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Here’s What Can Happen If You Violate U.S. OFAC Rules Pertaining To Cuba

In September 2016, Albert A. Fox Jr faced a $100,000 fine from U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for alleged violations of the U.S. embargo against Cuba during two trips to the island over recent years.

This January, the government settled the case against the pro-Cuba/anti-embargo Fox for $10,000.

el Nuevo Herald, reported that OFAC accused Fox, president of the Alliance for Responsible Cuba Policy Foundation, of illegal transactions tied to two trips to Cuba. The alleged prohibited transactions include providing unauthorized travel services to five members of the International Association of Drilling Contractors of Houston and engaging in unauthorized business activities, including meetings with Cuban government officials.

According to information released by the Treasury Department on its website, “OFAC concluded that the Alleged Violations were frequently undertaken while the Individual held himself out as an officer of the Alliance” and that “the alleged violations were not voluntarily self-disclosed to OFAC.”

Banking Industry

The banking industry’s most recent OFAC entanglement involves TD Bank’s dealings with several Cuban entities and with Cuban nationals living in Canada.

In transactions that began nearly a decade ago, TD Bank’s Global Trade Finance business, based in Montreal, Canada engaged in a series of trade finance transactions that generally involved import/export letters of credit for TD Bank’s Canadian customers that the bank failed to screen for any connection to an OFAC-sanctioned country or entity prior to processing related transactions through the U.S. financial system.

Up to and including 2011, TD Bank maintained several accounts for, and processed transactions to or through the U.S. on behalf of, a Canadian company owned by a Cuban company. TD Bank had reason to know about the customer’s connections to Cuba through the company’s ownership and business, as well as actual knowledge on the part of several TD Bank employees and business lines as early as 2005 and 2006. Between August 14, 2007 and April 22, 2011, TD Bank processed 29 transactions totaling $1,156,181.37 to or through the U.S.

TD Bank also maintained several accounts in Canada for a company that the bank described as “a freight, cargo and shipping business, based in Canada, that is, among other things, a transporter of oil and gas related equipment . . . [that ships its products] to destinations in the Middle East.” According to a document available to TD Bank, the customer was listed as a sales agent for an entity on OFAC’s List of Specially Designated Nationals and Blocked Persons and located in Iran. Between December 1, 2008 and March 28, 2012, TD Bank processed 39 transactions totaling $515,071.20 to or through the United States on behalf of this customer in apparent violation of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560.

Separately, TD Bank maintained accounts on behalf of 62 customers who were Cuban nationals residing in Canada. Between August 7, 2007 and January 24, 2011, TD Bank processed 99 transactions totaling $459,341.62 to or through the U.S. on behalf of these customers.

TD Bank has agreed to pay $516,105 to settle potential civil liability for 167 apparent violations of the Cuban Assets Control Regulations (CACR) and the Iranian Transactions  Sanctions Regulations (ITSR).

The Saga of Adem Arici

Before 2013, Adem Arici was one of the most successful players in the gourmet grocery business in New York. He was the co-founder and former co-owner of the chain of Amish and Zaytuna Markets that had locations in New York, New Jersey and Connecticut.

In 2011, Arici was charged with conspiracy to violate the Trading with the Enemy Act (TWEA) and witness tampering – the “enemy” in this case being Cuba.

RELATED: Cuba Travel Guide

Federal prosecutors alleged that Arici was attempting to invest in real estate in Cuba, where the U.S. has maintained a trade embargo since 1962 and tried to cover it up by instructing witnesses to lie to investigators.

In December 2013, Arici pled guilty and was sentenced to 5 years in prison for tax fraud.

The trade embargo with Cuba is enforced through various laws and regulations through TWEA and other related federal regulations. With only a few exceptions, TWEA prohibits all commercial transactions with Cuba or Cuban nationals unless allowed in advance by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC).

Cuba red car
Image by Cuba Journal

According to prosecutors, Arici and his lawyer and co-defendant, Marc E. Verzani, traveled to Cuba in September 2011. They were joined by an unnamed associate who claimed that the three businessmen attempted to engage in illegal activities, including Arici investing millions of dollars in Cuban real estate and businesses, joined them.

Arici, who has dual Turkish and U.S. citizenship, claimed that a Turkish group sent him to Cuba on a religious and a humanitarian mission and insisted that he could not have bought real estate in Cuba because of their law against foreign ownership of property.

In June 2013, Adem Arici pled guilty to one count of conspiracy to commit tax and fraud offenses, four counts of subscribing to false and fraudulent federal personal income tax returns, as well as one count of witness tampering in connection with a federal investigation of individuals engaging in prohibited transactions in which a Cuban national had an interest.

Verzani, his lawyer and co-defendant, pled guilty in October 2013 to making a false statement to US Customs for failing to include “Cuba” in the list of countries visited on the customs declaration form he submitted upon returning to the United States. He was sentenced to two years’ probation and was subsequently disbarred.

Here’s What Can Happen If You Violate U.S. OFAC Rules Pertaining To Cuba was last modified: March 21st, 2017 by Simons Chase