Not found by a bank, a customer or a competitor. Found by the paperwork for the subsidiary’s own resale.
What happened
Key Holding, LLC, a Delaware logistics company, acquired Key Logistics Colombia S.A.S. in December 2021. Neither company had a sanctions compliance programme — not Key Holding covering its foreign subsidiaries, and not Key Colombia itself, whose management did not know it was now subject to US Cuba sanctions at all.
Between January 2022 and July 2023, Key Colombia arranged the logistics for 36 freight shipments worth about $3.06 million to consignees in Cuba, from suppliers in Colombia, Spain, China and Panama. Most were foodstuffs ineligible for a licence. Three were safety-related oil well machinery components shipped to Comercial Cupet S.A., a company majority-owned by the Cuban government.
How it surfaced
Key Holding learned of the shipments in January 2024 — while conducting due diligence for its own pending sale to another US company. Nobody inside Key Colombia had raised it; staff there knew about the shipments but not that they were prohibited.
The penalty
Voluntarily self-disclosed and non-egregious. OFAC listed as aggravating that Key Colombia continued the shipments without any reassessment of its sanctions exposure after its ownership changed, and that Key Holding — as the immediate US parent of a foreign freight forwarder — bore extra responsibility for that exposure regardless of company size. Mitigating factors included a clean five-year record, that most shipments were of benign consumer goods, and a fast response: within months, Key Holding issued its first trade-sanctions compliance policy, ran mandatory company-wide training, and put Key Colombia onto continuous automated shipment screening.
OFAC’s compliance considerations echo its 2019 Framework directly: US persons should evaluate the sanctions risk of a newly acquired foreign subsidiary and ensure it adopts controls to manage it — the step that, in this case, happened only after the violations were found, not before.
What the record shows
- A parent can be blind to its own subsidiary’s business. Key Holding did not conceal anything; it simply never asked what Key Colombia was shipping, to whom.
- Acquisitions get audited when they are bought, not necessarily after. The gap here closed only because the company was being sold again — a second transaction, not routine oversight, supplied the review that integration never did.
See acquisition integration gaps and the C.H. Robinson case for the same pattern with a larger, more established acquirer.