compliance policies and procedures, and cooperated with OFAC by providing all relevant information in a clear and organized fashion.

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