Tung Tai Group Settles Potential Civil Liability for Alleged Violation of the Cuban Assets Control Regulations: Tung Tai Group ("Tung Tai"), San Jose, CA, has agreed to pay $43,875 to settle potential civil liability for an alleged violation of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (the "CACR"). The alleged violation by Tung Tai occurred on or about August 8, 2010, when it entered into contracts to buy and sell Cuban-origin scrap metal. This matter was not voluntarily disclosed to OFAC and the alleged violation constitutes a non-egregious case. The base penalty amount for the alleged violation was $65,000. The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: Tung Tai has no history of prior OFAC violations.
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TURBOFAC Commentary (259 words)
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.