The Treasury Department’s Office of Foreign Assets Control states that a recent enforcement action highlights the importance of implementing regular audits and other risk-based controls, performing heightened due diligence, and taking other steps to ensure that affiliates and subsidiaries are complying with their obligations under OFAC’s sanctions regulations.

In the case at issue a company and its subsidiary have agreed to pay $227,500 to settle their potential civil liability for seven apparent violations of the Cuban Assets Control Regulations. The apparent violations occurred when the company’s Malaysian affiliates produced analytical reports, or sent employees to Cuba to present these reports, for oil exploration projects in Cuban territorial waters. According to OFAC, the subsidiary’s global director and technical director directed actions designed to cover up these actions.

The statutory maximum civil monetary penalty in this case is $455,000 and the base penalty amount is $227,500, OFAC states. Aggravating factors include that the two officials knowingly dealt with Cuban interests despite prior notification that doing so was unlawful, that dealings with Cuba were deliberately concealed on multiple occasions, that senior managers had actual knowledge of the violative conduct, and that the subsidiary had an ineffective compliance program and failed to adhere to the parent company’s sanctions compliance guidance.

Mitigating factors include the voluntary submission of information to OFAC and the implementation of remedial steps, including taking appropriate disciplinary actions against those involved, providing compliance training, implementing a new sanctions compliance program, developing a compliance audit process, and appointing a head of trade compliance.

For more information on U.S. sanctions and ways to ensure your company is in compliance, please contact Kristine Pirnia at (202) 730-4964.

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