On June 13, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with online travel services company, Expedia Group.
Between April 2011 and October 2014, OFAC determined that Expedia enabled 2,221 people, including Cuban nationals, to travel within, or to and from, Cuba. The U.S. government under former President Barrack Obama did not relax its sanctions on Cuba until 2016, which means that Expedia was in violation of Cuban Assets Control Regulations (CACR) sanctions at multiple points throughout this time.
Additionally, OFAC found that several of Expedia’s foreign subsidiaries failed to “exercise a minimal degree of caution” by violating the CACR multiple times over a three-plus year period. Deemed to be a “pattern… of conduct,” altogether OFAC found that Expedia’s repeated violations, and those of its subsidiaries, “harmed the sanctions program objectives of the Cuban Assets Control Regulations.”
The importance of self-disclosure, and cooperating with OFAC
Expedia received a fine of $325,406—a reduction from a base penalty of over $550,000. A reduction, in part, because Expedia voluntary self-disclosed their violations upon discovery, and cooperated with the investigation.
Additionally, once they discovered the violations, Expedia “implemented significant remedial measures to strengthen its U.S. economic sanctions compliance program throughout the Expedia corporate family, including domestic and foreign direct and indirect subsidiaries.”
Speaking of foreign subsidiaries
Export and OFAC violations arising from U.S. companies making acquisitions abroad are becoming increasingly common. In this specific case, Expedia failed to inform a new foreign subsidiary until approximately 15 months after the acquisitions that it was now subject to U.S. jurisdiction and law.
With more and more U.S. companies looking to grow by way of acquisition, OFAC cautions that “U.S. companies can mitigate risk by conducting sanctions-related due diligence both prior and subsequent to mergers and acquisitions, and taking appropriate steps to audit, monitor, train, and verify newly acquired subsidiaries for OFAC compliance.”
No organization is immune to the necessities of OFAC and export compliance
This case stands as a reminder, yet again, that OFAC is stepping up its enforcement efforts. It also highlights the importance of voluntary self-disclosure, as well as cooperation, should an organization ever find itself in violation of sanctions and OFAC compliance laws. Lastly, it underscores the importance of educating foreign subsidiaries about the dangers of non-compliance with OFAC, and Financial and export compliance regulations administered by additional U.S. and international regulatory bodies.