US view on Iran sanctions and Libya
Welcome to our ninth bulletin in our regular series on sanctions against Iran. In this bulletin Doug Maag, Senior Counsel in our New York office focuses on how the US is dealing with the ongoing Iran sanctions and the new sanctions against Libya.
US sanctions update
On 1 February 2011, OFAC announced a $36,000 settlement with Aon International Energy Inc. (Aon Energy), a subsidiary of Aon Corporation, resolving what is reported to be the first publicly-announced sanctions enforcement action involving the reinsurance industry.
OFAC alleged that Aon Energy had "facilitated the placement of coverage and the payment of premiums for facultative retrocession reinsurance that reinsured construction risks associated with a petroleum project on Kharg Island in Iran." OFAC further claimed that Aon Energy had brokered and placed the coverage "on behalf of a European reinsurer with two European retrocessionaires."
The announcement advises that the settlement amount reflects a number of factors, including: the "transactions were particularly harmful to the sanctions program"; "OFAC viewed the apparent violations as part of a pattern of reckless, but not egregious, conduct by Aon Energy"; "Aon Energy, under the direction of its parent, Aon, took several steps to strengthen its OFAC compliance program and its existing OFAC procedures after the apparent violations"; and "Aon Energy cooperated with OFAC."
Situation in Libya
Insurers and reinsurers should be aware that on 25 February 2011 the US imposed Libya-related sanctions with immediate effect. Among others things, the sanctions require US persons and companies to freeze the property and interests of Muammar Qadhafi and his sons, the Government of Libya and its instrumentalities, agencies, and controlled entities, the Central Bank of Libya, and those involved in human rights abuses relating to political repression in Libya. Although corresponding regulations have yet to be issued, US companies and others are also prohibited from providing
"services" to the sanctioned targets, which generally include the provision of insurance and reinsurance.