Thursday, October 29, 2020

General Electric Settles $2.7 Million Fine for Violations of Cuba Sanctions Program


OFAC’s aggressive enforcement program continues to bear fruit.  The latest settlement involved General Electric and three of its subsidiaries, which agreed to pay $2.7 million for 289 alleged violations of the Cuba Sanctions Program.  (Copy of Settlement Notice Here).  So far this year, OFAC has settled 22 cases for a total of approximately $1.28 billion (Statistics Here).

Between 2010 and 2014, the GE companies accepted payment from The Cobalt Refinery Company (“Cobalt”) for goods and services provided to a Canadian customer of GE.  Cobalt has been listed as a Specially Designated National (“SDN”) since 1995.  General Electric’s Canadian customer had a long-standing relationship with the Cuban mining industry through various partnerships and joint ventures with the Cuban government.  Cobalt is one of three entities owned by a public joint venture between GE’s Canadian customer and the Cuban government.  Since 1996, the GE companies maintained and renewed on at least 18 occasions, this customer relationship despite the obvious sanctions risks.

In 2014, GE discovered that for at least four years, from 2010 to 2014, GE received numerous payments directly from Cobalt for invoices issued to GE’s Canadian customer.  GE contracted with the Canadian customer, sent all the invoices to the Canadian customer, Cobalt paid GE directly in more than 65 percent of the total transactions.

GE specifically approved Cobalt as a third-party payer and failed to recognize the significant and widely-published relationship between Cobalt and their Canadian customer.  OFAC also noted the GE companies did not conduct “sufficient diligence” into their customer’s activities.  The General Electric companies deposited all checks received from Cobalt into GE’s bank account at a Canadian financial institution.  The GE companies’ sanctions screening software never alerted on Cobalt’s name.

- Advertisement -

In total, the GE companies received 289 checks directly from Cobalt totaling approximately $8 million.  The GE companies provided to their Canadian customer goods and services which ultimately benefited Cobalt, which is co-located with GE’s Canadian customer.

Under the Sanctions Enforcement Guidelines, GE voluntarily disclosed the alleged violations, which constituted a non-egregious case.  The base civil monetary penalty was approximately $3.3 million.  The ultimate settlement amount reflected OFAC’s consideration of the General Factors under the Enforcement Guidelines.

OFAC identified the following aggravating factors:

  • The GE companies failed to take reasonable care with respect to their US economic sanctions violations, particularly given GE’s commercial sophistication;
  • The GE companies’ actions caused substantial harm to the objectives of the Cuba sanctions program by conducting a large volume of high-value transactions directly with a Cuban company;
  • GE’s disclosures created substantial uncertainty about the totality of the benefits conferred to a Cuban company on the SDN List, and GE’s disclosures were not made in a clear and organized manner and placed significant burdens on OFAC staff to review and understand the materials.

On the mitigating side of the equation, OFAC cited:

  • GE did not suffer any violations for the past five years;
  • GE identified the violations by testing and auditing its compliance program.  General Electric implemented remedial measures and new processes to enhance its sanctions compliance procedures, including the development of a training video using this case as an example.
  • GE cooperated with the OFAC investigation and agreed to several tolling extensions.
- Advertisement -

As noted by OFAC, the General Electric enforcement action underscores the risks to US companies from (1) accepting payments from third parties; and (2) conducting transactions in foreign currency at a foreign financial institution.  In addition, the GE enforcement action highlights the importance of conducting appropriate due diligence on customers and counter-parties when initiating and renewing customer relationships.

Source: General Electric Pays OFAC $2.7 Million for Violations of Cuba Sanctions Program 


Nigerian court declines to issue international arrest warrant for fugitive ex-Petroleum Minister in corruption case

The Abuja Division of the Federal High Court, on Wednesday, refused an application by the Economic and Financial Crimes Commission, EFCC, for an arrest...

South Korea’s former Vice Justice Minister sentenced to jail for bribery and sexual favors

Former Vice Justice Minister Kim Hak-eui, the figure at the center of one of Korea’s biggest political sex scandals, was placed under pretrial detention...

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World


Latest News

This Week

Australian court approves $920 million Westpac money laundering fine

The Federal Court of Australia has agreed on the deal struck between the Australian Transaction Reports and Analysis Centre (AUSTRAC) and Westpac, ordering the Australian...

Bribery trial of former San Angelo police chief Tim Vasquez delayed until 2021

The trial of former San Angelo police chief Tim Vasquez will not happen until 2021, according to court documents. The trial, originally set for...

Mid-Small financial institutions to benefit from Oracle’s Anti-money laundering protection

Oracle today announced new cloud services to help mid-sized banks combat money laundering and outsmart financial crime. Oracle Financial Crime and Compliance Management Cloud Service brings...

Operators of fake theology school accused of stealing $12 million in student aid

Six people from three states are charged with defrauding $12 million from federal student aid programs by allegedly enrolling students into a theology school...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks