June 13, 2019-Just a week after the U.S. government announced tougher restrictions on traveling to Cuba, the U.S. Treasury Department announced it reached settlement agreements with internet-travel firm Expedia and Hotbeds USA for apparent violations of the U.S. Cuban Assets Control Regulations.
The two actions, which relate to separate areas of the U.S. sanctions law, demonstrate the new emphasis in the United States on tightening and enforcing sanctions against Cuba.
Enforcement Targets Travel Agencies
Today, the U.S. Treasury ‘s Office of Foreign Assets Control announced settlement agreements with travel groups Expedia and Hotelbeds USA for assisting Americans for unauthorized Cuba-related travel.
Headquartered in Bellevue, Washington, the Expedia Group agreed to pay $325,406 for assisting 2,221 people, including some Cuban nationals, for Cuban-related travel between 2011 and 2014.
Meanwhile, Florida-based Hotbeds USA agreed to pay $222,705 to avoid a potential civil liability for providing Cuba-related travel services to 703 non-U.S. persons between 2011 and 2014. The company is a subsidiary of Hotbeds Group headquarted in Mallorca, Spain. According to a Treasury document, the company facilitated payments for hotel accommodations by transferring the payments through Spain.
Cuban-related travel is defined as “travel within Cuba or between Cuba and locations outside the United States.”
Joint Ventures and Foreign Subsidiaries
The Expedia case highlights the risk companies encounter in violating U.S. sanctions law when they purchase or merge with foreign subsidiaries.
According to Treasury, employees in Expedia’s headquarters overlooked transactions its foreign subsidiaries booked that may have violated U.S. sanctions laws.
“Foreign acquisitions can pose unique sanctions risks, to which a U.S. person parent company should be alert at all stages of its relationship with the subsidiary,” the Treasury Department said.
Strategic Shift
Last week, the U.S. announced new travel restrictions that target cruise lines.
“This Administration has made a strategic decision to reverse the loosening of sanctions and other restrictions on the Cuban regime,” Treasury Secretary Steven Mnuchin said last week. “These actions will help to keep U.S. dollars out of the hands of Cuban military, intelligence and security services.”
Sources and Background
The law this news relates to is the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR).
For more information, see the U.S. Treasury Department’s release about the settlement agreements.
