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German company penalized $5.5 million, Cuban sanction violations
German company penalized, Cuban sanction violations
The U.S. Treasury Department, Office of Foreign Assets Control (OFAC), today announced a civil penalty of approximately $5.5 million against a German company for violations of the Cuban Assets Control Regulations.
According to the OFAC release [PDF 17 KB], the German company violated the U.S. regulations between May 2012 and February 2016, when the company fulfilled Cuba orders of chemical reagents on 304 invoices.
The German company was acquired by a U.S. entity in January 2012. Prior to the acquisition, the U.S. company instructed the German entity that it would need to cease all transactions with Cuba. However, the German company continued to fulfill orders destined for Cuba. The U.S. company then discovered these transactions, and made a voluntary disclosure to the OFAC in January 2013. The OFAC issued a warning letter.
Later, the U.S. company discovered that despite its efforts, the German company had continued to engage in transactions with Cuba. The U.S. company voluntarily disclosed this to the OFAC, which found the violations constituted an egregious case.
The OFAC release notes that this situation demonstrates the importance of:
- Implementing risk-based controls, such as regular audits, to determine that subsidiaries are complying with their obligations under OFAC’s sanctions regulations
- Performing follow-up due diligence on acquisitions of foreign persons known to engage in historical transactions with sanctioned persons and jurisdictions
- Responding appropriately to information regarding the sanctions compliance efforts of foreign persons subject to the jurisdiction of the United States
For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:
Doug Zuvich |
John L. McLoughlin |
Andy Siciliano |
Luis (Lou) Abad |
Irina Vaysfeld |
Amie Ahanchian |
Robert Waldrop |
Gisele Belotto |
Christopher Young |
Andy Doornaert |
George Zaharatos |
Jessica Libby |
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