Cuba Shipments Snare Forwarder

Treasury’s Office of Foreign Assets Control (OFAC) announced a $608,825 settlement with Key Holding, LLC to resolve its potential civil liability for 36 apparent violations of the Cuban Assets Control Regulations (CACR), 31 C.F.R. part 515. The violations stemmed from the conduct of a Colombian subsidiary that managed logistics for freight shipments to Cuba between January 2022 and July 2023.

Key Holding, a privately held logistics company based in Delaware, acquired the Colombian entity—then known as Key Logistics Colombia S.A.S.—in December 2021. Following the acquisition, the subsidiary arranged 36 unlicensed shipments of goods valued at over $3 million to consignees in Cuba. The goods included foodstuffs, safety-related oil machinery components, towels, and electric forage choppers.

The violations were voluntarily self-disclosed and deemed non-egregious. OFAC determined that Key Holding became subject to U.S. sanctions jurisdiction upon acquiring the Colombian entity and that neither entity had implemented a sanctions compliance program at the time of the transactions.

Key Holding discovered the shipments in January 2024 during due diligence for a planned sale of the company and subsidiaries to JAS Worldwide.

It subsequently ceased all Cuba-related shipments, implemented a trade sanctions and export control policy on April 1, 2024, initiated company-wide sanctions training, and adopted an automated compliance screening system.

OFAC cited several aggravating factors, including failure to exercise appropriate caution following the acquisition, lack of awareness of the CACR’s extraterritorial application, and the potential undermining of the policy objective to isolate the Cuban government.

Mitigating factors included Key Holding’s clean sanctions record, cooperative posture, implementation of remedial measures, and the non-sensitive nature of most shipped goods.

The maximum applicable civil penalty in this matter was over $4 million. OFAC applied its enforcement guidelines, resulting in a reduced base penalty of $1.2 million and a final settlement amount of $608,825.

The case underscores OFAC’s guidance that U.S. persons must ensure newly acquired foreign subsidiaries comply with U.S. sanctions, even when operating abroad. The agency reiterated the importance of shipping document reviews, employee training, and comprehensive sanctions compliance frameworks.

For more information, please see the following Enforcement Release.