NY regulator asks foreign reinsurers about Iran links
Reuters in New York
New York’s financial regulator has asked 20 non-US reinsurers whether they conducted business with entities linked to Iran, as part of a review of these companies’ ability to comply with a new US sanctions law that becomes effective Monday.
The New York’s Department of Financial Services wrote to the companies after learning that three insurers had issued coverage that applied to trades with Iran, according to a copy of the letter seen by Reuters. The three firms could not be identified.
The letter from Superintendent Benjamin Lawsky’s office, dated June 25, was sent to companies including Swiss Re, Lloyd’s of London and Hannover Re.
The New York regulator also asked the reinsurers to provide details regarding any business they have done with Switzerland-based commodities giants Glencore Xstrata and Trafigura that will continue after Monday.
The letter cites news reports that Glencore and Trafigura had supplied thousands of tons of alumina to an Iranian firm that provided aluminium to Iran’s nuclear program.
Glencore declined to comment on the letter. A Trafigura spokeswoman said in a statement to Reuters that the company is compliant with national and international law where applicable.
A Glencore spokesman had said in May the company broke no regulations and did not violate the sanctions.
A Swiss Re spokesman confirmed the company had received a letter from the New York regulator requesting information regarding its international trade controls. “They want to know what controls are in place to ensure compliance with US sanctions on Iran,” he said.
He added that the company is aware of its legal obligations and has controls in place to ensure its compliance.
Lloyds of London said in an e-mailed statement, “Lloyd’s will comply with any applicable sanctions, as it always has done.”
The world’s third biggest reinsurer, Hannover Re, declined to comment directly on US developments.
“Hannover Re is strictly compliant with the sanctions implemented by the European Union and the United Nations,” a company spokeswoman said.
Financial services firms, including insurance and reinsurance companies, are prohibited from providing services to companies that do business with Iran under the Iran Freedom and Counter-Proliferation Act of last year (IFCPA), signed by President Barack Obama in January.
The act and other sanctions are aimed at making it hard for Iran to sell oil and limiting funds for its nuclear program, which some in the West believe is being used to develop weapons. Iran says the program is purely for civilian purposes.
Any violation of the IFCPA will prohibit a company from engaging in any business in the United States, and US financial firms may be prohibited from making loans or issuing credit to it.
The regulator also asked the companies to explain all their policies and procedures to ensure compliance with the new law and identify all lines of business which may be subject to sanctions under the law.