OFAC revokes so-called U-turn authorization for Cuba-related financial transactions
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.
As many jurisdictions, including Australia, set about strengthening their bribery and anti-corruption laws, multinational insurers and insurance brokers need to consider the bribery and corruption risks to which they are vulnerable when venturing into Asian markets.
In Australia, a new books and records offence came into force on March 1, 2016. It has extra-territorial reach and will make it easier for regulators and prosecutors to investigate, prosecute and penalise companies and individuals who misdescribe payments in their accounts in a way which facilitates, conceals or disguises bribery.
These reforms may herald the beginning of a new era of anti-bribery enforcement activity in Australia against companies and individuals. The backdrop includes recent enforcement activity in the US (under the Foreign Corrupt Practices Act) and the UK (under the Bribery Act and the Financial Services and Markets Act) and the ongoing Senate Inquiry into Australia’s foreign bribery laws, which is likely to lead to further reforms.
The past few years have seen a number of high profile enforcement actions against insurers and insurance brokers by US and UK regulators, resulting in multi-million dollar fines and penalties. At the same time, insurers and brokers continue to seek out new opportunities in higher risk, emerging markets. In Australia, this is a symptom of the current low growth sentiment in domestic financial services and insurance markets. It also reflects the increased demand for insurance capacity across Asian economies and a growing appetite among international insurers and brokers to expand into those markets. Some insurers have reported significant profits as a result of expansion into Asia.
But US and UK regulators and prosecutors have imposed fines on insurance brokers doing business in Asia. Fines have been imposed for failing to maintain effective systems and controls to prevent financial crime and for violating books and records provisions. The SEC has also taken enforcement action against an insurer for allowing an Indonesian joint venture to make improper payments in return for insurance contracts on large government projects. Risk factors highlighted by these cases include higher risk countries and classes of business, large contracts, use of overseas introducers and State involvement.
These enforcement actions arise out of business transacted in Bangladesh, Myanmar, Indonesia, Vietnam and other high risk jurisdictions. They should be of interest to insurers and brokers who are transacting business in Asia or who plan to expand into the region, whether through acquisitions, joint ventures, agencies, introducers or otherwise. China, India, Malaysia and Thailand are also seen as having high growth potential. These jurisdictions receive scores of 50 or less out of 100 in Transparency International’s Corruption Perceptions Index.
As these enforcement actions demonstrate, insurers and brokers need to establish and maintain an effective culture and control environment, wherever they operate, in order to mitigate financial crime risks.
This must include:
The key message from earlier enforcement actions is that emerging markets may present significant growth opportunities, but they also give rise to bribery and corruption risks. Insurers and brokers need to take effective steps to prevent the occurrence of bribery and corruption in their distribution chains.
On 5 September 2019, Professor John McMillan AO’s Final Report (Report) on the operation of the Narcotic Drugs Act 1967 (ND Act) was tabled in Parliament. Section 26A of the ND Act required the Minster to cause a review of the operation of the ND Act to be undertaken.