COMPLYING WITH
SANCTIONS, SDNs & TRADE
EMBARGOES
Wednesday, October 9th, 2013
1:00pm – 2:00pm
BORIS POPULOH
Sr. Vice President
Willis Relocation Risk Group
SANCTIONS: TODAY’S AGENDA
What Are Sanctions
Who Issues Sanctions
Sanctions Type & Scope
SDNs (Specially Designated National)
Who Must Comply with Sanctions
Sanction Territories
Sanction Violations
Sanction Penalties
Sanction “Touch-Points”
THE WILLIS GROUP
- Global Insurance Broker (NYSE:WSH)
- Founded in 1828
- London / New York HQ
- 21,000 Employees / 415 Offices / 130 Countries
- $3.48 Billion Revenue (2012)
- 65,000 + Global Commercial Clients
- 45% UK FTSE 100 / 40% Fortune 500
- Place $38 Billion of Clients Premium Annually
into Insurance Marketplace
- Only Global Broker with Mobility Practice
Group (Willis Relocation Risk Group)
196/0
TRADE RESTRICTIONS
TRADE SANCTIONS
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ECONOMIC PROTECTIONISM
ECONOMIC PENALTIES
Sanctions are “domestic” measures and/or penalties
applied by one country on another with the purpose of
controlling, prohibiting or restricting financial or trade
activity of persons, entities and governments in order
to achieve policy objectives.
WHO ISSUES SANCTIONS?
Any country can impose unilateral sanctions on any other territory.
They are referred to as DOMESTIC sanctions.
In the United States sanctions are issued by the Office of Foreign
Asset Control (OFAC)
United Nations (UN) Resolutions can result in sanctions. If you live
in a UN member state you are likely to be subject to UN Sanctions.
The European Union* (EU) also issues sanctions which are enforced
by each EU member state
* EU Member States: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.
SANCTIONS: Type & Scope
Financial Sanctions



can freeze the funds or any
kind of assets of a Specially
Designated National (‘SDN’)
can prohibit funds being made
available to an SDN
Trade Sanctions
Syria and Iran have broad trade
sanctions against them, relating to
exports of crude oil and petrochemicals
from those countries.
can restrict the availability of
insurance coverage & activity
(e.g. insurance prohibitions
relating to Syria, Iran, Cuba &
others)
OFAC: Specially Designated Nationals
http://www.ustreas.gov/offices/enforcement/ofac/sdn/index.shtml
SANCTIONS: Type & Scope
Broad Sanctions


target entire countries or
industries
For example: the oil and
petroleum sanctions applicable
to Iran and Syria
Smart/Targeted Sanctions


