OFAC Insurance Cases

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Sanctions Implementation for the
Insurance Industry
David J. Brummond
Senior Sanctions Advisor - Insurance
Presentation Outline
•
OFAC Overview
•
OFAC Enforcement Process
•
Insurance Case Profile
•
Evolving Iranian Sanctions
2
OFAC Overview
OFAC Mission
To administer and enforce economic
and trade sanctions based on U.S.
foreign policy and national security
goals against selected targets
3
OFAC Overview
Sanctions History
• Secretary Gallatin – Embargo Act of 1807
• “Trading with Enemy Act” (TWEA)
–
–
–
–
–
–
Civil War
The Great War (WW I)
Roosevelt Bank Seizures (1933)
Nazi Germany (WW II)
North Korea/China (1950)
Cuba Missile Crisis (1963)
• “International Emergency Economic Powers Act” (IEEPA)
– Peacetime Sanctions – “Economic Emergencies”
– Presidential Implementation - Executive Orders




Iranian Hostages (1979)
Panama Noriega (1988)
Yugoslavia (1998)
Libya (2011)
4
OFAC Overview
THE PRESIDENT
Defense
ODNI
Secretary of the Treasury
National Security
Council
State
Under Secretary
SANCTIONS
Terrorism Finance Intelligence
(TFI)
OFAC
Commerce
Banking Regulators
(FRB, FDIC, OCC, State)
Homeland Security
Local Law Enforcement
PROGRAMS
Justice
(FBI, US Attorneys)
State
Intelligence
Community
Presentation Outline
•
OFAC Overview
•
OFAC Enforcement Process
•
Insurance Case Profile
•
Iranian Sanctions - Insurance
6
OFAC Enforcement Process
Economic Sanctions
Enforcement Guidelines
74 FR 57593 (November 9, 2009)
• Scope
– All Sanctions Programs
– All U.S. Persons
• OFAC Enforcement Goals
– Flexibility to Achieve Appropriate Result
– Predictability/Equity in OFAC Response
7
OFAC Enforcement Process
Sanctions Enforcement
Options
Criminal
Referral
Civil
Penalty
Finding of
Violation
Cautionary
Letter
No Action
8
OFAC Enforcement Process
Enforcement Guidelines
General Factors
• Willful or Reckless Violation
• Awareness of Conduct
• Harm to Sanctions Program Objectives
• Individual Characteristics of Subject Person
• Compliance Program / Remedial Response
• Cooperation with OFAC
9
OFAC Enforcement Process
Base
Penalty
Calculation
Yes
Voluntary
Self-Disclosure
No
Egregious Case
No
Yes
(1)
One-Half
Transaction Value
($125k Cap)
(2)
Applicable
Schedule Amount
($250k Cap)
(3)
One-Half
Statutory Maximum
(4)
Statutory Maximum
OFAC Enforcement Process
Insurance Penalty Settlement Cases
2011
•
•
•
•
•
Aon International Energy
HCC Insurance Holdings
McGriff Seibels & Williams
Gen Re Corporation
Metropolitan Life
$ 36,000
$ 38,448
$ 122,408
$ 59,130
$ 22,500
2013
• America Steamship Mutual P&I $ 348,000
11
Presentation Outline
•
OFAC Overview
•
OFAC Enforcement Process
•
Insurance Case Profile
•
Iranian Sanctions - Insurance
12
Insurance Case Profile
OFAC Insurance Case Files
(January 1, 2006 – July 1, 2013)
Resolved/Concluded
253
Pending
_78
Total
331
13
Insurance Case Profile
Insurance Case Categories
License Requests
177
Enforcement Actions
100
Inquiries
54
14
Insurance Case Profile
OFAC Insurance Cases Line of Business Profile
•
•
•
•
•
•
Commercial Lines P&C
Individual L&H
Reinsurance
Personal Lines P&C
Group L&H
All Lines
132
52
55
54
36
2
15
Insurance Case Profile
Sanctions Programs
Insurance Case Profile
Country-Based Programs
Cuba (98) Iran (52) Sudan (28) Syria (9)
187
List-Based Programs
81
Regime-Based Programs
30
Narcotics (47) Somalia (15) Terrorism (6)
WMD (13)
Burma (15) Libya (8) Other (7)
All Programs
33
16
Presentation Outline
•
OFAC Overview
•
OFAC Enforcement Process
•
Insurance Case Profile
•
Iranian Sanctions - Insurance
17
Iran Sanctions - Insurance
“Primary” Sanctions
Iranian Assets Control Regulations, 31 C.F.R Part 535,
November 14, 1979
International Security and Development Cooperation
Act of 1985 (“ISDCA”) PL 99–83 (S 960) August 8, 1985
• Section 505 – Delegated authority to impose trade restrictions
• EO – 12613 Prohibit Imports From Iran (October 29, 1987)
• EO – 12957 Prohibit Development of Iranian Petroleum Resources
(March 16, 1995)
• EO - 12959 Prohibit Exports to Iran (May 7, 1995)
Iranian Transactions Regulations, 31 C.F.R. Part 560,
September 11, 1995
18
Iran Sanctions - Insurance
Related Executive Orders
EO-13224 Global Terrorism (Sept. 23, 2001)
EO-13382 Proliferation of Weapons of Mass Destruction (WMD)
(June 29, 2005)
****
Iranian Transaction And Sanctions Regulations, 31 C.F.R., Part 560
(October 22, 2012)
19
Iran Sanctions - Insurance
“Secondary” Sanctions
Iran and Libya Sanctions Act of 1996 (“ISA”),
Pub.L. 104-172, August 5, 1996
•
•
•
•
Background
Scope: Any Person, i.e., Foreign Persons
Section 5 – Sanctions Trigger
Section 6 – Sanctions Menu
20
Iran Sanctions - Insurance
“Secondary” Sanctions: Integrated & Expanded
Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010 (“CISADA”)
Pub. L.111–195, July 1, 2010
• Section 102(a) – Expanded ISA Sanctions Trigger
• Section 102(b) – Expanded ISA Sanctions Menu
****
• Section 104(c) – Correspondent or Pay-Through Accounts
of Foreign Financial Institutions
• Section 104(d) – Persons Owned or Controlled by Domestic
Financial Institutions
21
Iran Sanctions - Insurance
“Secondary” Sanctions: Integrated & Expanded2
Iran Threat Reduction and Syria Human Rights Act of 2012,
Pub.L. 112–158, Aug. 10, 2012 (“TRA”)
• Section 202 - Insurance for Transport of Crude Oil from Iran
• Section 204 - Add 3 New Sanctions Options to ISA Section 6
• Section 211 - Insurance for Transport of Goods that Contribute to
NPWMD/Terrorism
• Section 212 - Insure or Reinsure NIOC or NITC
****
• Section 218 - US Parent Liability for Foreign Subsidiaries
• Section 219 - US “Issuer” – Report Iranian Activities
22
Iran Sanctions - Insurance
“Secondary” Sanctions: Integrated & Expanded3
Iran Freedom and Counter-Proliferation Act of 2012
“IFCA”
National Defense Authorization Act for Fiscal Year 2013
Pub. L. 112-239, Subtitle D – Iran Sanctions, signed January 3, 2013
• Section 1244(c): Blocking of Property of Entities in Energy,
Shipping and Shipbuilding Sectors
• Section 1246(a): Imposition of Sanctions With Respect to
the Provision of Underwriting Services or Insurance or
Reinsurance for Activities or Persons with Respect to Which
Sanctions Have Been Imposed
23
Sanctions Implementation for the
Insurance Industry
David J. Brummond
[email protected]
202-622-7255
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