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COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th, 2013 1:00pm – 2:00pm.

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Presentation on theme: "COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th, 2013 1:00pm – 2:00pm."— Presentation transcript:

1 COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th, 2013 1:00pm – 2:00pm

2 BORIS POPULOH Sr. Vice President Willis Relocation Risk Group

3 What Are Sanctions Who Issues Sanctions Sanctions Type & Scope SDNs (Specially Designated National) Who Must Comply with Sanctions Sanction Territories Sanction Violations Sanction Penalties Sanction “Touch-Points ” SANCTIONS: TODAY’S AGENDA

4 THE WILLIS GROUP - Global Insurance Broker (NYSE:WSH) - Founded in 1828 - London / New York HQ - 21,000 Employees / 415 Offices / 130 Countries - $3.48 Billion Revenue (2012) - 65,000 + Global Commercial Clients - 45% UK FTSE 100 / 40% Fortune 500 - Place $38 Billion of Clients Premium Annually into Insurance Marketplace - Only Global Broker with Mobility Practice Group (Willis Relocation Risk Group)

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7 Sanctions are “domestic” measures and/or penalties applied by one country on another with the purpose of controlling, prohibiting or restricting financial or trade activity of persons, entities and governments in order to achieve policy objectives.

8 WHO ISSUES SANCTIONS? Any country can impose unilateral sanctions on any other territory. They are referred to as DOMESTIC sanctions. United Nations (UN) Resolutions can result in sanctions. If you live in a UN member state you are likely to be subject to UN Sanctions. The European Union* (EU) also issues sanctions which are enforced by each EU member state * EU Member States: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. In the United States sanctions are issued by the Office of Foreign Asset Control (OFAC)

9 SANCTIONS: Type & Scope Financial Sanctions  can freeze the funds or any kind of assets of a Specially Designated National (‘SDN’)  can prohibit funds being made available to an SDN  can restrict the availability of insurance coverage & activity (e.g. insurance prohibitions relating to Syria, Iran, Cuba & others) Trade Sanctions  Syria and Iran have broad trade sanctions against them, relating to exports of crude oil and petrochemicals from those countries. OFAC: Specially Designated Nationals

10 Broad Sanctions  target entire countries or industries  For example: the oil and petroleum sanctions applicable to Iran and Syria Smart/Targeted Sanctions  target SDNs only  For example: asset freeze on the funds of Korea Mining Corp (North Korea) or Muhammad Gaddafi (son of Colonel Gaddafi) - both are SDNs SANCTIONS: Type & Scope

11 WHY IS THIS IMPORTANT TO ME? US citizen (wherever you are working) US permanent resident Non-US citizen doing business in or from the US (if you are on holiday picking up emails or making calls from the US) If you work for a US company or a subsidiary owned by a US parent company

12 SANCTIONED TERRITORIES Cuba * Cuba* Iran North Korea Sudan Syria - Afghanistan- Egypt- Rep. Guinea-Bissau - Belarus- Eritrea- Rep. of Guinea - Burma (Myanmar)- Federal Rep. of Yugoslavia & Serbia- Somalia - Congo, Democratic Rep. of - Iraq- Tunisia - Ivory Coast (Cote d’Ivoire)- Lebanon- Yemen - Democratic Rep. of Congo- Liberia- Zimbabwe * * * * * * * * * * * * * * * * * * *

13 SANCTIONED TERRITORIES Over time list will change as certain sanctions are lifted, or new countries become subject to sanctions. In addition, the scope of sanctions against these countries can change. SANCTIONSSANCTIONS SANCTIONSSANCTIONS sanctions imposed against Syria have become significantly broader in recent years sanctions against Burma have eased and mostly been lifted

14 14 SANCTIONS: SDNs Specially Designated Nationals list (the “SDN List”). - members of certain current/former governmental regimes - designated terrorists and terrorist groups - organizations narcotics traffickers - weapons proliferators - persons involved in the black-market diamond trade - a large number of vessels LARGE LIST (5730 Entries) 60 Vessels Added 50 Amended Details Increased Risk for Shippers

