A Boston-based company (the "Company") settled potential civil liability on behalf of three of its current and former subsidiaries for alleged violations of the Cuban Assets Control Regulations ("CACR").
According to OFAC, the three companies accepted payments from a designated Cuban entity that is part of a joint venture between the Cuban government and a Canadian customer to whom each of the three companies provided goods and/or services. OFAC found that the companies received 289 payments directly from the designated Cuban entity for invoices that had been sent to the Company's Canadian customer. OFAC noted the long relationship among the three companies and their Canadian customer, and that the sanctions implications posed by dealings with the Canadian customer were never adequately addressed. OFAC also found that the sanctions screening software the companies used never alerted them to the Cuban firm.
OFAC stated that this enforcement action highlights the sanctions risk of (i) accepting payments from third parties (in this case, from the designated Cuban firm) and (ii) conducting transactions in foreign currency or at a foreign financial institution. OFAC emphasized the importance of conducting "appropriate due diligence on customers and other counter-parties when initiating and renewing customer relationships" (emphasis in original).
The Company settled the potential civil liability for $2,718,581, noting that the Company freely self-disclosed the alleged violations and that the "alleged violations constitute a non-egregious case."
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