Civil Enforcement Information - Tung Tai Group

Date issued: Jan. 22 2013

TURBOFAC Commentary (255 words)

Notes:

1) It is not clear whether the contract was actually with a Cuban counterparty or a person acting on a Cuban person's behalf, or whether it was for the purchase of Cuban-origin scrap metal located in a third country. If a Cuban was a party to the contract, the legal basis for the violation is fairly straightforward, as a blocked person has an "interest" in all contracts to which it is a party, and entering into such contracts constitute a dealing in property in which a blocked person has an interest.

If, however, the contract was for the purchase of Cuban-origin scrap mental located in and owned by a non-sanctioned person, the legal basis for the violation becomes less clear. Dealings in Cuban origin products are prohibited by 515.204. It is not clear whether OFAC would consider Cuba itself of have had an “interest” in the contract, in violation of 515.201(a), or whether it considered entering into the contract to rise to the level of an attempt to violate 515.204. If there was no Cuban party to the contract, this would be the first—and from 2006 through at least 12/2020 only—time that an enforcement action was based solely on the entering into a contract when a sanctioned party was not a direct or indirect counterparty to the transaction.

Refer to General Note and Associated Scenario Matrix re: the Legal Status of Discussions, Negotiations, Contracts and other Pre-transactional Activities (System Ed. Note) for further discussion on this issue.