Security Alert Services - OFAC Background

As part of the U.S. Government's efforts to cut off access by terrorists and drug traffickers to the U.S. private sector, the Treasury Department through its Office of Foreign Assets Control (OFAC) has created some major restrictions on U.S. corporations and individuals from dealing with certain prohibited parties. Major areas of concern are money laundering and access to financial services. Therefore, OFAC has ordered that, among others, insurance companies are prohibited from doing business with these Specially Designated Persons. The prohibition goes to writing policies, being owners or beneficiaries of insurance policies and any other relationships with these prohibited names.

Insurance companies are under increasing scrutiny and pressure to avoid dealing with these individuals and businesses on OFAC's list of 5,000+ names. The penalties are severe, including prison terms and substantial fines. Therefore, solutions are needed to avoid inadvertently dealing with a prohibited person. The reach on this list is increasing with the passage of the USA PATRIOT Act, which goes into effect next month requiring agents and health insurers to ensure that they are not dealing with an OFAC blocked person or organization.

Given the categorical restrictions placed on transactions with "Specially Designated Nationals & Blocked Persons", all insurance companies, including the reinsurers, are faced with the need to take some actions to insure that they are not doing business with one of these prohibited parties. Every insurer must find a way to review its business activities to ensure compliance with the OFAC regulations. Like all financial services companies, the insurance companies need to comply with these sweeping restrictions.

Every MIB Member has the same challenge. How do they avoid doing business with OFAC's "Specially Designated Nationals & Blocked Persons"? How do they determine if there are any assets on their books that violate these restrictions or might result in a violation in the future? Every Member must consider developing their own solutions for their computer systems or manually checking each application, claim, asset, etc. We have reviewed some of the solutions that are commercially available; most have been developed to help the banks address payments to prohibited individuals. Whatever solution is considered, there is a need to create the review process and then to constantly monitor the OFAC list for the changes, which can be daily.

MIB's integrated positioning within the workflow of its Members and proven expertise in name searching technologies provide the opportunity for MIB to deliver a solution to address these issues. MIB gains the benefit of economies of scale by having and scrubbing the OFAC list once, and integrating that service enhancement into its existing service platform. Due to the model of the MIB Checking service, the OFAC information can be quickly integrated into the MIB Checking Service Database, and a new service enhancement will be available for Members in a short period of time. Best practices compliance can be achieved seamlessly for effectively screening applicants for individually underwritten life, health, long term care and disability products.

Additionally, we are rapidly developing other potential service opportunities to support other lines of business and transactions including Annuities and Claims in subsequent service offerings. With MIB's extensive network connections to all major insurance carriers and reinsurers, we are uniquely positioned to provide industry wide solutions quickly and efficiently. On this site we have tried to provide some of the best background references for OFAC and the USA PATRIOT Act. As the industry's own information services company, MIB intends to rapidly respond to the need for accurate, secure and easily accessible information to support the U.S. Government's effort to prevent these individuals from dealing with the private sector.