OFAC Enforcement Action: Amex Travel Related Services shows how it’s NOT done

The base penalty: $3,629,250

The final penalty: $5,226,120 – the first time Mr. Watchlist has ever seen the penalty be higher than the base.

The offense: Despite being warned, in writing, in 1995, Amex TRS issued over 14,000 tickets for travel between Cuba and third-party countries.

Here's the damning list of aggravating and mitigating General Factors:

(1) TRS demonstrated reckless disregard for the CACR, as evidenced by the apparent violationsoccurring subsequent to notice by the agency in 1995, the lack of oversight by U.S. managementof TRS’ foreign offices, and the continuing failure to implement effective mechanisms fordetecting Cuba travel bookings until late 2010, after having informed OFAC in OFAC’sinvestigation of TRS in 1995 and 1996 that it would do so;

(2) TRS’ U.S. management should have known that the conduct resulting in the apparentviolations would or might take place;

(3) the apparent violations caused significant harm to U.S. sanctions program objectivesregarding Cuba;

(4) TRS is one of the largest and most sophisticated travel service providers (TSPs) forauthorized Cuba travel;

(5) TRS has a significant sanctions history during the five years preceding these apparentviolations;

(6) at the time of the apparent violations, TRS’ compliance program was inadequate, given thenature of TRS’ operations, to detect and prevent Cuba travel bookings, particularly fromcountries that had adopted antidote measures;

(7) without authorization from OFAC, TRS continued to book travel to and from Cuba for manyof its corporate clients during a “wind-down period,” following its 2010 disclosure of theapparent violations to OFAC; therefore, TRS’ initial remedial response to the apparent violationswas inadequate;

(8) a substantial civil monetary penalty in this case is warranted to clearly communicate toparticipants in OFAC’s Cuba TSP program the seriousness with which OFAC takes compliancewith the CACR;

(9) TRS has not received a penalty notice or Finding of Violation from OFAC in the five yearspreceding the date of the transactions giving rise to the apparent violations;

(10) while TRS implemented a number of remedial measures in response to the apparentviolations, including measures to prevent unlicensed Cuba travel bookings, the mitigating effectof these remedial measures is diminished by TRS’ representations to OFAC in OFAC’s 1995 and1996 investigation of TRS that it would implement similar remedial measures, which TRSapparently never implemented;

(11) TRS provided substantial cooperation to OFAC by agreeing to toll the statute of limitationsin this case, by producing records and information to OFAC in a clear and organized fashion, bycooperating with OFAC’s requests for supplemental information, and by engaging in numerousconversations with OFAC regarding the transactional data; and

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

Link:

OFAC Enforcement Action

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