Frequently Asked Questions

103. What if the commercial setting and/or market circumstances of a global insurance policy does not permit the use of an OFAC exclusion such as the one noted above?

103 … OFAC recognizes that U.S. insurers often compete in international markets where non-U.S. insurers are willing and able to issue global insurance policies without a U.S. sanctions exclusion. In cases where such an exclusion is not commercially feasible, the insurer should apply for a specific… Read more

61. State insurance statutes regulate an insurer's ability to withhold claim payments, cancel policies or to decline to enter into policies. In some cases, insurers must commit an ostensible violation of state insurance regulations to comply with OFAC regulations. Does OFAC have a position as to whether OFAC regulations preempt state insurance regulations in this context?

61 … OFAC's regulations under the Trading with the Enemy Act and the International Emergency Economic Powers Act are based on Presidential declarations of national emergency and preempt state insurance regulations. OFAC regulations are not federal insurance regulations, they are regulations… Read more

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?

62 … 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… Read more

63. What should an insurer do if it discovers that a policyholder is or becomes a Specially Designated National (SDN)--cancel the policy, void the policy ab initio, non-renew the policy, refuse to pay claims under the policy? Should the claim be paid under a policy issued to an SDN if the payment is to an innocent third-party (for example, the injured party in an automobile accident)?

63 … The first thing an insurance company should do upon discovery of such a policy is to contact OFAC Compliance . OFAC will work with you on the specifics of the case. It is possible a license could be issued to allow the receipt of premium payments to keep the policy in force. Although it is… Read more

64. A workers' compensation policy is with the employer, not the employee. Is it permissible for an insurer to maintain a workers compensation policy that would cover a person on the Specially Designated Nationals (SDN) List, since the insurer is not transacting business with the SDN, but only with his/her employer?

64 … If an insurer knows that a person covered under the group policy is an SDN, that person’s coverage is blocked, and if he or she makes a claim under the policy, the claim cannot be paid. If an insurer does not know the names of those covered under a group policy, it would have no reason to know… Read more

65. How frequently is an insurer expected to scrub its databases for OFAC compliance?

65 … That is up to your firm and your regulator. Remember that a critical aspect of the designation of a Specially Designated National (SDN) is that the SDN's assets must be frozen immediately, before they can be removed from U.S. jurisdiction. If a firm only scrubs its database quarterly, it could… Read more

102. How can an insurer participate in worldwide insurance markets through global insurance policies if, by definition, coverage extends to potential risks in sanctioned countries?

102 … The best and most reliable approach for insuring global risks without violating U.S. sanctions law is to insert in global insurance policies an explicit exclusion for risks that would violate U.S. sanctions law. For example, the following standard exclusion clause is often used in open marine… Read more

104. Can an insurer offer global travel insurance and worldwide travel assistance without violating U.S. sanctions?

104 … The provision of all travel related services are authorized for all OFAC country sanctions programs (including Burma, Iran and Sudan) except Cuba. Travel related services may only be provided in Cuba pursuant to a valid general or specific OFAC license. If the traveler is a U.S. person… Read more

66. Is it sufficient if my company screens life insurance policies only prior to policy issuance?

66 … That is up to your firm and your regulators. Conducting screening only before policy issuance is critical but would not likely achieve your desired level of compliance. After the policy issuance, the U.S. Government may designate an existing policyholder or a named beneficiary as a Specially… Read more

68. If my screening efforts uncover a policyholder who became a Specially Designated National after policy issuance, can I notify the policyholder that the policy is "blocked"?

68 … Yes, the insurer may notify the policyholder that the policy is blocked, without obtaining a specific license from OFAC. … If my screening efforts uncover a policyholder who became a Specially Designated National after policy issuance, can I notify the policyholder that the policy is …

Frequently Asked Questions

Office of Terrorism and Financial Intelligence