The Case
Key Holding, LLC, a U.S.-based logistics company, has agreed to pay a $608,825 settlement for apparent violations of the Cuban Assets Control Regulations committed by its Colombian subsidiary. The violations involved 36 freight shipments to Cuba, primarily foodstuffs and some machinery, which occurred because the U.S. parent failed to implement a compliance program after acquiring the subsidiary in 2021. OFAC highlighted several aggravating factors, specifically that the company failed to exercise due caution regarding the acquisition and that the subsidiary's staff were fully aware of the Cuba shipments. Furthermore, regulators emphasized that as an international freight forwarder, the company warranted a higher standard of care regarding sanctions compliance. The penalty was reduced from the statutory maximum because the company voluntarily self-disclosed the violations and cooperated with the investigation.
Compliance recommendations for business
Key Holding, LLC, a U.S.-based logistics company, has agreed to pay a $608,825 settlement for apparent violations of the Cuban Assets Control Regulations committed by its Colombian subsidiary. The violations involved 36 freight shipments to Cuba, primarily foodstuffs and some machinery, which occurred because the U.S. parent failed to implement a compliance program after acquiring the subsidiary in 2021. OFAC highlighted several aggravating factors, specifically that the company failed to exercise due caution regarding the acquisition and that the subsidiary's staff were fully aware of the Cuba shipments. Furthermore, regulators emphasized that as an international freight forwarder, the company warranted a higher standard of care regarding sanctions compliance. The penalty was reduced from the statutory maximum because the company voluntarily self-disclosed the violations and cooperated with the investigation.
Compliance recommendations for business
- Prioritize post-acquisition integration: You must ensure that newly acquired foreign subsidiaries are immediately made aware of and integrated into your sanctions compliance program, as they may become subject to U.S. jurisdiction upon acquisition.
- Understand foreign subsidiary liability: It is critical to remember that under the Cuban Assets Control Regulations, foreign entities owned or controlled by U.S. persons are directly prohibited from trading with Cuba.
- Implement document review protocols: Logistics companies should establish escalation systems to carefully review shipping documents, such as air waybills and bills of lading, to flag sanctioned destinations before processing.
- Train global staff on U.S. jurisdiction: You should provide targeted training to employees in foreign offices to ensure they understand how U.S. sanctions regulations apply to their specific daily operations.
- Adopt automated screening tools: Utilizing platforms that allow for automatic, continuous screening of shipments can help prevent human error and ensure compliance with complex export controls.