15 15 SANCTIONS: SDNs It is a criminal offence for a US person to make funds directly or indirectly available to individual, entities or groups listed in the Specially Designated National List. Larger number of SDN’s ALBANIA, BANGLADESH, BOSNIA, CAMBODIA, COLUMBIA, GHANA, KOSOVO, KUWAIT, MEXICO, PAKISTAN AND PALESTINE US persons are also prohibited from dealing with any entity which is 50% owned by an SDN.

16 SANCTIONS: ‘TOUCH-POINT ’ A sanctions ‘touch-point’ can include (but is not limited to) instances where the transferee, the intermediary, the insured or the direct client is: - a national of a sanctioned territory; - the government of a sanctioned territory; - a entity (incl. vessels) incorporated in a sanctioned territory; - a entity owned or controlled by any of the above; - conducting business in a sanctioned territory; - shipping goods or flying to/from a sanctioned territory; or - paying international transit damage claims

17 SANCTIONS: VIOLATIONS Potential Offences: Attempts by a US person, or persons within the US to evade sanctions Attempts by a US person to make funds directly or indirectly available to entities or individuals on the “SDN List” US person investing in a company that is an SDN or that is owned or controlled (50%) by an SDN The facilitation and approval of transactions by third parties involving SDNs is prohibited It is a crime for any person (US or not) to conspire to cause a US person to contravene OFAC in any way Under certain sanction regimes a individual can be found guilty of a sanction breach even if that individual did not know the transaction was prohibited

18 SANCTIONS: VIOLATION Possible Responses to Apparent Violations No Action Initiate an Investigation Request further information from the potential violator Issue a Cautionary Letter Find that a Violation Occurred (Non-Monetary) Issue a Civil Monetary Penalty Suspension of Operating License Issuance of a Cease and Desist Order Refer the case for Criminal Prosecution

19 SANCTIONS: PENALTIES Requested Information MUST be Provided $20,000.00 Penalty $50,000.00 Penalty / Violations valued at more than $500K Broad Subpoena Power. “Every person is required to furnish under oath… at any time as may be required… complete information relative to any transaction… … or relative to any property in which any foreign country or any national thereof has any interest of any nature whatsoever, direct or indirect.”

20 Civil & Criminal Penalties Criminal Penalties - up to $1 million per violation - up to 20 years in prison Confiscation of company’s assets Regulatory Enforcement Action Severe Reputational Damage IT IS IMPORTANT TO GET THIS RIGHT! SANCTIONS: PENALTIES

21 General Factors 1. Willful or Reckless Violation of Law 2. Awareness of Conduct at Issue 3. Harm of Sanctions Program 4. Individual Characteristics of Violator(s) 5. Remedial Response 6. Cooperation with Investigating Agency Mitigating Factors 1. Voluntary Self-Disclosure 2. Effective export compliance program 3. Violation was isolated occurrence 4. License would have been issued 5. Cooperating with Agency

22 SANCTIONS: COMPLIANCE START to FINISH Risk Management Tool - Formal Program - Training/Awareness - Recordkeeping/Audits Competitive Advantage - Increasingly Important to Clients/Customers - Multinationals - 3rd Parties - Relocation Networks

23 SANCTIONS: PROTECT YOURSELF My Country does not impose Sanctions on Territories Listed I am not a US Person IT DOESN’T MATTER! WHY? Sanctions regimes are incredibly complex, and given the international nature of the Int’l HHG Transportation and Relocation Industry as well as the clients we serve, the act of transporting goods and related processes can sometimes impact transactions in unexpected and unforeseen ways.

24 THANK YOU Boris Populoh Willis Relocation Risk Group

25 COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th, 2013 1:00pm – 2:00pm

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