Insurers Beware: The Risks of Failing to Comply With OFAC SDN Screening Requirements


August 8 2016

Two related enforcement actions by the U.S. Department of Treasury’s Office of Foreign Assets Compliance (OFAC) are stark reminders that health insurance providers (and other insurers) must maintain adequate U.S. trade sanctions compliance programs, including conducting screening of customers and others. While the insurance company and its third party administrator (TPA), which provided health insurance coverage to, and received payments from, sanctioned narcotics dealers, were fortunate to escape with non-monetary “Findings of Violation,” in the future insurers that do not engage in adequate screening and other trade sanctions compliance measures may not be so lucky.

In its recent enforcement actions, OFAC found that AXA Equitable Life Insurance Company (AXA) facilitated and/or processed payments and maintained two health insurance policies in which SDNs had an interest. When AXA issued the policies in 1992, the policy holders were not on the SDN List. The Kanawha Insurance Company (whose parent company is Humana, Inc.), as TPA, serviced the policies, collected premiums, maintained policy records, and answered general inquiries from insured parties.