By: Brooke Driver
One can only hope that Netherlands-based CWT B.V. learned its lesson when it was slapped with a nearly six million dollar penalty for violating the Cuban Assets Control Regulations. The supposed violations occurred between the dates of August 8, 2006 and November 28, 2012. During this period, the travel service provider CWT reportedly assisted no less than 44,430 people in travel to or from Cuba. As the company became majority-owned by U.S. persons in 2006, its actions became subject to U.S. law, and therefore, the Trading with the Enemy Act.
Although CWT did disclose the majority of these violations to OFAC, a small portion did take place after the voluntary disclosure. OFAC did not demand the base penalty of $11,093,500, but arrived at the still painful total of $5,990,490 based on the following factors:
- CWT failed to exercise a minimal degree of caution or care regarding its obligations to comply with OFAC sanctions against Cuba by processing unauthorized travel-related transactions for more than four years before recognizing that it was subject to U.S. jurisdiction
- CWT is a commercially sophisticated international corporation and travel services provider
- CWT processed a high volume of transactions and assisted a large number of travelers, which caused significant harm to the objectives of the CACR
- CWT had no compliance program at the time (or an inadequate one)
- This instance was CWT’s first violation
- CWT cooperated substantially with OFAC’s cooperation
- CWT has taken significant remedial actions in order to improve its OFAC compliance procedures
Lesson learned: company ownership is just as important in determining U.S. jurisdiction as location. You may run your operation across the world, but if it is owned by United States citizens, it is subject to United States law, and you will suffer the consequences if you don’t comply accordingly.