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Civil Enforcement Information - Aon International Energy, Inc.

Date issued: Jan. 31 2011

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ENFORCEMENT INFORMATION FOR January 31, 2011

Aon International Energy, Inc. Settles Iranian Transactions Regulations Allegations: Aon International Energy, Inc., Houston, TX ("Aon Energy"), a subsidiary of Aon Corporation, Chicago, IL ("Aon"), has remitted $36,000 to settle allegations of violations of the Iranian Transactions Regulations, 31 C.F.R. part 560, that occurred in October 2005. OFAC alleged that Aon Energy had facilitated the placement of coverage and the payment of premiums for facultative retrocession reinsurance that reinsured construction risks associated with a petroleum project on Kharg Island in Iran. Aon Energy brokered and placed facultative retrocession reinsurance on behalf of a European reinsurer with two European retrocessionaires. The combined premium for the two retrocession reinsurance placements was $62,883. Aon Energy did not voluntarily disclose this matter to OFAC. The settlement amount reflects OFAC’s consideration of the following General Factors: Aon Energy provides specialized insurance services resulting in transactions that were particularly harmful to the sanctions program; OFAC viewed the apparent violations as part of a pattern of reckless, but not egregious, conduct by Aon Energy in connection with these policies; Aon Energy, under the direction of its parent, Aon, took several steps to strengthen its OFAC compliance program and its existing OFAC procedures after the apparent violations; Aon Energy has not been the subject of prior OFAC penalties or other OFAC administrative actions; and Aon Energy cooperated with OFAC and also entered into a tolling agreement with OFAC which was undertaken by Aon on behalf of Aon Energy.
External link location:
https://ofac.treasury.gov/media/13821/download?inline

TURBOFAC Commentary (219 words)

Notes:

1) Aon provided further information in correspondence with the SEC.

"In your letter, you also noted a recent regulatory settlement with the Office of Foreign Assets Control by Aon International Energy [Inc.] ("AIEI"). AIEI is a subsidiary of Aon Corporation and agreed to pay $36,000 to OFAC to settle allegations that it had facilitated the placement of facultative retrocession reinsurance policies related to construction risks for an Iranian petroleum project. The activities in question occurred on or about October 2005. The reinsured was a European entity, as were the retrocessionaires (which were reinsurers to the reinsured European party), and AIEI had no dealings with Iranian parties. In agreeing to the settlement amount, OFAC noted AIEI’s cooperation with the proceedings and the fact that Aon had instituted enhancements to its compliance program and procedures at AIEI." https://www.sec.gov/Archives/edgar/data/315293/000110465911054360/filename1.htm

2) OFAC cites no violated provision cited, but this is an example of second-order facilitation prohibited by 560.206. Here, AON facilitated a transaction (reinsurance for a European company), where the underlying insurance transaction itself probably did not directly involve an Iranian party, but did facilitate an Iran-related transaction (i.e. the underlying construction transaction insured). Compare HCC Insurance Holdings, Inc. (2011) where OFAC considers similar facts to constitute violations of both 560.206 and 560.208.