OFAC REACHES CIVIL ENFORCEMENT SETTLEMENT WITH INSURERS THAT SOLD POLICIES COVERING CUBA TRAVEL
January 30, 2020
On December 9, 2019, OFAC announced the settlement of a civil enforcement case against Allianz Global Risks US Insurance Company (AGR US) for $170,535. Between August 2010 and July 15, 2015, AGR US’s Canadian subsidiary, AGR Canada, sold travel insurance though an underwriter to Canadian citizens that covered travel to Cuba. AGR Canada was subject to OFAC jurisdiction by virtue of its U.S. ownership and control. In total, AGR Canada processed 864 prohibited claims before global travel insurance policies covering Cuba became legal under amended regulations on January 15, 2015.
OFAC found that AGR Canada and AGR US should have received notice that some policies were covering trips to Cuba, yet ignored the warning signs. No compliance program had been in place and an internal investigation was not undertaken until 2014. Nevertheless, AGR US reduced its compromise penalty by developing a compliance program, hiring a compliance manager, self-disclosing the prohibited transactions, and then cooperating with OFAC’s investigation.
Similarly, on December 9, 2019, OFAC announced it had reached a $66,212 settlement with Chubb Limited for insurance of trips by Europeans to Cuba between 2010 and 2014. Some of Chubb’s predecessors in interest issued global policies through travel agents that did not contain sanctions exclusionary clause due to the E.U.’s Anti-U.S. Sanctions Blocking Regulation and an erroneous legal analysis about de minimis exposure to sanctions risk. Chubb helped reduce its settlement amount by hiring a compliance manager and cooperating with OFAC’s investigation.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665).
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