The Treasury Department’s Office of Foreign Assets Control reports that a U.S. global logistics company has agreed to pay $608,825 to settle its potential civil liability for apparent violations of OFAC sanctions on Cuba.
OFAC states that between January 2022 and July 2023 the company’s Colombian subsidiary managed the logistics for 36 freight shipments to Cuba from suppliers in Colombia, Spain, China, and Panama. Most of these shipments consisted of foodstuffs that were not eligible to be licensed by OFAC, while the rest were for safety-related oil well machinery components, towels, and electric forage choppers.
According to OFAC, the statutory maximum civil monetary penalty applicable in this matter is $4.0 million and the base penalty is $1.2 million. Aggravating factors included the companies’ failure to exercise due caution or care for their sanctions compliance obligations, the subsidiary’s staff’s awareness of the shipments and related transactions when they occurred, and the fact that the parent company’s business as an international freight forwarder warranted extra care and attention to U.S. sanctions. OFAC also notes that neither the parent company nor the subsidiary had sanctions compliance programs in place when the shipments occurred.
Mitigating factors included the companies’ clean penalty history, the fact that the vast majority of the shipments were of benign consumer products, and the remedial measures taken by the parent company upon discovering the apparent violations when it was conducting due diligence for its pending sale (including its subsidiaries) to another U.S. company. These measures included issuing the company’s first trade sanctions and export control compliance policy, implementing mandatory company-wide sanctions training, and adopting the use of a platform that allowed for automatic continuous screening of each shipment for compliance with U.S. sanctions and export controls.
OFAC states that this case highlights the importance of ensuring that newly-acquired subsidiaries, including entities organized outside the U.S., are aware of and comply with their obligations under the Cuban Assets Control Regulations. Because the CACR extend to entities owned or controlled by U.S. persons such as foreign subsidiaries, their business activity, including as related to exports from third countries, may nonetheless be subject to U.S. jurisdiction.
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