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Shipowners’ Mutual Insurance Group Fined for Economic Sanctions Violations

Monday, May 13, 2013
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced May 9 that a New York-based non-profit international marine mutual insurance association of merchant ship owners and charterers has agreed to remit $348,000 to settle potential liability for 55 apparent violations of U.S. economic sanctions against Cuba, Sudan and Iran. The actions at issue include processing protection and indemnity insurance claims and issuing letters of undertaking/guarantee as well as letters of indemnity as security or countersecurity for an LOU.

The total base penalty amount for the apparent violations was $1.73 million. OFAC notes that the association is a sophisticated commercial entity with actual knowledge or reason to know that some of the above activity involved sanctioned countries and did not voluntarily self-disclose the apparent violations. On the other hand, the association’s conduct does not appear to have been willful or reckless and the P&I claims and LOUs constituting the apparent violations may have been licensable at the time the transactions occurred. In addition, the association had not received a penalty notice or finding of violation from OFAC in the previous five years, took appropriate remedial action following the apparent violations and cooperated with OFAC, including by providing all information in a responsive, well-organized fashion.

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