The United States Department of Treasury Office of Foreign Assets Control (“OFAC”) released its monthly list of civil penalties last Friday, May 29. Really no suprises here folks. Three penalities were dished out: two for violations of the Cuban Embargo Program and one for violation of the Sudanese Sanctions Regulations.

The largest penalty was levied against Liberty International Holdings, Inc., for underwriting policies that insured Cuban business risks. OFAC imposed a civil penalty against Liberty in the amount of $35,211.75.

Volvo Construction Equipment North America, Inc. was also penalized by OFAC in the amount of $33,000.00. Volvo Construction Equipment North America, (yes, they are a subsidiary of auto manufacturer Volvo), is alleged to have facilited the export of motor graders to Sudan from Dubai and effected the transfer of funds in relation to this exportation. What was more interesting is that Volvo did not voluntarily disclose these transactions to OFAC. This is surprising in that when these bigger corporations get hit with OFAC penalities its usually as a result of their voluntary reporting of violations. Furthermore, I’m shocked that the penalty wasn’t greater due to lack of voluntarily disclosure.

It is amazing to me how companies or subsidaries of companies as big as Volvo are still able to find themselves on the wrong side of U.S. sanctions regulations. Now I’m sure Volvo has some excellent, high priced lawyers, most likely right here in Washington at some local mega firm, working for them. Maybe this was just a slip up and someone made a mistake when Volvo’s counsel was performing due diligence on the deal that allowed for these transactions to take place. Or maybe there is still not enough understanding and concern about these regulations. Either way, the word should be out by now, particularly if you are engaged in business with Cuba: if you violate the sanctions regulations, OFAC will penalize you. Which brings me to my next point/question/comment.

Every month when the civil penalties information is released I see the same thing: penalties for violations of the Cuban Embargo Program. Typically most of the penalties imposed are for these violations. What should that tell us?

How about, that after nearly 50 years of embargoes and sanctions, individuals and companies in the U.S. are still trying to do business with Cuba. This means that sanctions against Cuba have failed. Period. The Castros are still in power, the communist regime has not been toppled, and quite frankly U.S. persons are willing to risk getting hit with penalties to do business with or in Cuba. Therefore, that leads me to believe it must still be profitable to do so. I doubt at this point people in the U.S. do not know that there is an embargo against Cuban. My guess is that after 50 years it must be pretty well documented. If you have read this blog then you know what I’m going to say……it is time for OFAC to re-examine their regulations and policies.