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COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th , 2013 1 :00pm – 2 :00pm PowerPoint Presentation
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COMPLYING WITH SANCTIONS, SDNs & TRADE EMBARGOES Wednesday, October 9 th , 2013 1 :00pm – 2 :00pm. BORIS POPULOH Sr. Vice President Willis Relocation Risk Group. SANCTIONS: TODAY’S AGENDA. What Are Sanctions Who Issues Sanctions Sanctions Type & Scope

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COMPLYING WITH

SANCTIONS, SDNs & TRADE

EMBARGOES

Wednesday, October 9th, 2013

1:00pm – 2:00pm

slide2

BORIS POPULOH

Sr. Vice President

Willis Relocation Risk Group

slide3

SANCTIONS: TODAY’S AGENDA

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”

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THEWILLIS 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 AnnuallyintoInsurance Marketplace

- Only Global Broker with Mobility Practice Group (Willis Relocation Risk Group)

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/0

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TRADE RESTRICTIONS ECONOMIC PROTECTIONISM

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TRADE SANCTIONS ECONOMIC PENALTIES

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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.

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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.

WHO ISSUES SANCTIONS?

Any country can impose unilateral sanctions on any other territory. They are referred to as DOMESTIC sanctions.

The European Union* (EU) also issues sanctions which are enforced by each EU member state

In the United States sanctions are issued by the Office of Foreign Asset Control (OFAC)

* 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.

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SANCTIONS: Type & Scope

Trade Sanctions

  • Syria and Iran have broad trade sanctions against them, relating to exports of crude oil and petrochemicals from those countries.

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)

OFAC: Specially Designated Nationals

http://www.ustreas.gov/offices/enforcement/ofac/sdn/index.shtml

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SANCTIONS: Type & Scope

Broad Sanctions

  • target entire countries or industries
  • For example: the oil and petroleum sanctions applicable to Iran and Syria

Smart/Targeted Sanctions

  • target SDNsonly
  • For example: asset freeze on the funds of Korea Mining Corp (North Korea) or Muhammad Gaddafi (son of Colonel Gaddafi) - both are SDNs
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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

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SANCTIONED TERRITORIES

Cuba*

Iran

North Korea

Sudan

Syria

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

Cuba

- 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

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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.

SANCTIONS

SANCTIONS

sanctions imposed against Syria have become significantly broader in recent years

sanctions against Burma have eased and mostly been lifted

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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 Added50 Amended DetailsIncreased Risk for Shippers

14

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SANCTIONS: SDNs

It is a criminal offence for a US person to make funds directly or

indirectlyavailable 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.

15

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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
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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

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SANCTIONS: VIOLATION

Possible Responses to Apparent ViolationsNo 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

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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.”

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SANCTIONS: PENALTIES

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!

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SANCTIONS: PENALTIES

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

slide22

SANCTIONS: COMPLIANCE

Risk Management Tool

- Formal Program

- Training/Awareness

- Recordkeeping/Audits

Competitive Advantage

- Increasingly Important to Clients/Customers - Multinationals - 3rd Parties - Relocation Networks

START to FINISH

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SANCTIONS: PROTECT YOURSELF

My Country does not impose Sanctions on TerritoriesListed

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.

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THANK YOU

Boris PopulohWillis Relocation Risk Groupboris.populoh@willis.comwww.willisrelorisk.com

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COMPLYING WITH

SANCTIONS, SDNs & TRADE

EMBARGOES

Wednesday, October 9th, 2013

1:00pm – 2:00pm