Sanctions Round Up First Quarter 2022

Shearman & Sterling LLP

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14 ENFORCEMENT ACTIONS On January 3, OFAC announced a settlement with Airbnb Payments, Inc., a wholly owned subsidiary of Airbnb, Inc., to resolve its potential civil liability arising from nearly 7,000 apparent violations of the Cuban Assets Control Regulations. Specifically, between September 28, 2015 and March 1, 2020, OFAC determined that Airbnb Payments processed payments related to 3,464 "stays" (i.e., traveler lodging provided by Airbnb) and 3,076 "experiences" (i.e., traveler activities provided by Airbnb) in Cuba for guests traveling for reasons not permitted under the US government's authorized categories of travel. Airbnb Payments also processed payments related to forty-four confirmed transactions involving non-US persons engaging in Cuba-related travel prior to the issuance of a specific license from OFAC. OFAC specifically noted these violations occurred because Airbnb launched its services in Cuba without fully understanding the complex sanctions landscape. The company opened its platform for Cuba-related travel following the Obama administration's relaxation of travel restrictions. Airbnb Payments, however, did not upgrade its internal controls and recordkeeping systems to manage sanctions risks. OFAC noted that it was these deficient screening procedures, which Airbnb Payments proactively sought to fix upon its discovery of their flaws, that caused the apparent violations. In determining the penalty amount of $91,172.29, OFAC determined the apparent violations were non-egregious and voluntarily self- disclosed. On January 11, OFAC announced a settlement with Sojitz (Hong Kong) Limited over its potential civil liability arising from sixty apparent violations of the Iranian Transactions and Sanctions Regulations. Specifically, between August 2016 and May 2018, certain Sojitz HK employees caused the non-US company to purchase approximately 64,000 tons of Iranian-origin, high density polyethylene resin from a supplier in Thailand. In connection with those purchases, Sojitz HK made sixty separate US dollar payments from its Hong Kong bank to the Thai supplier's banks, transferring $75,603,411 through multiple US correspondent banks. OFAC noted that the employees who executed the payments acted contrary to company-wide policies by failing to identify the payments as being subject to US sanctions and omitting the country-of-origin information on transactional documents. OFAC found the noncompliant employees' behavior to be an aggravating factor in light of Sojitz HK's status as a "sophisticated offshore trading and cross-border trade financing company." Ultimately, in determining the penalty amount of $5,228,298, OFAC noted that the violations were non-egregious and voluntarily self-disclosed.

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