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62. What should an insurer do if an applicant for a policy, or the underlying insured activity, is subject to OFAC sanctions?
Insurance industry participants, including underwriters, brokers, and agents, are responsible for compliance with OFAC sanctions throughout the lifecycle of their involvement with an insurance policy or other product or service.
If a U.S. insurer receives an application for a policy from a person whose property and interests in property are blocked, such as a person on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), OFAC sanctions prohibit the insurer from issuing the policy, unless authorized or exempt, because doing so would provide a service (i.e., coverage) to the blocked person. If the blocked person sends a deposit to the insurer along with the application, the deposit must be blocked and reported to OFAC within 10 business days, unless authorized or exempt. If an insurer receives an application from a party on one of OFAC's other sanctions lists, please review the relevant prohibitions carefully before taking any action. For information on specific prohibitions, authorizations, or exemptions under a particular OFAC sanctions program, please see the relevant OFAC implementing regulations and the Sanctions Programs and Country Information page on OFAC's website.
Date Updated: November 13, 2024
Date Released
September 10, 2002
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62. At what point must an insurer check to determine whether an applicant for a policy is a Specially Designated National (SDN) or is on one of OFAC's other sanctions lists?
If you receive an application from an SDN for a policy, you are under an obligation not to issue the policy. Remember that when you are insuring someone, you are providing a service to that person. You are not allowed to provide any services to an SDN. If the SDN sends a deposit along with the application, you must block the payment. If you receive an application from a party on one of OFAC's other sanctions lists, please review the specific treatment prohibitions associated with that list carefully before taking any action. [09-10-2002]
1) OFAC expects routine re-screening of pre-existing customers. See AXA Equitable Life Insurance Company (2016), Bupa Florida (2014) and GEICO General Insurance Company (2nd action) (2010) for examples of insurance companies being fined for failing to re-screen pre-existing persons insured.
2) FAQ amended on 11-13-24 to specify that “underwriters, brokers, and agents” are each responsible for OFAC compliance, and make other edits.
3) OFAC says “[i]f the blocked person sends a deposit to the insurer along with the application, the deposit must be blocked and reported to OFAC within 10 business days, unless authorized or exempt,” but what if the deposit isn’t sent? Would the mere filing of an application for insurance that a U.S. person cannot accept due to sanctions constitute a “rejected transaction” for purposes of 501.604 of the RPPR? If so, it is somewhat unusual that OFAC would explicitly flag the RPPR obligation to block funds, but not the rejected transaction obligation if funds are not provided along with the application.