May 6, 2020

Kansas animal nutrition company settles potential civil liability with OFAC

The Office of Foreign Assets Control of the US Department of the Treasury has entered into a $257,862 settlement with BIOMIN America, Inc., resolving the company’s potential civil liability for apparent violations of the Cuban Assets Control Regulations (CACR), 31 CFR part 515.  According to the settlement, on thirty occasions between 2012 and 2017, BIOMIN and related foreign entities sold agricultural commodities worth over $17 million to Alfarma S.A. in Cuba.  Authorization for these transactions was neither sought nor obtained from OFAC, resulting in forty-four apparent violations of CACR § 515.201.  As stated in the settlement, BIOMIN’s management employed a transaction structure that it incorrectly determined would satisfy US sanctions requirements:  the company coordinated sales by its foreign affiliates to Alfarma, processing the purchase orders and receiving commissions on the transactions.  At the time of the apparent violations, BIOMIN did not have an OFAC compliance program in place.

OFAC based its calculation of the appropriate civil monetary penalty on a reduced base penalty of $973,691, due to BIOMIN’s voluntary self-disclosure of the apparent violations.  OFAC found BIOMIN’s recklessness in the development of the transaction structure, the involvement of the company’s management, and the commercial sophistication of BIOMIN’s parent holding company, the ERBER Group, to be aggravating factors.  However, OFAC viewed as mitigating factors the company’s violation-free record for the five years precedent the apparent violations, the fact that the transactions at issue might have been eligible for authorization through a specific license or an existing general license, the company’s provision of information to OFAC in a clear, concise, timely and well-organized manner, BIOMIN’s willingness to execute a tolling agreement to extend the statute of limitations, and compliance measures developed and implemented by the company since the apparent violations.

OFAC press release | Dept of the Treasury enforcement release