NU Online News Service, Feb. 17, 2:15 p.m.EST

A review of enforcement actions taken by the U.S. TreasuryDepartment reveals that bankers are the primary violators ofsanctions imposed against foreign governments, but a few propertyand casualty insurers and one broker have also received fines.

The most recent case involved the placement of reinsurance by asubsidiary of Chicago-based insurance broker Aon Corp.

According to information provided by the Office of ForeignAssets Control (OFAC), which is in charge of monitoring sanctionprograms, Aon International Energy Inc. paid $36,000 to settleallegations of violations of the Iranian Transactions Regulationsmade in October 2005.

In a report dated Jan. 31, 2011, OFAC said Aon Energyfacilitated the placement of reinsurance coverage and the paymentof premium for a construction risk related to a petroleum projecton Kharg Island in Iran.

The firm brokered and placed facultative retrocessionreinsurance agreements on behalf of a European reinsurer with twoEuropean carriers, OFAC said.

The combined premium to the two placements was $62,883,according to OFAC.

OFAC said Aon Energy did not voluntarily disclose thetransaction to the department.

OFAC said Aon Energy exhibited a pattern "of reckless, but notegregious, conduct…in connection with these policies."

OFAC noted that the parent company has since taken "severalsteps to strengthen its OFAC compliance program" and proceduresafter the violations.

This was the first time Aon Energy had been the subject of anOFAC action, and it did cooperate in correcting future actions, theoffice said.

In an e-mail statement, Aon said, "This issue was brought to ourattention in 2006 and we immediately began collaborating with theOffice of Foreign Assets Control to resolve this matter and tofurther enhance our compliance policies and procedures around traderestrictions, to ensure they meet the requirements and expectationsof OFAC. Aon prides itself on its high standards of businessconduct and has addressed OFAC's concerns with the utmostseriousness. We respect and accept OFAC's position and we considerthis matter closed."

A review of violations at the OFAC's website going back to2003 shows that p&c insurers have rarely been the subject ofOFAC action.

In 2008 and 2010, GEICO was subject to enforcement actionstotaling $12,086.

In 2010, the Chevy Chase, Md.-based insurer paid $11,000 tosettle allegations it violated the Foreign Narcotics KingpinSanctions Regulations for providing automobile insurance to a"Specially Designated Narcotics Trafficker." The company receivedtwo premium payments in 2006 and again in 2007 totaling $2,265.

The fine was the lowest available under the statute, OFAC said.It noted that while GEICO did not volunteer information about theviolation, it did not screen its system for drug kingpins in partbecause the narcotics trafficker list is only updated once a year.OFAC said GEICO committed to "making improvements" in itsscreening.

In 2008, GEICO paid $1,086 for violatingsanctions imposed against the former Liberian Regime of CharlesTaylor. OFAC said the insurer dealt in property or interests, orboth, of a member of that regime between August 2004 and March2005. GEICO voluntarily disclosed the matter to OFAC.

In 2009, a unit of Boston-based Liberty Mutual, LibertyInternational Holdings Inc., paid $35,212 to settle allegationsthat it violated the Cuban Assets Control Regulations. OFAC said awholly owned subsidiary of Liberty International "participated inthe underwriting of policies that insured Cuban business risk."

OFAC said Liberty International voluntarily disclosed the matterto OFAC and it was resolved according to standing procedure. 

In 2003, reinsurance broker Guy Carpenter settled with OFAC for$50,000 for violating the sanctions program against Iraq. The firmvoluntarily disclosed that it failed to retain funds in an interestbearing account and made unauthorized payments in 2000 and2001.