AMEX reaches settlement with OFAC over credit card use in Cuba

American Express (‘AMEX’) has agreed a payment of $204,277 to the US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) to settle apparent violations of the Cuban Asset Control Regulations (‘CACR’) by its indirect subsidiary BCC Corporate SA (‘BCCC’), a Belgian-based credit card issuer (17 November).

Between 2009 and 2014, credit cards issued by BCCC to its corporate customers were used to make purchases in Cuba – or were used in a transaction involving Cuba – at a time when such use was prohibited by US economic sanctions. Although the company had both policies and procedures in place to match transactions against OFAC’s Specially Designated Nationals and Blocked Persons (‘SDN’) List, these failed to prevent the credit cards being used contrary to US regulations. In total, 1,818 transactions totaling $583,649.43 for over 100 distinct corporate customers were processed in or involving Cuba.

At the time, the processing of such transactions  by ‘any corporation, partnership, association, or other organization, wherever organized or doing business, that is owned or controlled by’ a US person was prohibited by the CACR. In January 2015, OFAC revised the CACR to allow US financial institutions to process transactions involving Cuba and for the cards to be used for certain travel to Cuba by US nationals and third-country nationals.

AMEX has agreed to pay $204,277 to settle potential civil liability. The total base penalty was $291,825. Mitigating factors were that AMEX voluntarily self-disclosed the apparent violations to OFAC; it took ‘swift and remedial action’ and it has not received a penalty notice in the five years leading up to the first transactions.

In a client briefing on the action, law firm Hunton & Williams warned:

‘OFAC will continue to bring actions against US persons who apparently violated the Cuban Assets Control Regulations, even if such actions have subsequently become generally licensed or otherwise permissible.’

OFAC’s enforcement notice can be found at

https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20171117_BCCC.pdf