Airbnb, a flagship of US engagement with Cuba, fined for ‘apparent’ embargo violations
Nora Gámez Torres Miami Herald (TNS) Jan 3, 2022
Once the symbol of U.S. economic engagement with Cuba under the Obama administration, vacation rental company Airbnb has been fined by the Treasury Department for apparent violations of the U.S. embargo, the Office of Foreign Assets Control said Monday.
OFAC said in a statement that the company agreed to pay $91,172.29 to settle “its potential civil liability for apparent violations of sanctions against Cuba.” The violations included accepting reservations from guests traveling to the island outside the current 12 authorized categories and failing to keep certain records.
Currently, Americans can travel to Cuba under 12 authorized categories, including family visits, educational and religious activities, some athletic competitions, support for the Cuban people and humanitarian projects. Traveling for other professional activities such as journalism or research is also authorized.
The fine amount was lowered from a maximum of $600,000 because Airbnb disclosed the potential violations and cooperated with OFAC, the agency said.
“Airbnb operates in more than 220 countries and regions around the world and we take sanctions compliance very seriously,” Airbnb spokesperson Christopher Nulty said. “We are pleased to have reached this agreement with OFAC.”
But OFAC’s enforcement action is also a reminder of how much U.S. policy toward Cuba has changed in the past six years. After a short opening period under Obama, President Donald Trump hit the Cuban government with a flurry of new sanctions and many of the changes to the embargo regulations made by his predecessor were reversed. So far, little has changed under President Joe Biden, who has repeatedly criticized the Cuban government for its crackdown on dissidents and anti-government protesters.
Back in 2016, Airbnb’s president and co-founder, Brian Chesky, traveled to Cuba as a member of Obama’s delegation. The company had started doing business in Cuba the previous year, and it was the flagship for the new U.S. policy of engagement and support to Cuban entrepreneurs. In 2019, Airbnb reported 36,400 listings in Cuba, according to the U.S.-Cuba Trade and Economic Council.
The Obama administration also touted Airbnb’s success in Cuba to encourage American companies to do business with the island.
But in its Monday news release, OFAC took the opposite view, stating Airbnb’s apparent violations of the embargo “undermined” U.S. foreign policy toward Cuba. It also warned American companies from doing business with sanctioned countries.
“This action highlights the risks associated with entering new commercial markets, particularly one that has elevated sanctions risks such as Cuba, without fully anticipating the complexities of legally operating in a U.S.-sanctioned jurisdiction and fully implementing appropriate sanctions compliance controls,” OFAC said.
OFAC said after Airbnb started doing business in Cuba, the scaling up of its services “outpaced the company’s ability to manage the associated sanctions risks via its technology platforms.”
According to the release, Airbnb has put in place new “sanctions compliance” measures to prevent residents in Cuba from using the platform as guests and a screening process to ensure Cuban hosts are not government officials or communist Party members, among other steps.
Airbnb received criticism after reports that Vilma Rodríguez, Raúl Castro’s granddaughter, was renting a mansion through the company’s platform.
https://www.bakersfield.com/ap/news/airbnb-a-flagship-of-us-engagement-with-cuba-fined-for-apparent-embargo-violations/article_d4aa8f7f-9f69-5508-bca8-54d42a608ca0.html
Airbnb subsidiary to remit $91K for Cuba sanctions violations
By Jaclyn JaegerTue, Jan 4, 2022 1:43 PM
Airbnb Payments, a registered money services business and wholly owned subsidiary of Airbnb, will remit $91,172.29 for apparent violations of sanctions against Cuba, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced Monday.
The agency said the settlement amount, reduced from a base of $364,689, reflected its determination that the apparent violations were voluntarily self-disclosed and non-egregious.
The apparent violations were discovered after Airbnb Payments proactively initiated a comprehensive review of its sanctions compliance program, OFAC stated in its enforcement release. The company conducted a forensic review “based on an approved and statistically significant sampling” of traveler stays and experiences related to Cuba.
The sampling review determined Airbnb Payments between September 2015 and March 2020 processed payments “related to 3,464 extrapolated stays transactions in Cuba by Airbnb ‘guests’ traveling for reasons outside of OFAC’s 12 authorized categories,” the agency stated. Airbnb Payments also processed payments related to 3,076 extrapolated experiences transactions without keeping proper records in accordance with OFAC regulations.
Another 44 transactions were processed involving non-U.S. persons engaging in Cuba travel transactions on Airbnb’s platform prior to OFAC issuing a license to the company to engage in such conduct, the agency added, an apparent violation of the Cuban Assets Control Regulations.
Remedial efforts: “Airbnb Payments … voluntarily reported to OFAC the results of its review and lookback and implemented subsequent remedial measures designed to strengthen its sanctions compliance program and prevent recurrences,” OFAC stated. “Additionally, throughout its engagement with OFAC, Airbnb Payments fully cooperated with OFAC, including by responding to multiple requests for information and agreeing to toll the statute of limitations.”
Compliance lessons: The apparent violations occurred primarily because Airbnb launched its Cuba business in 2015 “without fully addressing the complexities of operating a Cuba-related sanctions compliance program for internet-based travel services,” according to OFAC.
Specifically, “[T]he scaling up of its services in Cuba appears to have outpaced the company’s ability to manage the associated sanctions risks via its technology platforms, leading to some of the apparent violations,” OFAC stated.
Similarly, the record-keeping violations related to guest experience transactions were “primarily due to technical defects involving an older version of the Airbnb mobile application that remained operational for Cuba-related travel,” OFAC added. “The older version of the application did not maintain complete functionality for guests to make an attestation regarding their reason for travel to Cuba.”
As part of its remediation, Airbnb Payments has agreed to implement additional sanctions compliance control improvements, including:
“This action highlights the risks associated with entering new commercial markets, particularly one that has elevated sanctions risks such as Cuba, without fully anticipating the complexities of legally operating in a U.S.-sanctioned jurisdiction and fully implementing appropriate sanctions compliance controls,” OFAC warned. “A failure to fully implement appropriate risk-based sanctions compliance measures into a company’s infrastructure at the time of a new product launch or entry into a new business line—particularly one involving internet-based services—could lead to apparent violations of OFAC regulations.”
In a statement, Christopher Nulty, an Airbnb spokesman, said, “Airbnb operates in more than 220 countries and regions around the world, and we take sanctions compliance very seriously. We are pleased to have reached this agreement with OFAC.”
Jaclyn Jaeger is an editor with Compliance Week and has written on a wide variety of topics, including ethics and compliance, risk management, legal, enforcement, technology, and more.https://www.complianceweek.com/regulatory-enforcement/airbnb-subsidiary-to-remit-91k-for-cuba-sanctions-violations/31219.article
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