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Will AON Face an OFAC Designation or an OFAC Penalty?

June 6, 2012 There are some reports being published by African news outlets that AON Corporation, one of the world's largest insurance brokers, is currently facing investigation for its dealings in relation to Zimbabwe diamonds. Included in these reports are that AON's Zimbabwe brokering division has already been warned by the United State Department of the Treasurys Office of Foreign Assets Control (OFAC) in regards to its dealings with sanctioned Mbada Diamonds, by serving as the designated insurance broker for Mbada Diamonds, an entity designated on the OFAC List of Specially Designated Nationals and Blocked Persons (SDN List). AON Zimbabwes parent company is a U.S. entity and as such it potentially falls under OFAC's jurisdiction for the enforcement of economic sanctions. According to a U.S. embassy spokesperson in Harare, any person or company under U.S. jurisdiction which trades with Mbada Diamonds is guilty of contravening US statutes. If these recent reports are true and OFAC is continuing its investigation into AON despite their rumored previous warning from OFAC, one has to wonder if they or their Zimbabwe subsidiary will be prime candidates for designation under the Foreign Sanctions Evader sanctions issued earlier this year. That sanctions program was designed to target those parties assisting in the evasion of U.S. economic sanctions. While it is interesting to consider whether such a designation could be used against AON, it is in my opinion highly unlikely. Designating such a high profile insurance company could wreak havoc globally and due much to disrupt the global financial system. I think a more likely outcome would be a stiff OFAC penalty as opposed to an actual designation. As those in the OFAC banking compliance community know, you don't only have to watch those banks with which you have a correspondent relationship, you also have to watch who your correspondent's correspondents are. The same can be said for insurers. It's not just who you are insuring, but who you are reinsuring. The author of this article is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.