Hotelbeds USA, Inc. OFAC Settlement: $222.7K (2019)

Hotelbeds USA knowingly sold hotel accommodations and gave its clients specific instructions to direct their payments for the Cuba-related transactions to an account in Spain, from which Hotelbeds USA was subsequently reimbursed.

The conduct stemmed in part from a reported misunderstanding and misinterpretation of the CACR throughout Hotelbeds USA, in which personnel believed Hotelbeds USA could engage in Cuba-related transactions if the bookings involved only non-U.S. clients and payments were made to non-U.S. bank accounts. These same personnel were responsible for issuing invoices or sending emails that included disclaimers that payments for any Cuba-related services should not be sent to Hotelbeds USA or the United States, and for the process in which customers sent Cuba-related payments to Spain, with revenues from such payments subsequently credited to Hotelbeds USA. Various employees and supervisors appear to have had actual knowledge of, and participated in, this conduct.

During the period the apparent violations were occurring, Hotelbeds USA personnel, including a senior manager, were aware that a U.S. financial institution had blocked a payment related to a Cuba-travel transaction and that OFAC had denied a specific license application filed by Hotelbeds USA seeking the unblocking of funds related to an unauthorized Cuba-travel transaction. The specific license denial generally outlined the CACR prohibitions and specifically articulated the CACR prohibitions regarding Hotelbeds USA's specific license request.

OFAC determined that the apparent violations were not voluntarily self-disclosed and that the apparent violations occurred prior to agency notice. Under the Cuba Penalty Schedule, 68 Fed. Reg. 4429 (January 29, 2003), the base civil monetary penalty amount for the apparent violations is $353,500. The settlement amount of $222,705 reflects OFAC's consideration of aggravating and mitigating factors pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

This enforcement action highlights the importance for both U.S. companies and foreign parents of U.S. subsidiaries to evaluate, verify, and audit existing compliance measures. U.S. companies and foreign parents of U.S. subsidiaries are encouraged to implement evolving and dynamic sanctions compliance programs that are commensurate with their sanctions risk, particularly those operating in the Cuba travel industry. U.S. companies and foreign parents of U.S. subsidiaries engaging in Cuba travel-related transactions should take note of and respond accordingly to sanctions-related warning signs, such as payments that are blocked or rejected by financial institutions for compliance or economic and trade sanctions purposes.

This page summarizes an OFAC enforcement case based on the document archived below. SanctionsLookup assumes no liability for errors, omissions, or inaccuracies in the original documents, this summary, or any changes made to the source documents at any time.

Provided for informational purposes only and does not constitute legal or compliance advice. Always consult the source document directly rather than relying on this summary.