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:
- IP blocking to account for issues related to permitting individuals located in Cuba to act as hosts on Airbnb while simultaneously preventing such persons from transacting as guests;
- The collection of country of residence and payment instrument information to determine whether users are nationals or residents of Cuba;
- Screening to ensure no hosts are Cuban government officials or Communist party members and also conducting manual checks to ensure no listings are associated with the Cuba restricted list;
- Requiring guests that book a stay or experience to complete an attestation prior to completing a reservation; and
- Requiring users listing a property in Cuba as a host on Airbnb to certify he or she is an independent entrepreneur.
“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.”