Airbnb Settles with OFAC Following Cuba Sanctions Violations

Jan. 18, 2022

It was announced on January 3, 2022, that Airbnb Payments, Inc. (Airbnb Payments), a wholly owned subsidiary of Airbnb, Inc., had agreed to pay $91,172.29 to settle its liability stemming from apparent violations of Office of Foreign Assets Control (OFAC) administered Cuba sanctions. The activity in question primarily involved payments related to guests traveling to Cuba for reasons outside of OFAC’s authorized reasons for travel, as well as Airbnb Payment’s failure to meet certain OFAC record retention requirements associated with Cuba-related transactions.

Pursuant to the Treasury Department enforcement release, Airbnb discovered the apparent violations following a “proactive forensic review,” one that had received prior OFAC approval. Due to the total number of records and the overall size of the data set, the review examined what OFAC described as a “statistically significant sampling” of traveler “stays” (i.e., traveler lodging provided by Airbnb hosts) and “experiences” (i.e., traveler activities provided by Airbnb hosts) involving Cuba. Airbnb extrapolated the results of the review to determine a reasonably accurate total number of in scope transactions processed between September 28, 2015, and March 1, 2020.

Based upon the extrapolated results it was determined that during the review period Airbnb had processed payments related to 3,464 Cuban “stay” transactions involving Airbnb guests who had traveled for reasons outside of the twelve authorized by OFAC under § 515.560(a). Commonly utilized and accepted reasons for Cuban travel include family visits, journalistic activity, professional research, educational activities, humanitarian projects, and support for the Cuban people. The average transaction amount for each stay was $139.52. It was also ultimately determined that Airbnb processed payments related to 3,076 “experiences” transactions where Airbnb failed to maintain records in accordance with applicable OFAC regulations. The average transaction amount processed for each such experience was $78.40. Airbnb also processed 44 confirmed travel transactions involving non-U.S. persons, all of which occurred prior to OFAC issuing a license covering such activities. The average transaction amount for these transactions was $111.09.

According to OFAC, the abovementioned violations occurred in large part due to Airbnb launching its Cuba business, in April of 2015, “without fully addressing the complexities” of maintaining a Cuba-related sanctions compliance program. It is stated in the enforcement release that the scaling up Airbnb’s Cuba business “outpaced” the company’s ability to manage the sanctions risks associated with such business. OFAC specifically highlights that when Airbnb first launched its Cuba business it utilized a manual process to screen hosts and guests for potential sanctions issues. Additionally, “technical defects” involving the Airbnb mobile application did not allow for guests to make an attestation regarding their reason for travel to Cuba, leading to numerous record keeping violations.

While OFAC cited the fact that Airbnb Payments is a “large and sophisticated US-based technology company” as an aggravating factor when assessing penalties, it also noted several mitigating factors, including Airbnb voluntarily reporting the results of its transaction review and subsequently implementing remedial measures designed to strengthen its sanctions compliance program. OFAC also noted that Airbnb fully cooperated with OFAC throughout the process by responding to multiple requests for information and agreeing to toll the statute of limitations.

If you have any questions relating to OFAC sanctions do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.