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*important* - LEXOLOGY: OFAC fines American Express $5 million for doing business in Europe

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  • Walter Lippmann
    LEXOLOGY OFAC fines American Express $5 million for doing business in Europe Bryan Cave LLP Robert Clifton Burns Cuba, USA July 23 2013 Bryan Cave LLP logo
    Message 1 of 1 , Jul 30, 2013
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      LEXOLOGY
      OFAC fines American Express $5 million for doing business in Europe

      Bryan Cave LLP
      Robert Clifton Burns
      Cuba, USA
      July 23 2013
      Bryan Cave LLP logo

      According to an announcement released yesterday by the Office of Foreign Assets Control (“OFAC”), the agency fined American Express $5,226,120 because Amex’s overseas offices booked travel to and from Cuba. OFAC justified the size of the fine with a litany of aggravating factors such as (1) reckless disregard for the Cuba sanctions regulations, (2) knowledge by the company that the Cuba transactions “would or might take place,” and (3) OFAC’s provision of a notice in 1995 to Amex that the bookings were a violation of the Cuba sanctions.

      What is most interesting is OFAC’s reference to, and treatment of, legislation passed by the European Union to prohibit companies doing business in Europe from complying with the U.S. sanctions on Cuba, legislation which OFAC oddly and uniquely calls “antidote” legislation. (Everyone else in the world calls it “blocking” legislation.) OFAC notes that “many” of the offending bookings occurred in countries with “antidote” legislation, presumably a reference to Council Regulation (EC) No 2271/96 of 22 November 1996 which prohibits companies in the E.U. from complying with the Cuba sanctions.

      Now, in that light, consider aggravating factor 6 cited by OFAC:

      [A]t the time of the apparent violations, TRS’ [American Express's] compliance program was inadequate, given the nature of TRS’ [sic] operations, to detect and prevent Cuba travel bookings, particularly from countries that had adopted antidote measures …

      Well, duh, if you’ll forgive my lapse into the vernacular. Of course, it was going to be difficult to comply with the Cuba sanctions where doing so would be illegal. There really is no way to interpret this other than as a statement by OFAC that having offices in Europe is inconsistent with complying with OFAC sanctions and that the only way to have an adequate compliance program is simply to stop doing business in Europe.

      But the humdinger of regulatory cluelessness has to be factor number 12.

      OFAC also considered as a relevant factor the legal obligations placed on TRS by U.S. law and antidote measures adopted by many of the jurisdictions in which TRS’ foreign branch offices and subsidiaries operate, but, given the facts and circumstances of this case, did not assign any mitigating or aggravating weight to this factor under the Guidelines

      Say what? Leaving aside the utter inanity of suggesting for even a moment that E.U. blocking legislation might be an “aggravating” factor in this world or any conceivable alternate universe, it is inconceivable that OFAC can blithely say that blocking legislation was completely irrelevant in its consideration of the case, unless of course you assume that the United States rules the world and the laws of other countries are immaterial and ineffective urgings of foreign vassal states. Or the factor might be irrelevant if OFAC’s real position is that the United States must stop doing business in Europe, Canada and other countries with blocking legislation.


      =========================================
      WALTER LIPPMANN
      Los Angeles, California
      Editor-in-Chief, CubaNews
      http://groups.yahoo.com/group/CubaNews/
      "Cuba - Un Paraíso bajo el bloqueo"
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