American Express Travel OFAC Settlement: $5.2M (2013)

From December 15, 2005 through November 1, 2011, TRS' foreign branch offices and subsidiaries issued 14,487 tickets for travel between Cuba and countries other than the United States without authorization from OFAC, constituting dealing in property in which Cuba or its nationals had an interest in apparent violation of the CACR. Many of the countries in which TRS operated had adopted "antidote" measures (blocking statutes) prohibiting compliance with the CACR.

OFAC determined that the apparent violations occurred "subsequent to agency notice" in 1995. TRS had been investigated by OFAC in 1995 and 1996 for similar apparent violations arising from the provision of travel services to and from Cuba by a recently acquired subsidiary, and OFAC provided written notice to TRS that such conduct constituted apparent violations of the CACR. Despite that notice, TRS failed to implement effective mechanisms for detecting Cuba travel bookings until late 2010. After disclosing the apparent violations to OFAC in 2010, TRS continued without authorization to book travel to and from Cuba for many of its corporate clients during a "wind-down period," rendering its initial remedial response inadequate.

TRS voluntarily self-disclosed this matter to OFAC. Under the Cuba Penalty Schedule, 68 Fed. Reg. 4429 (Jan. 29, 2003), the base penalty for the apparent violations is $3,629,250. The settlement amount of $5,226,120 reflects OFAC's consideration of the General Factors under the Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, App. A. The amount exceeds the base penalty, primarily due to TRS' reckless disregard for the CACR, evidenced by the violations occurring after OFAC's 1995 notice, lack of U.S. management oversight of TRS' foreign offices, and TRS' significant sanctions history during the five years preceding the apparent violations, as well as significant harm caused to U.S. sanctions program objectives and the inadequate initial remedial response. Mitigating weight was given to voluntary self-disclosure, TRS' substantial cooperation (including tolling the statute of limitations, producing records in a clear and organized fashion, and engaging with OFAC on transactional data), and remedial measures implemented following the apparent violations; however, the mitigating effect of those remedial measures was diminished by TRS' representations to OFAC in its 1995 and 1996 investigation that it would implement similar measures, which it apparently never implemented. OFAC also considered TRS' legal obligations under antidote measures adopted by the jurisdictions in which its foreign offices and subsidiaries operate but did not assign any mitigating or aggravating weight to that factor.

TRS' compliance program was inadequate, given the nature of its operations, to detect and prevent Cuba travel bookings, particularly from countries that had adopted antidote measures. U.S. management failed to provide adequate oversight of TRS' foreign offices, and TRS' U.S. management should have known that the conduct resulting in the apparent violations would or might take place. After disclosing the apparent violations to OFAC in 2010, TRS continued booking unauthorized Cuba travel for corporate clients during a "wind-down period," illustrating that remedial responses to disclosed violations must be immediate and complete. The mitigating weight of remedial measures is diminished when an entity previously represented to OFAC that it would implement similar measures and failed to follow through. OFAC stated that a substantial civil monetary penalty in this case was warranted to clearly communicate to participants in its Cuba TSP program the seriousness with which OFAC takes compliance with the CACR.

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