OFAC Export Compliance -Insurance Company Pays Big Fine

Treasury’s Office of Foreign Assets Control fines American Steamship Owners Mutual Protection for OFAC Export Compliance Violations

American Steamship Owners Mutual Protection and Indemnity Association (The American Club), is a New York-based shipping insurance company.  The company has agreed to pay OFAC $348,000, for 55 OFAC Export Compliance violations of the U.S. embargoes against Cuba, Sudan and Iran.  The fine could have been much more.

OFAC Export Compliance Violation

Photo courtesy of U.S. Treasury

The American Club processed three Protection and Indemnity (“P&I”) insurance claims totaling approximately $40,584 between January 19, 2004, and June 28, 2006, involving Cuba in apparent OFAC Export Compliance violation of the CACR. The base penalty amount for this set of apparent OFAC Export Compliance violations was $61,000. The American Club processed 18 P&I insurance claims, issued six Letters of Undertaking/Guarantee (“LOU”), and issued one letter of indemnity as security or countersecurity for an LOU totaling approximately $685,774.26 between November 15, 2003, and March 13, 2007, involving Sudan in apparent violation of the SSR. The base penalty amount for this set of apparent OFAC Export Compliance violations was $844,000. The American Club processed 21 P&I insurance claims, one LOU, and issued five letters of indemnity as security or countersecurity for an LOU totaling $488,453.65 between January 27, 2004, and August 8, 2006, involving Iran in apparent OFAC Export Compliance violation of the ITR. The base penalty amount for this set of apparent OFAC Export Compliance violations was $824,000. The total base penalty amount for the apparent OFAC Export Compliance violations was $1,729,000.

The OFAC Export Compliance Regulations that the American Club violated were the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515; the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538; and the Iranian Transactions Regulations (“ITR”), 31 C.F.R. part 560.1.

The Treasury’s Office of Foreign Assets Control said in a press release that the company didn’t self-disclose the cases, but added that OFAC considered the cases “non-egregious.”  The Office of Foreign Assets Control (“OFAC”) has determined that the American Club did not voluntarily self-disclose the apparent violations.

Many insurance companies don’t believe OFAC Export Compliance regulations apply to them.  OFAC Export Compliance Regulations apply to all U.S. Companies.  Period.

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