Cases with regard to sanctions and export control increasingly lead to enforcement action. During the last few years, the list of enforcement actions and their severity has been growing. In light of these developments, companies are advised to take appropriate measures. This month we discuss a settlement reached with American International Group in the US, Fokker Services in the Netherlands and BNP Paribas in France. This month’s settlements are a signal of the importance of effective oversight of any (foreign) subsidiary doing business with countries subject to economic sanctions and export control restrictions.

AIG settlement

American International Group Inc. (AIG), an international insurance and financial service organisation headquartered in New York, agreed to a USD 279,038 settlement after self-reporting to the US authorities that it violated the US Cuban Assets Control Regulations (CACR).

From January 2006 through March 2009, two of AIG’s Canadian subsidiaries sold policies to a Canadian corporate entity against risks in Cuba. These policies involved Comprehensive General Liability, Director’s and Officer’s (D&O) Excess Liability and Pollution Legal Liability coverage. One of the subsidiaries also provided a directors’ and officers’ liability policy to three Cuban joint venture partners of a Canadian corporation. Furthermore, another AIG subsidiary in Canada issued individual and annual multi-trip travel insurance policies in which Cuba was the identified travel destination.

The total base penalty amount for the alleged violations was USD 413,390. The US authorities considered the case to be non-egregious. Also, they took into account the company’s cooperation: AIG had submitted a voluntary self-disclosure. Other mitigating circumstances were the fact that AIG had not received a penalty notice or a finding of a violation in the five preceding years, and that AIG reacted with appropriate remedies to the violations.

This case can be compared with two other recently concluded enforcement actions in which both companies violated the CACR. In April, the U.S. Office of Foreign Assets Control (OFAC) announced that Carlson Wagonlit Travel, a Dutch travel company, was fined USD 6 million to settle claims for alleged violations of the CACR. In May, OFAC reached a settlement agreement of nearly USD 3 million with Decolar, a Delaware headquartered corporation with offices in Argentina, for disregarding US sanctions requirements.

Fokker Services settlement

On 5 June 2014, a settlement was reached between US authorities and a Dutch aerospace services provider company (Fokker Services). Fokker Services agreed to a USD 21 million global settlement for alleged violations of US restrictions on the export and re-export of aircraft parts, technology and services to Iran and Sudan. Fokker Services accepted responsibility for its conduct involving over 1,150 alleged violations of US sanctions.

According to a statement by the US authorities, between 2005 and 2010, Fokker indirectly exported or re-exported aircraft components to Iranian or Sudanese customers without having the required licences. The settlement covers a total of 1,112 sanction violations against Iran and 41 violations regarding Sudan.

These enforcement actions show that the US authorities are taking serious action against companies subject to US jurisdiction, wherever these companies may be located. The list of enforcement actions for violations of sanctions and export control restrictions has been growing over the last few years. Because of this development, companies are advised to take appropriate measures to ensure compliance by a foreign subsidiary doing business with countries subject to sanctions and export control regulation.

BNP Paribas settlement

An important development is the combined settlement agreement reached between federal and state government agencies with BNP Paribas. BNP Paribas agreed on 30 June 2014 to plead guilty and to pay USD 8.9 billion for illegally processing financial transactions for countries subject to US economic sanctions. This settlement will be discussed in our next issue.