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?
OFAC ‘s regulations under the trade with the Enemy Act and the International Emergency Economic Powers Act are based on presidential declarations of national hand brake and preempt state indemnity regulations. OFAC regulations are not federal policy regulations, they are regulations promulgated under the President ‘s exercise of foreign-affairs and national hand brake powers .

Released on September 10, 2002
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 person, you are providing a military service to that person. You are not allowed to provide any services to an SDN. If the SDN sends a sediment 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 cautiously before taking any action .
Released on September 10, 2002
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)?
The inaugural thing an indemnity ship’s 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 improbable that a payment would be licensed to an SDN, it is possible that a requital would be allowed to an innocent third party. The important thing to remember is that the policy itself is a block shrink and all dealings with it must involve OFAC .
Released on September 10, 2002
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?
If an insurance company knows that a person covered under the group policy is an SDN, that person ’ sulfur coverage is blocked, and if he or she makes a claim under the policy, the claim can not be paid. If an insurance company does not know the names of those covered under a group policy, it would have no rationality to know it needed to block anything unless and until an SDN files a claim under that policy. At that degree its block prerequisite would kick in .
If an insurance company knows that a person covered under a group policy is on one of OFAC ‘s early sanctions lists, a unlike set of restrictions may apply. The insurance company should contact OFAC if a claim is filed by an individual on one of the other sanctions lists .
Released on January 30, 2015
65. How frequently is an insurer expected to scrub its databases for OFAC compliance?
That is up to your firm and your regulator. Remember that a critical aspect of the appointment of a Specially Designated National ( SDN ) is that the SDN ‘s assets must be freeze immediately, before they can be removed from U.S. legal power. If a firm only scrubs its database quarterly, it could be 3 months besides deep in freezing targeted assets. Although the prohibitions and treatments for individuals and entities on OFAC ‘s early sanctions lists are unlike from those on the SDN number, there may be exchangeable consequences if your fast takes a long fourth dimension in recognizing a sanctions tilt match .
OFAC ‘s sanctions lists may be updated a frequently as a few times a workweek or adenine rarely as once in a calendar month .
Released on January 30, 2015
66. Is it sufficient if my company screens life insurance policies only prior to policy issuance?

That is up to your firm and your regulators. Conducting screening entirely earlier policy issue is critical but would not likely achieve your desire floor of submission. After the policy issue, the U.S. Government may designate an existing policyholder or a named benefactive role as a Specially Designated National or Blocked Person ( “ SDN ” ), or it may expand sanctions with esteem to a particular area, or impose sanctions against a new area. If an existing policyholder or a named benefactive role became an SDN or otherwise subject to U.S. sanctions, the insurance company may be required to “ block ” the policy, report card such blocking to OFAC within 10 days of the SDN appointment, space any future premiums into a block, interest-bearing account at a U.S. fiscal institution, and seek an OFAC license before making any payments under the policy. other restrictions may apply if a policyholder or a named beneficiary is added to one of OFAC ‘s other sanctions lists. consequently, routinely screening all policies against OFAC ’ s sanctions lists, as frequently updated, would enable the insurance company to comply with the applicable OFAC regulative requirements. It besides is authoritative to screen the policyholder and beneficiary anterior to paying a claim .
Released on January 30, 2015
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”?
Yes, the insurance company may notify the policyholder that the policy is blocked, without obtaining a specific license from OFAC .
Released on May 1, 2003
69. In my letter to the policyholder whose policy is “blocked,” may I also instruct the policyholder not to send any more premium or that we will not accept additional premium under this account?
The insurance company may instruct the policyholder as follows : “ If you send any more premium, we are required under applicable U.S. laws and regulations to place such funds in a blocked account. If you have any questions, please contact the U.S. Department of Treasury ’ s Office of Foreign Assets Control. ”
Released on May 1, 2003
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?
The best and most reliable approach for insuring global risks without violating U.S. sanctions law is to insert in ball-shaped insurance policies an denotative exception for risks that would violate U.S. sanctions law. For exemplar, the pursue standard ejection article is much used in open marine cargo policies to avoid OFAC conformity problems : “ whenever coverage provided by this policy would be in trespass of any U.S. economic or barter sanctions, such coverage shall be nothing and invalidate. ” The legal effect of this exclusion is to prevent the elongation of a banned service ( policy or risk assumption ) to sanction countries, entities or individuals. It basically shifts the risk of loss for the implicit in transaction back to the insured – the person more probably to have direct control over the economic activeness giving arise to the contact with a ratified area, entity or individual .
Released on November 16, 2007
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?
OFAC recognizes that U.S. insurers frequently compete in international markets where non-U.S. insurers are uncoerced and able to issue global policy policies without a U.S. sanctions ejection. In cases where such an exclusion is not commercially feasible, the insurance company should apply for a particular OFAC license for the global policy policy. In making a license determination, OFAC will review the facts and circumstances of each global indemnity policy, including both risk frequency and risk severity, to assure that issue of the policy will not undermine U.S. extraneous policy goals. A divide license would be required for the insurance company to pay claims arising under any authorize global insurance policy .
Released on November 16, 2007
104. Can an insurer offer global travel insurance and worldwide travel assistance without violating U.S. sanctions?

The planning of all travel related services are authorized for all OFAC country sanctions programs ( including Burma, Iran and Sudan ) except Cuba. Travel refer services may only be provided in Cuba pursuant to a valid general or particular OFAC license. If the traveler is a U.S. person traveling to Cuba pursuant to a valid OFAC license, travel insurance may be issued to the traveler by a U.S. insurance company without a separate license. similarly, the issue or provision of coverage for ball-shaped health, life sentence, or change of location insurance policies for individuals normally resident in a nation outside of Cuba who travel to or within Cuba is authorized by general license, as is the serve of such policies and payment of title arising from events that occurred while the individual was traveling in, or to or from, Cuba. additionally, insurers should check OFAC ’ mho list of Specially Designated Nationals and other sanctions lists to ensure that no forbidden services are rendered to persons or entities on those lists .
Released on January 15, 2015

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