April 24, 2022

OFAC settles with two US companies to resolve alleged violations of Cuba Assets Control Regulations

On April 21, 2022, the US Department of the Treasury’s Office of Foreign Assets Control announced two settlements that it reached with US-based companies to resolve apparent violations of the Cuban Assets Control Regulations (CACR), 31 CFR part 515, in connection with purchases of explosives or related accessories for mining operations, between 2016 and 2017, from Unión Latinoamericana de Explosivos (ULAEX), a Cuban entity.  The CACR generally prohibits dealings in Cuban-origin goods by a person subject to the jurisdiction of the United States, including wholly owned subsidiaries of a US-based companies.

OFAC reports that Newmont Corporation, a multinational mining company based in Colorado, agreed to pay $141,442 to settle potential civil liability for a purchase of Cuban-origin explosives and related accessories by its subsidiary Newmont Suriname f/k/a Surigold during the period in question.  After entering a “Mineral Agreement” with the Government of Suriname in 2013, Newmont, through its wholly owned subsidiary Newmont Suriname, accepted a bid to work with a Suriname-based distributor affiliated with a third-party US corporation in order to obtain mining explosives and related supplies.  After its first transaction with the distributor in 2016 clearly identified that the goods were provided by ULAEX and were sourced from Cuba, Newmont and Newmont Suriname received assurances that Cuban origin products would not be used to fill their orders.  However, the distributor continued to fill two subsequent orders from ULAEX without Newmont’s awareness.  OFAC reports that the unlawful shipments were attributed, at least in part, to one employee’s failure to understand the implications of dealing in Cuban origin products.  According to OFAC, a Newmont Suriname employee involved in the first transaction with the distributor had not attended US export and trade sanctions training provided by Newmont and did not realize that, because its parent company was a person subject to the jurisdiction of the United States, it was subject to the provisions in the CACR.  OFAC arrived at the $141,442 settlement amount after determining that Newmont’s/Newmont Suriname’s conduct was non-egregious and voluntarily self-disclosed.

OFAC also reports that it reached a similar $45,908 settlement with Florida-based Chisu International Corporation, a company affiliated with a third-party Suriname-based distributor of explosives and related accessories, to settle potential civil liability for the purchase of Cuban origin explosives on four occasions.  OFAC reports that Chisu and its affiliates in Suriname and Panama procured explosives and related supplies from ULAEX on behalf of an unnamed US company for a mining project located in Suriname. While the explosives were procured from ULAEX through a non-US person manufacturer/distributor of explosives, the bill of lading clearly identified ULAEX as exporting the goods, while the importation permit indicated that the goods were sourced from Cuba.  Chisu’s US client eventually discovered in 2018 that the explosives had been sourced from Cuba and, at that time, informed Chisu of the problem and sought assurances that the company would no longer procure goods from Cuba.  According to OFAC, the apparent violations primarily occurred because Chisu was a small company with no compliance program in place and was mostly managed by a single individual who was not aware that indirect dealings in Cuban-origin goods were prohibited by the CACR. OFAC ultimately arrived at the $45,908 settlement amount after determining that, while the conduct was not voluntarily self-disclosed, Chisu’s conduct was non-egregious in nature.

Department of Treasury Press Release | OFAC Enforcement Release (Newmont) | OFAC Enforcement Release (Chisu)