OFAC Enforcement Action against Decolar.com, Inc.

The company, whose HQ is in Buenos Aires, but who is incorporated in Delaware, was fined $2,809,800 on Tuesday for violations of the Cuban Asset Control Regulations, for providing air and hotel travel services to 17,836 persons between March 2009 and March 2012. The violations were voluntarily self-disclosed, and were apparently egregious violations, although the word does not appear in the settlement notice.

The base penalty was $4,460,000. You might think it would be a lot more, but the Cuban sanctions program has its own penalty schedule (Mr. Watchlist was unaware of this – sounds like fodder for a future post).

Here's how we get from $4,460,000 to 2,809,800 – on the aggravating factor side:

(1) Decolar demonstrated reckless disregard for U.S. sanctions requirements when it failed toascertain the U.S. sanctions requirements applicable to its business operations, relyinginstead upon a third party's oral assurances that Decolar's conduct did not require anOFAC license. With the exercise of appropriate due diligence, Decolar's seniormanagement reasonably should have been aware of the applicable prohibitions under theCACR. Based upon the number of apparent violations and the length of time over whichthey occurred, the apparent violations also appear to have resulted from a pattern orpractice of conduct;

(2) Decolar's senior management appears to have been aware that its foreign subsidiarieswere providing Cuba-related travel services to third-country nationals;

(3) The apparent violations resulted in significant harm to U.S. sanctions program objectivesregarding Cuba;

(4) Decolar, which has a large customer base and established operations in numerouscountries, is a sophisticated travel services provider; and

(5) Decolar had no OFAC risk-based compliance program at the time of the apparentviolations.

and on the mitigating factor side:

(1) The Cuba-related transactions appear to have been a very small portion of Decolar'soverall business;

(2) Decolar has not been the subject of any prior OFAC enforcement action in the five yearspreceding the earliest date of the transactions giving rise to the apparent violations;

(3) Upon discovering the apparent violations, Decolar immediately stopped offering anyCuba-related travel services to any of its customers. Decolar also recently adoptedOFAC compliance policies and procedures; and