American International Group, better known as AIG to its customers worldwide, agreed to pay the United States Treasury’s Office of Foreign Assets Control (OFAC) $148,698 in fines earlier this year.[i]
The fines were paid to settle potential liabilities for “apparent violations” of OFAC sanctions on Iran, Sudan, and Cuba—AIG had insured shipments to these countries over 550 times between November 2007 and September 2012, totaling $396,530 in premiums and a base fine amount of $198,266.[ii]
What AIG did right
The situation could have been far worse for the organization than it ultimately was, especially given the number of violations involved over the lengthy time period. Additional aggravating factors in the situation included AIG’s size and stature as an organization, and the countries in question that benefited from AIG’s actions. However, AIG itself identified the violations, and voluntarily self-disclosed to OFAC, cooperating with them to the fullest extent by furnishing the necessary information to aid in OFAC’s investigation. “AIG did voluntarily self-disclose the apparent violations, and the apparent violations constitute a non-egregious case,” said OFAC.[iii]
AIG’s situation was further alleviated by other mitigating factors—the extensive OFAC compliance program AIG had in place to prevent the company from engaging in transactions with denied or restricted parties, for one. AIG also took remedial action right away once it realized the violations had occurred.
The takeaways from this situation
Firstly, this case demonstrates the importance of having a full-fledged OFAC compliance program in place, as having one was a major mitigating factor in OFAC’s decision to lessen AIG’s penalties. Secondly, it further reinforces that a violation is not the end of the world—and that if a company is inadvertently engaged in one (or even many, as in AIG’s case), voluntarily self-disclosing infractions to OFAC, and cooperating with OFAC’s investigation can potentially lessen an organization’s financial liability.
[i] OFAC Fines AIG for Insuring Iran, Sudan, and Cuba Shipments. Compliance Week, July 3, 2017. https://www.complianceweek.com/blogs/enforcement-action/ofac-fines-aig-for-insuring-iran-sudan-and-cuba-shipments#.WV0xYITyuUl. Accessed July, 5 2017
[ii] ENFORCEMENT INFORMATION FOR June 26, 2017. OFAC, June 26, 2017. https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20170626_aig.pdf. Accessed July 5, 2017
[iii] ENFORCEMENT INFORMATION FOR June 26, 2017. OFAC, June 26, 2017. https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20170626_aig.pdf. Accessed July 5, 2017