US Insurance Provider Fined for CACR Violations

A U.S. insurance company was fined about $170,000 for violating the Cuban Assets Control Regulations, the Treasury’s Office of Foreign Assets Control said in a Dec. 9 enforcement notice. Allianz Global Risks US Insurance Company (AGR US), a subsidiary of Germany-based Allianz SE, committed more than 6,000 violations of the CACR, OFAC said.

Between 2010 and 2015, AGR Canada, a Toronto-based office operated by AGR US, “fronted” travel insurance policies for Canadian citizens traveling to Cuba, OFAC said. AGR Canada did not collect information “regarding the travel destination upon policy issuance,” OFAC said, and a travel destination was only disclosed to the underwriting manager in instances when “emergency medical assistance was required,” a claim was submitted or a coverage inquiry was received. But despite learning that the travel included Cuba, AGR Canada continued offering the insurance for several years without “addressing its requirements to be in compliance with OFAC regulations,” the notice said.

That resulted in 864 Cuba claims worth about $518,000 and the collection of about $23,000 in premiums, OFAC said. AGR US “does not appear to have taken steps or implemented adequate controls to prevent the fronting of Cuba travel policies issued during this period.” AGR US did not begin an internal investigation until 2014.

AGR US eventually voluntarily disclosed the violations and it constituted a non-egregious case, OFAC said. Mitigating factors included the fact that no senior staff at AGR US or AGR Canada were aware of the violations, the fact that AGR US had not committed a violation in the previous five years, the fact that AGR US took steps to improve its compliance program, and that it cooperated with OFAC. AGR US improved its compliance program by “incorporating compliance reviews” within its procedures, which “requires all new or revised products and programs to undergo and obtain compliance review and approval,” the notice said.

Aggravating factors included AGR US’s failure to “exercise a minimal degree of caution or care” in allowing its Canadian branch to commit sanctions violations and the company’s failure to “further investigate” its insurance policies related to Cuba in response to several notifications in 2010 that said AGR US was providing “prohibited coverage.” AGR US and AGR Canada also ignored “warning signs” for several years, had “actual knowledge” of the Cuba coverage as early as 2010, provided “economic benefit” to Cuba and did not maintain “specific” OFAC compliance procedures during the violations.