Travel Services Provider Fined $5.9 Million for Cuba Sanctions Violations

Generali Global Assistance Inc. agreed to pay nearly $5.9 million to resolve apparent violations of U.S. sanctions on Cuba, in a settlement that the U.S. Treasury Department said underscored the need for companies to be cognizant of indirect sanctions risks.

The self-reported case stems from Cuba-related insurance reimbursements that the San Diego-based travel services provider routed through a Canadian affiliate in an attempt to avoid U.S. sanctions, the department’s Office of Foreign Assets Control said Thursday.

The total value of the prohibited transactions was low, but the case was an egregious one, OFAC said. Generali appeared to have acted recklessly when it intentionally avoided making direct payments to Cuban entities and formalized a process to make them indirectly—knowing it would be illegal otherwise, the office said. Generali had codified the indirect payment process for Cuba-related payments in its procedures manual, according to the sanctions watchdog.

“[Generali] has worked diligently with OFAC to provide detailed information about these prior practices and has made a substantial investment of time and resources to further improve its sanctions compliance program,” a company spokesman said in a statement.

The apparent violations occurred between 2010 and 2015, when Generali discovered the issue while reviewing its compliance protocols and reported the transactions to the Treasury, the spokesman said.

During that time, Generali served as a provider to two Canadian insurers that offered medical expense reimbursement and other travel services to Canadians traveling to Cuba, according to OFAC.

For reimbursement claims submitted by individual travelers, the company would process the claims much as it did for travelers to other countries, OFAC said. Direct payments requested by Cuban service providers, however, were referred to Generali’s Canadian affiliate, which the company would later reimburse, it said.

Both forms of reimbursements violated U.S. sanctions on Cuba, according to the settlement.

The case demonstrates the importance of ensuring that compliance programs capture direct and indirect sanctions risks, including the risk of implementing a procedure that allows a company to process in a roundabout way a transaction that would otherwise be prohibited, OFAC said.

The office also acknowledged the abrupt changes to U.S. policy on Cuba that occurred between the administrations of Presidents Obama and Trump. Cuba sanctions were at some point revised in a way that authorized some of Generali’s problematic conduct, OFAC said. That was a mitigating factor, it said.

President Obama in December 2014 said he would begin discussions with Cuba on normalizing relations. Shortly after in 2015 the U.S. began easing trade and travel rules and removing Cuban individuals and entities from U.S. blacklists.

But the Trump administration in June 2017 moved to reverse some of the changes and has since incrementally tightened sanctions on the island nation.

In the five years that have lapsed since the company disclosed the payments, Generali has signed multiple extensions to a tolling agreement, which pushes back the deadline by which authorities must bring their claim, so that OFAC could continue its investigation—another mitigating factor, according to OFAC.

Generali also established a formal structure for compliance personnel, and rolled out new sanctions training for its employees, it said.

San Diego-based Generali is part of Italian insurance conglomerate

Assicurazioni Generali

SpA, also known as the Generali Group.

Write to Dylan Tokar at [email protected]

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