The US Treasury Department's Office of Foreign Assets Control (OFAC) announced on 6 August that Navigators Insurance Company (Navigators) has agreed to pay $271,815 to settle apparent US sanctions violations.

According to OFAC, between May 2008 and April 2011 US-based Navigators and its London branch:

issued global protection and indemnity (“P&I”) insurance policies that provided coverage to North Korean-flagged vessels and covered incidents that occurred in or involved Iran, Sudan, or Cuba—some of which led to the payment of claims.

In considering the settlement amount, OFAC cited as aggravating factors that Navigators (1) managers and supervisors knew or had reason to know that most of the insurance policies and claims payments involved sanctioned countries, (2) is a commercially sophisticated financial institution, and (3) did not have a formal OFAC compliance program in place when the apparent violations occurred.  OFAC also reported that personnel within Navigators misinterpreted the applicability of OFAC sanctions regulations.

This development highlights the importance for insurers and other financial institutions to establish, implement, and follow appropriate sanctions compliance policies and procedures.