Meeting Compliance Challenges: OFAC Settlement Highlights Critical Insurance Control Gaps
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OFAC's recent enforcement action against American Life Insurance Company (ALICO) provides key insights for insurance compliance teams. On November 14, 2024, ALICO agreed to pay $178,421 to settle Iranian sanctions violations - a case that exposes critical compliance control weaknesses in screening, documentation, and third-party oversight.
The Core Issues
The enforcement action centered on ALICO's processing of $446,077 in transactions for Iranian government-owned entities operating in the UAE. A sales agent successfully circumvented initial rejections by resubmitting altered documentation through alternate channels, exposing gaps in application tracking controls.
Warning Signs
Several red flags emerged during these transactions:
- Documentation displaying Iranian embassy letterhead
- Payment attempts through Bank Melli of Iran, a blocked entity
- Cash payments following rejected bank transactions
- Continued claims processing after suspension orders
Building Better Controls
In response, ALICO implemented key reforms:
- Enhanced screening for sanctioned country references
- Improved tracking systems for rejected applications
- Strengthened training protocols
- New escalation procedures for compliance matches
- Three-year historical review process
Insurance Compliance Lessons
This case reinforces essential compliance requirements:
- Thorough ownership structure screening
- Systematic tracking of rejected applications
- Enhanced third-party administrator oversight
- Clear documentation of compliance decisions
For insurers operating in high-risk jurisdictions, this enforcement action underscores the importance of robust sanctions compliance programs and effective third-party risk management.
Contact Currin Compliance Services to learn how we can help strengthen your compliance framework.
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[Note: This article is intended for informational purposes only and does not constitute legal advice. Companies should consult with their legal counsel regarding specific compliance requirements.]
