OFAC Fines Swiss Insurance Company for Cuba Sanctions Violations

Chubb Limited, a Swiss holding company, was fined about $65,000 for more than 20,000 violations of the Cuban Assets Control Regulations, the Treasury's Office of Foreign Assets Control said in an enforcement notice. The violations were the responsibility of ACE Limited -- an insurance and reinsurance service provider with locations in Switzerland, U.S. and Britain -- which merged with Chubb Corp. in 2016 to form Chubb Limited.

Between 2010 and 2014, ACE Europe processed at least 20,000 transactions worth about $367,847 in violation of the CACR, including for Cuba-related travel insurance coverage, OFAC said. The violations were caused by ACE’s “misunderstanding of the applicability” of U.S. sanctions on Cuba. Beginning in 2012, ACE Europe issued “group travel policies” to a European online travel agency that sold global travel coverage, OFAC said. The policies did not contain a “sanctions exclusionary clause,” which is “often” used in global insurance policies to mitigate risks of sanctions violations, the notice said.

ACE said the lack of a sanctions clause was due to ACE Europe’s misunderstanding of how U.S. sanctions on Cuba applied to insurance activity. ACE Europe said that it believed it could provide coverage “if the risk of violating U.S. sanctions involved a de minimis portion of the portfolio, and the E.U.’s Anti-Blocking Regulation prevented enforcement of the U.S. sanctions regulations related to Cuba,” the notice said.

OFAC said the violations were voluntarily disclosed and constituted a non-egregious case. A mitigating factor included the fact that many of the violations would have been legal through a general license had the transactions occurred after Jan. 16, 2015, when OFAC amended the CACR to authorize certain Cuba-related travel insurance activities. Other mitigating factors included the fact that ACE had not committed a violation in the previous five years, that ACE cooperated with OFAC’s investigation, and that the violations were concentrated within a single ACE operating entity. ACE also took remedial actions to improve compliance, including hiring a global crime risk officer, conducting a “comprehensive risk assessment” across Europe, Eurasia and Africa, and developing a “sanctions risk assessment methodology” to identify gaps in compliance.

Aggravating factors included ACE’s failure to “implement adequate internal controls,” the fact that ACE Europe business leaders had “reason to know” of U.S. sanctions but failed to use a sanctions clause in its contracts and the fact that the violations took place over several years. Other aggravating factors included the fact that ACE “conferred economic benefit” to U.S. sanctioned parties and ACE is a “large and commercially sophisticated” company.