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6 December 2010. Issue 137 in the series
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Welcome to TT Talk Edition 137
Contents:
1. Introduction
2. Insurance - Sanctions and the Club
3. Summary
4. Conclusion
1. Introduction
In recent months the international trading world, including the Club and its Members, has been faced with an intensified sanction regime.
The position under the major legislative changes is summarised in this issue and impact all those in the transport and logistics industry involved in international trade, as well as insurers. Readers can follow the link at the end for more detailed information that the Club sent out to its Members by way of Circular recently.
(a) OFAC (Treasury Office of Foreign Assets Control and the Department of Commerce)
This emanates from the United States against designated states, regimes, companies and people, including Iran.
OFAC enforces sanctions against 15 territories and over 6000 individuals, entities, and vessels (Specially Designated Nationals) (SDNs) involved in activities inimical to US interests. The activities include WMD, terrorism, and drug trafficking. It is illegal for a ’US person’ without an OFAC licence to engage in a ‘prohibited transaction’ with a sanctioned territory or an SDN. The territorial sanctions, 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 in respect of other territories are primarily directed against SDNs.
(b) CISADA (Comprehensive Iran Sanctions, Accountability, and Divestment Act 2010)
This is United States regulation applying specifically against Iran. CISADA focuses principally on foreign persons engaging in certain types of transactions with Iran, and imposes sanctions such as blocking foreign exchange and freezing assets. Targeted activities include investing in or otherwise supporting Iran’s petroleum and energy industries.
(c) EU REGULATION 961/2010
Regulation 961, implemented by the European Union against Iran, impacts in particular on insurance and prohibited goods.
It prohibits:
- insurance of the Iranian Government, Iranian persons and bodies or anyone acting on behalf or at the direction of these;
- sale, supply, transport and broking prohibited goods to Iran.
Prohibited goods are defined generally as relating to the nuclear and oil and gas industries, military equipment and internal repression.
2. Insurance - Sanctions and the Club
The TT Club's branch, established in New Jersey, is a ‘US person’ for the purposes of OFAC, and the Club is also subject to CISADA and EU Regulation 961. The constraints of all three regimes turn to a large extent on ‘assistance’ (or ‘facilitation’). This will certainly be widely construed to extend, not only to insurance but also, for example, to handling of claims which are tainted by a breach of the regimes. The bottom line is the following:
- The Club will insure its Members within the terms of their cover to the maximum extent permitted by the regimes
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Although the Club will assist, it must remain the responsibility of Members to ascertain whether what they are doing is permitted by the regimes.
3. Summary
All those involved in international trade need to understand the various regulations and assess the impact on their operations. It is likely that additional procedures will need to be adopted to ensure that, as far as possible, you avoid unwittingly breaching the sanctions. Such additional procedures may assist in defending your position in the event that a breach is alleged.
For more detailed guidance on these sanction regimes and their impact, please follow the link below to the Club’s recent Circular.
>Click here to download the Sanctions Circular<
4. Conclusion
We hope that you will have found the above interesting. If you would like further information, or have any comments, please email us. We look forward to hearing from you.
Peregrine Storrs-Fox
Risk Management Director
TT Club
TT Talk is a free electronic newsletter published as occasion demands, by the TT Club, 90 Fenchurch Street, London, EC3M 4ST, United Kingdom.
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The materials contained in TT Talk have been prepared for information purposes only, and are not a substitute for legal advice. Whilst every care has been taken to ensure the accuracy of the materials,
the editor, any contributor or the TT Club accept no responsibility for loss or damage which may arise from reliance on information contained in TT Talk.In the United States TT Club Mutual Insurance Ltd.
is approved as a surplus lines insurer in most states and is accessible through properly licensed surplus lines brokers.
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