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New York Insurance Company Penalized for Covering North Korean-Flagged Vessels

Tuesday, August 11, 2015
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Aug. 6 that a New York insurance company has agreed to remit $271,815 to settle its potential civil liability for 48 apparent violations of U.S. economic sanctions that it self-disclosed. According to OFAC, over a three-year period this company and its London branch issued global protection and indemnity insurance policies that provided coverage to North Korean-flagged vessels and covered incidents that occurred in or involved Iran, Sudan or Cuba, some of which led to the payment of claims.

The total base penalty amount for all of the apparent violations was $755,042. The following were considered aggravating factors: company managers and supervisors knew or had reason to know that the majority of the insurance policies and claims payments at issue involved OFAC-sanctioned countries, the company is a commercially sophisticated financial institution, and the company did not have a formal OFAC compliance program in place at the time the apparent violations occurred. The following were considered mitigating factors: the company has not received a penalty notice or finding of violation from OFAC in the five years preceding the earliest date of the apparent violations; took appropriate remedial action in response to the apparent violations, including the formation and implementation of a comprehensive OFAC compliance program; and cooperated with OFAC’s investigation by providing all information in a responsive, well-organized fashion and by signing a tolling agreement and two extensions to that agreement.

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