Yesterday the Office of Foreign Assets Control (“OFAC”) announced that it had imposed a $2,809,800 fine on Argentina-based Decolar.com, Inc. Decolar is an online travel agency and attracted the ire of OFAC for booking trips by non-U.S. persons to Cuba, trips for 17,836 people to be precise. This made OFAC very, very angry:
Decolar demonstrated reckless disregard for U.S. sanctions requirements when it failed to ascertain the U.S. sanctions requirements applicable to its business operations, relying instead upon a third party’s oral assurances that Decolar’s conduct did not require an OFAC license. With the exercise of appropriate due diligence, Decolar’s senior
management reasonably should have been aware of the applicable prohibitions under the CACR. Based upon the number of apparent violations and the length of time over which they occurred, the apparent violations also appear to have resulted from a pattern or practice of conduct
So, you’re no doubt wondering where OFAC gets the right to fine a company based in Argentina for violating the U.S. sanctions on Cuba. Simple. Even though the company was based in Argentina, it was incorporated in Delaware. This was probably the most expensive incorporation in Delaware ever.
One thing that is odd about the OFAC release is its coy reference to the “third party” that told Decolar that it had nothing to worry about. My guess, particularly due to OFAC’s reluctance to identify this party, is that it was likely a lawyer. Saying that relying on a lawyer is “reckless” is harsh, even by OFAC standards, but it seems that if this mysteriously anonymous third party had been, say, the company janitor, OFAC could not have resisted mentioning that. After all, that would indeed be reckless. And, of course, the company was even more reckless for not ignoring their legal counsel and doing the research themselves. You know, by looking at the Spanish version of the Cuba sanctions which OFAC keeps on its website. Oh wait, there isn’t a Spanish version.