Sanctions Implementation for the Insurance Industry David J. Brummond Senior Sanctions Advisor -...
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Transcript of Sanctions Implementation for the Insurance Industry David J. Brummond Senior Sanctions Advisor -...
Sanctions Implementation for the Insurance Industry
David J. BrummondSenior Sanctions Advisor - Insurance
Presentation Outline
2
• OFAC Overview • OFAC Enforcement Process
• Insurance Case Profile
• Evolving Iranian Sanctions
OFAC Overview
3
OFAC Mission
To administer and enforce economic and trade sanctions
based on U.S. foreign policy and national security goals against
selected targets
OFAC Overview
4
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)
SANCTIONS
Homeland Security
Secretary of the Treasury
THE PRESIDENT
Local Law Enforcement
OFAC
National SecurityCounci
l
State
IntelligenceCommunity
Justice
(FBI, US Attorneys)
Banking Regulators(FRB, FDIC, OCC, State)
State
Under Secretary Terrorism Finance Intelligence (TFI)
PROGRAMS
OFAC Overview
Commerce
ODNI
Defense
Presentation Outline
6
• OFAC Overview • OFAC Enforcement Process
• Insurance Case Profile
• Iranian Sanctions - Insurance
OFAC Enforcement Process
7
Economic SanctionsEnforcement 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
OFAC Enforcement Process
8
No Action
Cautionary Letter
Finding of Violation
Civil Penalty
Criminal Referral
Sanctions EnforcementOptions
OFAC Enforcement Process
9
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
Voluntary Self-
Disclosure
Egregious Case
(1)One-Half
Transaction Value($125k Cap)
OFAC Enforcement Process
No Yes
No
Yes
(3)One-HalfStatutory Maximum
(2)Applicable
Schedule Amount($250k Cap)
(4)Statutory Maximum
Base Penalty
Calculation
OFAC Enforcement Process
11
Insurance Penalty Settlement Cases
2011
• Aon International Energy $ 36,000
• HCC Insurance Holdings $ 38,448
• McGriff Seibels & Williams $ 122,408
• Gen Re Corporation $ 59,130
• Metropolitan Life $ 22,500
2013
• America Steamship Mutual P&I $348,000
Presentation Outline
12
• OFAC Overview • OFAC Enforcement Process
• Insurance Case Profile
• Iranian Sanctions - Insurance
Insurance Case Profile
13
Resolved/Concluded 253
Pending _78
Total 331
OFAC Insurance Case Files
(January 1, 2006 – July 1, 2013)
Insurance Case Profile
14
License Requests 177
Enforcement Actions 100
Inquiries 54
Insurance Case Categories
Insurance Case Profile
15
• Commercial Lines P&C 132• Individual L&H 52• Reinsurance 55• Personal Lines P&C 54• Group L&H 36• All Lines 2
OFAC Insurance Cases -
Line of Business Profile
Insurance Case Profile
16
Country-Based Programs 187 Cuba (98) Iran (52) Sudan (28) Syria (9)
List-Based Programs 81
Narcotics (47) Somalia (15) Terrorism (6) WMD (13) Regime-Based Programs
30 Burma (15) Libya (8) Other (7)
All Programs 33
Sanctions ProgramsInsurance Case Profile
Presentation Outline
17
• OFAC Overview • OFAC Enforcement Process
• Insurance Case Profile
• Iranian Sanctions - Insurance
Iran Sanctions - Insurance
18
“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
Iran Sanctions - Insurance
19
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)
Iran Sanctions - Insurance
20
“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
Iran Sanctions - Insurance
22
“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
Iran Sanctions - Insurance
23
“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
Sanctions Implementation for the Insurance Industry
David J. Brummond
202-622-7255