TT Talk - OFAC
The countries and regimes currently targeted by OFAC are:
- Congo (Democratic Republic)
- Ivory Coast
- Liberia (former regime of Charles Taylor)
- North Korea
- and part of Former Yugoslavia (the "Western Balkans").
OFAC also maintains a frequently updated list of over 6000 "sanctioned persons" comprising Specially Designated Nationals (SDNs) and "blocked persons" (which may be individuals, entities, and vessels). Without an OFAC licence, it is illegal for a "US person" to engage in a "prohibited transaction" with an embargoed country or a sanctioned person. The country embargoes, and therefore the definition of "prohibited transaction", vary in extent. The most comprehensive embargoes involve Cuba, Iran and Sudan. Broad embargoes also cover Myanmar, North Korea, and Syria. Sanctions against other countries are primarily directed against named SDNs. A "US person" is, generally:
- a US citizen or permanently resident alien (wherever located and by whomever employed)
- a US organised entity, including foreign branches
- anyone physically in the US
- a US branch of a foreign company
- as far as concerns Cuba, foreign persons owned or controlled by US persons, eg: foreign subsidiaries of US companies.
The Club is authorised as a surplus lines insurer in almost all US jurisdictions, and its New Jersey "branch", where insurance is underwritten, is a "US person" as defined above. This means that, although the Club is a UK entity, it and its Members are subject to OFAC with respect to its US surplus lines activities and the activities of its US branch. OFAC not only prohibits direct transactions between US persons and embargoed countries or sanctioned persons, but also prohibits US persons from approving, financing or "facilitating" transactions by foreign persons which would be prohibited if performed by US persons directly. Thus, without an OFAC licence, a US person may not provide insurance to a third country exporter which covered a shipment of goods to Iran, or book a shipment of cargo on a blocked IRISL vessel on behalf of a foreign shipper.
Violations are subject to criminal and/or civil penalties. Most criminal violations are subject to a $1 million fine and/or 20 years in jail. Most civil violations are punishable by a penalty of the greater of $250,000, or twice the value of the transaction.