US Company Fined for Illegal Exports to Cuba After Misinterpreting US Sanctions

The Treasury Department fined a Kansas animal nutrition company more than $250,000 for illegally exporting agricultural goods to Cuba, which violated U.S. sanctions, according to a May 6 notice. The company, BIOMIN America, completed 30 illegal sales to Cuba between 2012 and 2017 and did not have a sanctions compliance program, the Treasury's Office of Foreign Assets Control said. If BIOMIN had consulted with OFAC before the sales took place, the company may have received a license, the agency said.

While trying to sell agricultural goods to Cuba-based Alfarma S.A., BIOMIN’s managers “developed a transaction structure” they mistakenly believed would avoid U.S. sanctions, OFAC said. BIOMIN thought that U.S. sanctions only blocked it from directly exporting goods to Cuba, the notice said, and developed a plan to export foreign-produced goods to Cuba in a deal with Alfarma. BIOMIN processed purchase orders from Alfarma on behalf of BIOMIN’s foreign affiliates, receiving commission on each of the sales, OFAC said, which violated the Cuban Assets Control Regulations. The transactions totaled more than $17 million.

BIOMIN could have avoided sanctions violations if it had used an existing general license under the Cuban Assets Control Regulations or applied for a specific OFAC license, the agency said. But the company “failed to seek appropriate advice” and did not have a compliance program. Other aggravating factors included the fact that BIOMIN was “reckless in its actions” to sell to Cuba, the fact that its management knew about the transactions, and the fact that it is a subsidiary of ERBER Group, a “commercially sophisticated” company.

OFAC said mitigating factors included the fact that BIOMIN’s sales may have been eligible for a general license or a specific license, the fact that it had not committed a violation in the previous five years and the fact that it provided “clear, concise” and “timely” information to OFAC. BIOMIN also began “engaging” with export control consultants to implement compliance training for its management, including training on export control requirements, denied persons screening and country-specific embargoes. The company also created “formal written policies and procedures” to prevent future violations.

OFAC said the case underscores the importance of global companies maintaining a compliance program. It also shows that companies can “benefit from seeking appropriate advice and guidance” before doing business that may involve U.S. sanctions “rather than developing alternative methods through non-U.S. companies in order to avoid prohibitions on U.S. companies.”