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House to House July 2010


The impact on insurers and their policyholders of the US sanctions framework


“The Office of Foreign Assets Control (OFAC) administers andenforces economic sanctionsprogramsprimarily against coun- tries and groups of individuals, such as ter- rorists and narcotics traffickers. The sanc- tions can be either comprehensive or selective, using the blocking of assets and trade restrictions toaccomplishforeignpol- icy and national security goals” See the United States Department of the Treasury web- site (http://www.ustreas.gov/).


Economic sanctions have been a feature of the headlines in recent times, particularly with regard to Iran, and in the US there has been increasing state and local government effort to influence companies not to do business with Iran. But US sanctions programs do not stop with Iran.


The following is a brief overviewof the US sanc- tions framework and howit impacts the transport industry and its insurers.Detailed rules and guid- ance can be found on the US Treasury OFAC web-site where there is also a link to an inform- ative frequently asked questions page.


BIFA awards


Any “USperson”world-wideissubject toOFACen- forced economic sanctions. “US person” in this context, inshortmeansUScitizensandpermanently resident aliens, wherever located or for whomever they are employed,US entities including branches, and anyone physically in the US and US branches ofaforeigncompany.Ascanbeexpected, thereare significantpenalties forbreachingOFACsanctions.


Types of sanction


Broadly speaking,OFACadministers two types of sanctions programs:


1. Country-based Countries against which OFAC administers em- bargoes currently include: Cuba, Iran, Myanmar, Sudan,North Korea, Syria, some parts of the for- merYugoslavia,Belarus, IvoryCoast, Liberia,Zim- babwe, Congo, Iraq, and Lebanon.


2. Entity/list-based OFACalsomaintainsalistofspeciallydesignatedna- tionals (SDNs) with which US persons cannot en- gage in any transactions. These couldbe individuals orentitiesfromanywhereintheworld. Itcontainsmore


than6,000individuals,entitiesandvesselssothat, for example,sanctionsalreadyextendto123vesselsop- eratedby theIslamicRepublicof IranShippingLines whichwere identified as SDN blocked vessels.


OFACalso prohibitsUSpersons fromapproving, guaranteeing, financing, or “facilitating” transac- tions by non-USpersonswith targeted countries, companies, or individuals. This includes for ex- ample, insuring or transporting a shipment of goods to an OFAC sanctioned country.


The effect is such that even if a non-UScompany was to carry out a transaction over the internet, leveraging the opportunities of e-commerce, it must ensure that the servers on which the web- site is run are not located in the USA or risk the accusation of facilitation and the need to comply with theOFAC sanctions programs.


However, licences to trade with entities in tar- geted countries are available from OFAC for certain categories of transaction (these vary be- tween programs).


Recent changes - Iran


On July 1, 2010, President Obama signed the Comprehensive IranSanction,Accountability, and Divestment Act of 2010 (“CISADA”). CISADA includesmany newprovisions designed to reach foreign firms currently doing businesswith Iran. In particular, sanctionable activities include invest- ment in Iran's refined petroleumindustry, export of refined petroleum products to Iran or assistance to Iran's ability to import such products.


In this connection, underwriting or entering into a contract providing insurance or reinsurance for the provision of such goods or services to Iran are specifically identified as sanctionable activities.


Impact on TT Club’s policyholders


An additional clause clarifying US sanctions will be included in policies:  Issued to USMembers  Issued in the US  In respect of trade to or fromthe US  Offering global coverage.


This means that whenever coverage provided by such a policy is in violation of anyUSeconomic or trade sanction, such coveragewillbe null andvoid.


TTClubwere proud to Sponsor the European Logistics Award at the British International Freight Association (BIFA) Freight Services Awards, 2009 competition.


TTClub’sDavid Lumby (left) and event hostMrs Frances Edmonds (right) present the trophy to category winner Chris Arnold of GEFCO UK.


Please note that TTClub carries out the requisite checks against the US sanctions SDN list.


Ian Rosenthal, TT Club


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