Key Holding, LLC, a Delaware-based privately held global logistics company, must pay a $608,825 fine after reaching an agreement with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) for potential civil liability for violations of sanctions imposed on Cuba.
Between January 2022 and July 2023, the company’s Colombian subsidiary — then known as Key Logistics Colombia S.A.S. — coordinated 36 cargo shipments to Cuba, valued at over $3 million, from suppliers in Colombia, Spain, China, and Panama.
Although most of the shipments consisted of food, OFAC determined that 33 of them did not meet the requirements for authorization under its regulations.
Three others contained oil machinery components, towels and electric forage harvesters, with some of the material destined for Comercial Cupet S.A., according to a document published July 3 by OFAC.
Lack of compliance controls
When Key Holding, LLC acquired Key Colombia in December 2021, it did not have an OFAC sanctions compliance program, nor had the parent company implemented one covering its international subsidiaries.
As a result, neither the management at the U.S. headquarters nor the management in Colombia were aware that logistics operations with Cuba were subject to the Cuban Assets Control Regulations (CACR).
Related Posts
The situation came to light in January 2024, when Key Holding U.S. was conducting a compliance review as part of a potential sale of the company to another U.S. company. It was then that they voluntarily notified OFAC.
OFAC and fine for violating Cuba blockade
After the violations were discovered, Key Holding immediately halted shipments to Cuba and began taking steps to strengthen its compliance system.
On April 1, 2024, they issued their first formal trade and sanctions compliance policy, which now covers all of their subsidiaries.
Shortly after, on April 16, mandatory sanctions training for all personnel began, and in July, Key Colombia integrated a platform for automatic monitoring of sanctions and export control compliance for each shipment.
OFAC emphasized that this case highlights the critical importance of ensuring that foreign subsidiaries of U.S. companies are fully informed of their obligations, regardless of where they are registered or where they operate.
Authorities recommend that companies implement document review protocols and internal escalation mechanisms in the face of legal doubts.
Thus, the document indicates that companies must undergo ongoing training to avoid these types of situations which, although unintentional, can lead to costly economic sanctions and reputational damage, resulting from the extraterritorial nature of the blockade/embargo against Cuba.
• Full document published by OFAC in PDF format.
