OFAC Compliance
The requirement to screen insurance transactions against the U.S. Treasury's list of sanctioned individuals and entities.
What It Is
The Office of Foreign Assets Control (OFAC) administers and enforces economic sanctions programs. Insurance companies and agencies are required to screen all parties involved in insurance transactions against OFAC's Specially Designated Nationals (SDN) list.
OFAC compliance is a federal requirement that supersedes state regulation. Violations can result in severe civil and criminal penalties, including fines up to $20 million and imprisonment.
Why It Matters for Brokers
OFAC screening is mandatory for all insurance transactions, not just those involving international parties. Domestic individuals and entities can appear on the SDN list. Agencies must screen insureds, additional insureds, certificate holders, and beneficiaries. Many agencies rely on their carriers to perform OFAC screening, but agencies themselves have independent compliance obligations. Failure to screen is a strict liability offense — ignorance is not a defense.
Real-World Example
During onboarding of a new commercial account, the agency's OFAC screening tool flags a match on the insured's name against the SDN list. The agency must investigate whether it is a true match or a false positive before proceeding with the placement.
Common Mistakes
- 1Relying solely on carriers for OFAC screening without independent agency checks
- 2Not screening all parties including additional insureds and certificate holders
- 3Failing to document OFAC screening results for each transaction
- 4Not updating screening tools with current SDN list versions
How brokerageaudit.com Handles This
BrokerageAudit integrates OFAC screening into the client onboarding workflow, automatically checking all parties against current SDN lists.