Stuck Between a Rock and an OFAC Place

Posted by at 9:40 pm on April 23, 2014
Category: Cuba SanctionsOFAC

Carlson Wagonlit US HQ via http://careers.carlsonwagonlit.com/jc/external/en/global/meetUs/Locations-Country-DetailPages/USA-Pages/USA_overview.html [Fair Use]Last week the Office of Foreign Assets Control announced that it whacked Carlson Wagonlit with a massive $5,990,490 fine for doing business in Europe as an American. Specifically, the massive fine was levied because Carlson was involved in arranging travel for Europeans to Cuba. Carlson became subject to U.S. sanctions on Cuba in 2006 when French hotel chain Accor sold its 50 percent stake in Carlson Wagonlit to Carlson and JPMorgan Chase, resulting in control of Carlson Wagonlit by U.S. companies.

In justifying the massive fine OFAC tut-tuts that Carlson Wagonlit was a sophisticated international company that processed Cuba travel for “four years before recognizing that it was subject to U.S. jurisdiction” and that it had either no compliance program or an “inadequate” one. Of course, OFAC omits from its chastisement of Carlson Wagonlit one significant fact: the 900-pound E.U. Council Regulation that made it illegal for Carlson Wagonlit to refuse to book travel to Cuba

In essence, and as I’ve said before, OFAC’s enforcement of the Cuba Sanctions against U.S. companies in Europe in these circumstances is tantamount to making it illegal for American companies to do business in Europe. This is particularly true for travel companies which simply cannot avoid being requested to book travel for Cuba. If the Company refuses, it violates E.U. law; if it complies, it violates U.S. laws. Sanctioned if you do; sanctioned if you don’t.


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Copyright © 2014 Clif Burns. All Rights Reserved.
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More like sanctioned if you do, theoretically sanctioned if you don’t? Is there any evidence that any foreign-incorporated business has ever paid a penny in fines in an EU blocking statute enforcement? I know of Austrian, UK and Norwegian examples, but no actual enforcement actions. My sense is that in reality EU companies have no problem getting their home authorities to agree to stand down on the blocking statutes in cases where OFAC would refuse to grant a license.

Comment by nora on April 23rd, 2014 @ 9:51 pm

The above comment from Nora is spot on: most sane Member State governments will not push to enforce regulation 2271 because it belongs to a byegone age. The EU and US regularly cooperate on sanctions where the US takes the same “extraterritorial” view as in the Cuba sanctions. Iran anyone?

While 2271 is still on the statute books, many companies have found ways of making it redundant, for example, citing US legislation not blocked under 2271 as justifying the ban, or in some cases, giving the Cuban sales territory to the US parent. The EU company tells the Cuban purchaser it has no contractual right to sell to it in Cuba, and guess what happens when the Cuban company approaches the US parent for supplies?

Comment by Newf2002 on April 24th, 2014 @ 3:57 am

One man’s sanction is another man’s boycott. And the EU has their own “anti-boycott laws” against the US boycott of Cuba.

Comment by Jim Dickeson on April 25th, 2014 @ 11:32 am