Travel service company to pay $6M for violating Cuba sanctions

According to the settlement agreement, between June 2010 and January 2015, Generali Global Assistance (GGA) served as a travel service provider for two Canadian insurers that offered medical expense reimbursement and other travel services for non-U.S. Canadian subscribers who traveled to Cuba. GGA provided medical expense claims processing and payment services to support the claims paid to Canadian travelers who were insured under a group policy issued by one of those Canadian insurers.

“GGA dealt in blocked property in which Cuba or a Cuban national had an interest by (i) providing prohibited post-travel claim reimbursements directly to Canadian travelers who had travelled to Cuba, and (ii) providing for the indirect payment of claims to Cuban service providers through a Canadian affiliate,” the settlement agreement stated. In total, GGA processed 2,593 claims reimbursements, with a value of $285,760.

Such activity violated the Cuban Assets Control Regulations (CACR). According to OFAC, GGA intentionally referred the Cuba-related payments to its Canadian affiliate to avoid processing reimbursement payments directly to Cuban parties and to travelers located in Cuba. GGA then subsequently reimbursed its Canadian affiliate for those payments.

“GGA codified this referral process in its procedures manual, which provided instructions to GGA employees on how to service Canadian travelers’ policies,” according to the settlement agreement. OFAC determined GGA voluntarily self-disclosed the violations and that the violations constituted an egregious case.

Compliance commitment

GGA has committed to maintain for at least five years a sanctions compliance program that’s designed to minimize the risk of recurrence of similar conduct in the future. Specifically, it has made the following compliance commitments:

Management commitment: Senior management and its board must review, approve, and support the sanctions compliance program, including by promoting a culture of compliance; delegate “sufficient authority and autonomy” to compliance unit(s) to effectively deploy policies and procedures; and ensure the compliance unit(s) have “adequate resources” relative to the “breadth of operations, target and secondary markets, and other factors affecting its overall risk profile.”

Risk assessment: GGA will conduct an OFAC risk assessment “in a manner, and with a frequency, that adequately accounts for potential risks. Such risks could be posed by its clients and customers, products, services, supply chain, intermediaries, counterparties, transactions, and geographic locations, depending on the nature of the organization.”

Internal controls: GGA has designed and implemented written policies and procedures outlining its sanctions compliance plan. These internal controls should enable the company “to clearly and effectively identify, interdict, escalate, and report to appropriate personnel within the organization transactions and activity that may be prohibited by OFAC,” the settlement agreement stated. Any weakness in its internal controls pertaining to sanctions compliance must be remediated.

Testing or auditing: GGA must ensure the testing or audit function “is accountable to senior management, is independent of the audited activities and functions, and has sufficient authority, skills, expertise, resources, and authority within the organization.”

Training: GGA must ensure its OFAC-related training program “provides adequate information and instruction to employees and, as appropriate, stakeholders—for example, clients, suppliers, business partners, and counterparties).”

Such compliance commitments align with those outlined in similar settlement agreements with OFAC regarding U.S. sanctions violations.

New Cuba sanctions

Prudent chief compliance officers and chief risk officers will want to pay attention to OFAC enforcement actions related to violations of U.S. sanctions on Cuba, given that OFAC on Sept. 24 published amendments to the CACR that further restrict U.S. engagement with Cuba. The changes, which are effective immediately, restrict lodging at certain properties in Cuba; importing Cuban-origin alcohol or tobacco products; attending or organizing professional meetings or conferences in Cuba; and participating in and organizing certain public performances, clinics, workshops, competitions, and exhibitions in Cuba.

“The Cuban regime has been redirecting revenue from authorized U.S. travel for its own benefit, often at the expense of the Cuban people,” Treasury Secretary Steven Mnuchin said in a statement. “This Administration is committed to denying Cuba’s oppressive regime access to revenues used to fund their malign activities, both at home and abroad.” For more clarity on these changes, OFAC issued an updated series of Frequently Asked Questions.