The United States government imposed a fine of $608,825 on the company Key Holding, LLC, a global logistics firm based in Delaware, for violating embargo sanctions by facilitating 36 cargo shipments to Cuba between January 2022 and July 2023.
According to an official statement from the Office of Foreign Assets Control (OFAC), the violation occurred through its subsidiary in Colombia, Key Logistics Colombia S.A.S., which was acquired by the American parent company in December 2021.
During that period, the subsidiary managed shipments worth over 3 million dollars, sourced from suppliers in Colombia, Spain, China, and Panama, destined for various consignees in Cuba.
Out of the 36 shipments made, 33 contained food, which, if processed correctly, could have been exempt; however, they were not authorized by OFAC. The other three included machinery components for oil wells, towels, and electric forage grinders, some managed through Comercial Cupet S.A., a Cuban state entity specialized in energy sector imports.
Key Holding claimed to have been unaware of these operations until January 2024, when it was preparing to sell its company to another American firm. Both the parent company and its subsidiary lacked a sanctions compliance program, a failure that was crucial for the operations to be carried out without warning or regulation.
OFAC acknowledged that the company cooperated with the investigation, took responsibility, and implemented corrective measures, including the establishment of internal controls, mandatory training on sanctions, and automated monitoring tools for shipments.
However, it also considered as aggravating factors the lack of due diligence, the negative impact on the sanction policy against Cuba, and the fact that the staff in Colombia was indeed aware of the destination of the shipments.
This case is a clear warning for other companies: even businesses operating outside of U.S. territory can incur violations if they are under the control of a U.S. company.
The Department of the Treasury emphasizes the need to review contracts, destinations, certificates of origin, and shipping documents, especially when incorporating foreign subsidiaries.
Frequently Asked Questions about U.S. Sanctions on Companies for Shipments to Cuba
Why was Key Holding, LLC fined by the United States?
Key Holding, LLC was fined $608,825 for violating the Cuba embargo sanctions. The company facilitated 36 cargo shipments to Cuba without authorization from the Office of Foreign Assets Control (OFAC), through its subsidiary in Colombia, Key Logistics Colombia S.A.S.
What products were sent to Cuba by Key Holding?
Of the 36 shipments made by Key Holding, 33 contained food items, which, if processed correctly, could have been exempt from penalties. The other three shipments included components for oil well machinery, towels, and electric feed grinders.
What measures did Key Holding take after the fine imposed by the U.S.?
Key Holding implemented internal controls and mandatory training on sanctions. Additionally, it adopted automated shipping monitoring tools and cooperated with the OFAC investigation.
Why is the Key Holding case relevant for other companies?
The Key Holding case serves as a warning to other companies regarding compliance with U.S. sanctions. Even companies operating outside of U.S. territory can incur violations if they are under the control of a U.S. company, highlighting the importance of reviewing contracts and shipping documents.
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