target SDNs only
For example: asset freeze on the
funds of Korea Mining Corp (North
Korea) or Muhammad Gaddafi
(son of Colonel Gaddafi) - both
are SDNs
WHY IS THIS IMPORTANT TO ME?
US citizen (wherever you are working)
US permanent resident
Non-US citizen doing business in or from the US
(if you are on holiday picking up emails or making
calls from the US)
If you work for a US company or a subsidiary
owned by a US parent company
SANCTIONED TERRITORIES
Cuba*
Iran
North Korea
Sudan
Syria
*
*
*
*
**
*
*
*
*
*
Cuba
- Afghanistan
- Belarus
- Burma (Myanmar)
- Congo, Democratic Rep. of
- Ivory Coast (Cote d’Ivoire)
- Democratic Rep. of Congo
**
*
* *
*
*
*
*
- Egypt
- Eritrea
- Federal Rep. of Yugoslavia & Serbia
- Iraq
- Lebanon
- Liberia
- Rep. Guinea-Bissau
- Rep. of Guinea
- Somalia
- Tunisia
- Yemen
- Zimbabwe
SANCTIONED TERRITORIES
Over time list will change as certain sanctions are lifted, or new countries
become subject to sanctions.
In addition, the scope of sanctions against these countries can change.
S
A
N
C
T
I
O
N
S
sanctions imposed
against Syria have
become significantly
broader in recent years
S
A
N
C
T
I
O
N
S
sanctions against Burma
have eased and mostly
been lifted
SANCTIONS: SDNs
Specially Designated Nationals list (the “SDN List”).
- members of certain current/former governmental regimes
- designated terrorists and terrorist groups
- organizations narcotics traffickers
- weapons proliferators
- persons involved in the black-market diamond trade
- a large number of vessels
LARGE LIST (5730 Entries)
60 Vessels Added
50 Amended Details
Increased Risk for Shippers
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SANCTIONS: SDNs
It is a criminal offence for a US person to make funds directly or
indirectly available to individual, entities or groups listed in the
Specially Designated National List.
Larger number of SDN’s
ALBANIA, BANGLADESH, BOSNIA, CAMBODIA, COLUMBIA,
GHANA, KOSOVO, KUWAIT, MEXICO, PAKISTAN AND
PALESTINE
US persons are also prohibited from dealing with any entity which is 50% owned by an SDN.
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SANCTIONS: ‘TOUCH-POINT’
A sanctions ‘touch-point’ can include (but is not limited to)
instances where the transferee, the intermediary, the
insured or the direct client is:
- a national of a sanctioned territory;
- the government of a sanctioned territory;
- a entity (incl. vessels) incorporated in a sanctioned territory;
- a entity owned or controlled by any of the above;
- conducting business in a sanctioned territory;
- shipping goods or flying to/from a sanctioned territory; or
- paying international transit damage claims
SANCTIONS: VIOLATIONS
Potential Offences:
Attempts by a US person, or persons within the US to evade sanctions
Attempts by a US person to make funds directly or indirectly available to
entities or individuals on the “SDN List”
US person investing in a company that is an SDN or that is owned or
controlled (50%) by an SDN
The facilitation and approval of transactions by third parties involving SDNs is
prohibited
It is a crime for any person (US or not) to conspire to cause a US person to
contravene OFAC in any way
Under certain sanction regimes a individual can be found guilty of a sanction
breach even if that individual did not know the transaction was prohibited
SANCTIONS: VIOLATION
Possible Responses to Apparent Violations
No Action
Initiate an Investigation
Request further information from the potential violator
Issue a Cautionary Letter
Find that a Violation Occurred (Non-Monetary)
Issue a Civil Monetary Penalty
Suspension of Operating License
Issuance of a Cease and Desist Order
Refer the case for Criminal Prosecution
SANCTIONS: PENALTIES
Requested Information MUST be Provided
$20,000.00 Penalty
$50,000.00 Penalty / Violations valued at more than $500K
Broad Subpoena Power. “Every person is required to
furnish under oath… at any time as may be required…
complete information relative to any transaction…
… or relative to any property in which any foreign country
or any national thereof has any interest of any nature
whatsoever, direct or indirect.”
SANCTIONS: PENALTIES
Civil & Criminal Penalties
Criminal Penalties
- up to $1 million per violation
- up to 20 years in prison
Confiscation of company’s assets
Regulatory Enforcement Action
Severe Reputational Damage
IT IS IMPORTANT TO GET THIS RIGHT!
SANCTIONS: PENALTIES
General Factors
1. Willful or Reckless Violation of Law
2. Awareness of Conduct at Issue
3. Harm of Sanctions Program
4. Individual Characteristics of Violator(s)
5. Remedial Response
6. Cooperation with Investigating Agency
Mitigating Factors
1. Voluntary Self-Disclosure
2. Effective export compliance program
3. Violation was isolated occurrence
4. License would have been issued
5. Cooperating with Agency
SANCTIONS: COMPLIANCE
Risk Management Tool
- Formal Program
- Training/Awareness
- Recordkeeping/Audits
Competitive Advantage
- Increasingly Important to Clients/Customers
- Multinationals
- 3rd Parties
- Relocation Networks
START to FINISH
SANCTIONS: PROTECT YOURSELF
My Country does not impose Sanctions on Territories Listed
I am not a US Person
IT DOESN’T MATTER!
WHY?
Sanctions regimes are incredibly complex, and given the international
nature of the Int’l HHG Transportation and Relocation Industry as well
as the clients we serve, the act of transporting goods and related
processes can sometimes impact transactions in unexpected and
unforeseen ways.
THANK YOU
Boris Populoh
Willis Relocation Risk Group
boris.populoh@willis.com
www.willisrelorisk.com
COMPLYING WITH
SANCTIONS, SDNs & TRADE
EMBARGOES
Wednesday, October 9th, 2013
1:00pm – 2:00pm