American International Group is under fire from regulators again, this time for agreeing to sell coverage to clients with ties to Cuba—a violation of sanctions placed by the US government, AIG
’s majority shareholder.
AIG units sold the policies to a Canadian client from 2006 through March 2009, protecting the corporation from risks in Cuba, including pollution liability, according to a Friday statement from the US Treasury Department’s Office of Foreign Assets Control.
What’s more, AIG also provided travel coverage to Canadians taking trips to Cuba from March 2006 to September 2008. The global insurer gleaned roughly $338,000 in travel premiums and more than $500,000 for commercial policies.
The report added that AIG and certain of its management “had actual knowledge of the conduct.
“The compliance programs of AIG’s two Canadian subsidiaries were inadequate,” the Foreign Assets Control report said.
OFAC said it considered AIG’s offence “non-egregious,” but nevertheless fined the company $279,038. The company’s cooperation lessened the fine, the department stressed.
“Upon identifying and voluntarily disclosing these matters, AIG implemented comprehensive improvements to its global sanctions compliance program, including improvements targeted to more effectively address applicable sanctions laws,” said AIG spokesman Matt Gallagher
The news comes as AIG faces a legal fight with the New York Department of Financial Services, which accused two of its former units—American Life Insurance Co. (ALICO) and DelAm—of soliciting insurance business in the state without a license.
AIG disputed the actions, and is currently attempting to block any action from either the DFS or Superintendent Benjamin Lawsky. AIG claims New York officials have threatened to seek “substantial monetary penalties” from AIG over ALICO’s activities, which violates the insurer’s right to due process under the US Constitution.