The Office of Foreign Assets Control of the US Department of the Treasury recently announced a settlement with insurance company, Chubb Limited, to resolve allegations of apparent violations of the Cuban Assets Control Regulations, 31 CFR Part 515 (CACR).
Before its merger with Chubb, ACE Europe, domiciled in the UK, was a subsidiary of ACE Group Holdings, Inc., a US company providing insurance to individuals and commercial customers worldwide. According to the Enforcement Information, from 2010 to 2014, ACE Europe processed at least 20,291 transactions totaling $367,847 in apparent violation of the CACR. The purpose of these transactions was the provision of Cuba-related travel insurance coverage sold directly by ACE or by a third party. Some of these, issued to a European online travel agency, did not include a sanctions exclusionary clause. ACE represented to OFAC that it believed coverage could be provided if the risk of violating US sanctions involved a de minimis portion of the insurance portfolio; ACE also believed that the EU Anti-Blocking Regulation prevented enforcement of the CACR.
ACE voluntarily self-reported the apparent violations. The settlement amount of $66,212 to resolve the company’s potential civil liability for over 20,000 apparent violations reflects OFAC’s consideration of several mitigating factors, including ACE’s cooperation with OFAC, the fact that many of the transactions at issue would have been authorized by a general license, had they occurred after January 2015 when the CACR was amended, and remedial actions taken by the company in response to the apparent violations. OFAC considered as aggravating factors the company’s failure to implement adequate internal controls and use sanctions exclusionary clauses, ACE Europe’s actual knowledge of the policies covering travel to Cuba, the company’s size and commercial sophistication, and the duration of the sanctions, which occurred over several years.