OFAC Cuba Enforcement Strikes Again - And This Time, It Would have Been Legal?

Another day, another big-ticket Cuba embargo enforcement notice from OFAC, the Treasury Department’s Office of Foreign Assets Control. Or so it seems these days more than ever.

Several years ago, just how much time and money OFAC was spending on Cuba embargo enforcement, especially in comparison with its other responsibilities, caused quite a stir.  Back in 2004, Senate Finance Committee investigators (I was one of them) discovered that OFAC, an office of roughly 100 investigative personnel charged with sanctions programs enforcement and tracking terrorist funding networks, had dedicated 21 of those personnel or FTEs (fulltime equivalents) to Cuba sanctions, which all too often amounted to tracking down cigar aficionados buying Cuban cigars on the internet or fining the 74-year-old grandmother who went on a bike tour that she thought was legit but wasn’t. 

The numbers were shocking because that same office dedicated only two FTEs to tracking the funding networks of Osama bin Laden.  Numerous members of Congress on both sides of the aisle were outraged by what they saw as a gross misallocation of precious and mission critical resources.  The Committee continued asking questions, until finally OFAC just refused to tell.  Its staff, we were told, are all cross-trained and shifted so much that it was impossible to report and quantify what percent of resources were dedicated to various missions. 

In today’s fiscal climate then, perhaps it’s wise that OFAC seems to make every effort to catch the big fish too.  Those multi-million dollar fines and not so much taxpayer dollars, it could be argued, help pay for all the personnel enforcing the Cuba embargo.

The latest OFAC catch is the Vancouver, Washington malt company Great Western.  According to OFAC, Great Western made the mistake of “perform[ing] various back-office functions for the sales by a foreign affiliate of non-U.S. origin barley malt to Cuba.”  Though OFAC originally anticipated a nearly $6 million fine, the company ended up settling its case and paying just $1.3 million. Why?  It seems OFAC considered a number of mitigating factors in the case, including the fact that, “if the subject goods had been shipped from the United States, they would have been eligible for an OFAC license.”

Yes, apparently it’s possible to violate the embargo, even in relation to one of the very few exemptions to the embargo.