BIOMIN America settles Cuba sanctions case

May 13, 2020
OFAC says matter has compliance lessons for companies

Overland Park, Kansas-based BIOMIN America has paid $257,862 to settle its potential civil liability for ‘apparent violations’ of US sanctions against Cuba.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which brought the action, says it ‘demonstrates the importance of US companies with a global presence maintaining appropriate sanctions compliance programs, particularly when dealing with foreign subsidiaries and affiliates.’

OFAC says in a related filing that BIOMIN America, an animal nutrition company, co-ordinated sales of agricultural commodities to a company in Cuba without authorization from the Treasury unit.

Specifically, the government says that from around July 11, 2012 until around September 29, 2017, BIOMIN America and its owned or controlled foreign entities engaged in a total of 30 sales of agricultural commodities produced outside the US to Alfarma in Cuba without OFAC authorization, resulting in 44 apparent violations of the Cuban Assets Control Regulations (CACR).

Under the structure at issue, BIOMIN America processed purchase orders from Alfarma on behalf of BIOMIN America’s foreign affiliates that would then fulfill the orders for Alfarma, according to OFAC. BIOMIN America co-ordinated and received commissions on these sales as executed by its foreign affiliates and, as a result, BIOMIN America and its owned or controlled foreign entities dealt in blocked property in apparent violation of the CACR, the government says.

According to OFAC, the US company could potentially have sought an existing general license under the CACR or applied for a specific license from the Treasury unit, provided the exports had been consistent with the Export Administration Regulations, but it failed to seek appropriate advice or otherwise take the steps necessary to authorize the transactions.

During the time in which the apparent violations occurred, BIOMIN America did not have an OFAC compliance program in place, the government says.

According to OFAC, the statutory maximum civil monetary penalty applicable in this matter is $2,149,230, but BIOMIN America voluntarily self-disclosed the apparent violations and they constitute a non-egregious case.

In assessing the penalty, OFAC says it took into account aggravating factors including that:

  • BIOMIN America was ‘reckless in its actions’ to develop, direct and execute a transaction structure to export its products to Cuba, as fulfilled by its owned or controlled foreign entities and a foreign affiliate, in a way that violated the CACR
  • The company’s management and the management of another of its owned or controlled foreign entities were aware of and involved in the development and execution of the transaction structure.

OFAC says it also took into account mitigating factors such as that:

  • BIOMIN America and its owned or controlled foreign entities’ transactions may have been eligible for authorization through an existing general license or a specific license
  • BIOMIN America and its owned or controlled foreign entities have not received a penalty notice or finding of violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations
  • The company, on behalf of itself and its owned or controlled foreign entities, engaged outside counsel and export control consultants to conduct comprehensive training for logistics, compliance and senior management on country-specific embargoes, denied-persons screening and export license requirements, among other things.
  • The company developed formal written policies and procedures to prevent sales to or for unauthorized destinations, parties or activities
  • The company provided information to OFAC in a clear, concise, timely and well-organized manner.

OFAC officials in the filing advise that companies can benefit from ‘seeking appropriate advice and guidance when contemplating business involving US sanctions programs rather than developing alternative methods through non-US companies in order to avoid prohibitions on US companies.’

A spokesperson for BIOMIN America and its parent company did not respond immediately to a request for comment.

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