OFAC assesses penalty against chemical supply company for Cuba sanctions violations

The Office of Foreign Assets Control of the US Department of the Treasury has assessed a civil monetary penalty against AppliChem GmbH, a German supplier of chemicals for chemical, biological, pharmaceutical and clinical research, for 304 violations of Cuban Assets Control Regulation, 31 C.F.R. § 515.201.   Prior to its acquisition of AppliChem in January 2012, Illinois Tool Works, Inc. (ITW),  a US company based in Glenview, Illinois, warned AppliChem to cease all transactions involving Cuba.  Additional guidelines and warnings were sent to AppliChem after the acquisition, but when AppliChem continued to  process Cuban orders, ITW submitted a voluntary self-disclosure to OFAC in January 2013, and OFAC issued a cautionary letter in May 2016.  In January 2016 a whistleblower report triggered a full-blown investigation by ITW, which revealed that the AppliChem management used a code name instead of “Cuba,” and employed third parties to carry out the shipping of 304 orders to Cuba totalling approximately $3,433,495.  In assessing a civil monetary penalty of $5,512,564 against AppliChem, OFAC viewed as aggravating factors AppliChem’s willful conduct, its size and sophistication, and the persistent pattern of violations over a five-year period.  OFAC deemed  ITW’s  voluntary disclosure and cooperation, its thorough internal investigation, and its willingness to sign a tolling agreement, to be mitigating factors.

OFAC Enforcement Information