The New York Department of Financial Services is asking Lloyd’s of London officials for details about an internal Lloyd’s market probe regarding potential violations by its managing agents of U.S. laws barring companies from doing business with Iran.
The Aug. 27 letter from the DFS was prompted by a July 30 letter sent to the New York DFS by Lloyd’s.
That letter told the DFS that the Lloyd’s market has determined it has contracts with two firms, Glencore Xstrata Plc and Trafigura Beheer BV, that were linked to alleged shipments of thousands of tons of alumina to an Iranian firm that provided aluminum for Iran’s nuclear program.
A spokesman for Lloyd’s would only comment that “the New York regulator is engaged in an industry-wide review. Lloyd’s takes sanctions compliance very seriously and there is no evidence of any breach.”
The Lloyd’s spokesman also said, “Reviewing all aspects of managing agents’ performance is part of the day-to-day role of overseeing the Lloyd’s market. This includes conforming with all applicable international sanctions, which we have always done.”
The July 30 Lloyd’s letter was in response to a request for information about dealings with Iran that Lawsky sent to 20 non-U.S. reinsurance firms, including Lloyd’s, on July 1. The Lawsky letter sought data from such firms as Lloyd’s, Swiss Re and Hannover Re about their dealings with people or entities linked to Iran. Lawsky sent the letters after determining that at least three insurance groups had insured shipments to Iran.
In prior responses, Lloyd’s market officials have pointed out they are a trading market, not an insurance company. The officials have noted that the Lloyd’s market is made up of more than 50 independent businesses, each of which is responsible for the business it writes.
Lloyd’s officials have also said they have been providing guidance to the market on sanctions issues and reviewing the market’s compliance for more than a decade, and that Lloyd’s has a “dedicated sanctions compliance team.”
The officials have also said, “Lloyd’s has always maintained and continues to demonstrate a strong commitment to ensuring compliance with UK, EU and international sanctions requirements.”
Lawsky is probing the reinsurers in order to ascertain whether they are complying with the Iran Freedom and Counter-Proliferation Act of 2012, which was effective July 1.
The new law bans financial services companies that do business in the United States, such as insurers and reinsurers, from providing services to companies that trade with Iran.