ENFORCEMENT INFORMATION FOR DECEMBER 9, 2019

Information concerning the civil penalties process is discussed in OFAC regulations governing

the various sanctions programs and in 31 C.F.R. Part 501. On November 9, 2009, OFAC

published as Appendix A to part 501 Economic Sanctions Enforcement Guidelines. See 74 Fed.

Reg. 57,593 (Nov. 9, 2009). The Economic Sanctions Enforcement Guidelines, as well as recent

final civil penalties and enforcement information, can be found on OFAC’s website at

US”) is a Chicago-based property casualty insurer and a wholly owned subsidiary of Allianz SE

(“Allianz”), a German financial services provider organized under the laws of the European Union and

Germany. AGR US operates AGR Canada (“AGR Canada”) as a Canadian branch office in Toronto,

Canada. AGR US has agreed to remit $170,535 to settle its potential civil liability for 6,474 apparent

violations of the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. Part 515.

The Office of Foreign Assets Control (OFAC) has determined that AGR US voluntarily self-disclosed

the apparent violations and that these apparent violations constitute a non-egregious case. The total

base penalty amount for the apparent violations was $270,690.90.

days for the specific trip (e.g., a single trip to Cuba), and second, insurance coverage that would be in

effect for a full year and provide coverage for every trip taken during that time (e.g. covering multiple

trips to several countries, including one or more trips to Cuba). The travel insurance policies covered

reimbursement for eligible emergency medical expenses while out of country and non-refundable

expenses resulting from trip cancellation, delay, or interruption due to specified categories of events.

A Canadian underwriting manager operating separately from AGR Canada underwrote, marketed, and

serviced the insurance policies. Neither the underwriting manager nor AGR Canada collected

information regarding the travel destination upon policy issuance. A travel destination was only

disclosed to the underwriting manager in instances where emergency medical assistance was required,

AGR US or AGR Canada addressing its requirements to be in compliance with OFAC regulations.

The policies resulted in the processing and reimbursement of 864 Cuba-related claims totaling CAD

532,200.35 (approximately $518,092), and the collection of CAD 30,599.61 (approximately $23,289)

in premiums. Despite AGR Canada’s status as a person subject to the jurisdiction of the United States

as defined by section 515.329 of the CACR, 31 C.F.R. Part 515 and communications with the

underwriting manager early in the relevant period that referenced Cuba-related coverage, AGR US

does not appear to have taken steps or implemented adequate controls to prevent the fronting of Cuba

travel policies issued during this period. AGR US did not initiate an internal investigation until 2014,

which resulted in the self-disclosure.

in which Cuba or a Cuban national has an interest. The CACR were amended on January 16, 2015 to

authorize pursuant to § 515.580 the issuance of global travel insurance policies that include coverage

for travel to and from Cuba.

The settlement amount reflects OFAC’s consideration of the following facts and circumstances,

pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31

C.F.R. Part 501, app. A.

The following were considered aggravating factors:

AGR US and AGR Canada appear to have ignored warning signs and continued this pattern of

conduct for several more years;

Both AGR US and AGR Canada had actual knowledge of the Cuba-related coverage as early

as 2010;

By fronting travel insurance policies and providing coverage to individuals traveling to Cuba,

AGR Canada provided economic benefit to Cuba and caused harm to the integrity of the

CACR, and their associated policy objectives; and

At the time of the apparent violations, AGR US and AGR Canada did not maintain specific

OFAC Compliance procedures related to the fronting of travel insurance policies.

matter;

In response to the apparent violations described, AGR US stated that it undertook steps to

enhance its OFAC compliance program, including the establishment of oversight processes and

by hiring a full-time legal and compliance officer for AGR Canada in order to address the

compliance risks posed by the branch; and

AGR US cooperated with OFAC by voluntarily self-disclosing the apparent violations,

entering into and extending a statute of limitations tolling agreement, and providing document

productions that were well-organized. Further, AGR US facilitated OFAC’s review of the

relevant information and documentation related to the investigation.

reviews within its product development procedures, which requires all new or revised products and

programs to undergo and obtain compliance review and approval.

determining which financial products can be offered by persons subject to U.S. jurisdiction in the

context of OFAC-administered sanctions programs. The enforcement action also highlights the need

for, and importance of, internal controls, policies, and procedures in detecting and preventing potential

violations of this nature in a timely manner.

For more information regarding OFAC regulations, please visit: http://www.treasury.gov/ofac.