ENFORCEMENT INFORMATION FOR April 7, 2011
McGriff, Seibels & Williams of Texas, Inc. Settles Iranian Transactions Regulations Allegations: McGriff, Seibels & Williams of Texas, Inc., Houston, TX ("McGriff"), has paid $122,408 to settle allegations of violations of the Iranian Transactions Regulations, 31 C.F.R. part 560 (the "ITR"), which were promulgated pursuant to, inter alia, the International Emergency Economic Powers Act, and are administered by the Office of Foreign Assets Control ("OFAC").
OFAC alleged that McGriff, a U.S. insurance brokerage firm specializing in insurance coverages for the energy sector, violated the ITR by its unlicensed design, revision, and placement, with foreign insurers, of six commercial multiple peril ("CMP") insurance policies that insured the risks of a submersible oil rig in Iranian waters. The policy periods were between May 1, 2004, and April 31, 2005.
The combined premiums received by the foreign insurers for the six CMP insurance placements totaled $453,364. McGriff voluntarily disclosed this matter to OFAC and the alleged violations constituted a non-egregious case. The settlement amount reflects OFAC’s consideration of the following: the insurance services provided by McGriff, which were highly specialized and involved the Iranian petroleum industry, were particularly harmful to the objectives of the sanctions program; the apparent violations resulted from the actions of a senior employee outside the knowledge of McGriff’s senior management; McGriff strengthened its OFAC compliance program in response to the apparent violations; McGriff has not been the subject of prior OFAC penalties or other OFAC administrative actions; and McGriff cooperated with OFAC in the investigation, including entering into two tolling agreements.
1) No provision violated cited, but fact pattern would have fallen within the scope of 560.206 at a minimum (facilitation of a transaction related to Iranian-origin goods or services).
Note that OFAC suggests that each of the "design, revision, and placement" of the insurance policies would have been sufficient to amount to a violation of the ITSR. The mere "design" of an insurance policy (without placing it) appears to be sufficient to constitute a "transaction" within the scope of 560.206. Compare to Civil Enforcement Information - Balli Group PLC and Balli Aviation, Ltd., in which negotiations to perform a prohibited act are an "attempt" to perform the action the subject of the negotiations.
Refer to General Note and Associated Scenario Matrix re: the Legal Status of Discussions, Negotiations, Contracts and other Pre-transactional Activities (System Ed. Note) for further discussion on this issue.
2) The offshore rig is considered "Iran" for the purposes of the ITSR.
§ 560.303 - The term Iran means the territory of Iran and any other territory or marine area, including the exclusive economic zone and continental shelf, over which the Government of Iran claims sovereignty, sovereign rights, or jurisdiction, provided that the Government of Iran exercises partial or total de facto control over the area or derives a benefit from economic activity in the area pursuant to an international agreement. The term Iranian means pertaining to Iran as defined in this section.