All you need to know about Financial Sanctions

Following feedback from our brokers, we know sanctions are an area which still causes some confusion.  It’s essential you know what’s expected of you as a financial services provider and what steps you can take to prevent a breach.

What is a sanction?

A company or a person which the appropriate authorities (UN, European Commission and/or the UK Government) determine that by the nature of their activities should not be allowed access to ‘financial resources’ and are placed on the relevant sanctions list. The list maintained by HM Treasury includes all the sanctioned companies and individuals irrespective of the authority that determined that they should not be allowed access to ‘financial resources’. In addition, specific countries are also subject to trade and financial sanctions.

What does it mean to you?

HM Treasury has issued a general licence that allows sanctioned companies and people to take out insurance policies. If you identify a sanctioned company or person has taken out an insurance policy, you have a duty to notify HM Treasury “without delay”. This requirement would fall on a broker as much as on LV= where this occurs.

Any payment to a sanctioned company or person, such as a refund of premiums or payment of a claim needs to be approved by HM Treasury prior to making the payment.

What do you need to do to avoid a breach?

It’s unlikely you’ll see many policies taken out by sanctioned companies or people and therefore unlikely a financial sanction breach will occur.  However it’s important you have appropriate systems and controls in place to identify a policy taken out by, or a payment due to, a sanctioned company or person. The only way that this can be done is to ensure that policy and payment data are screened against the current sanctions list maintained by HM Treasury.

Need further advice please visit:

www.gov.uk/government/publications/financial-sanctions-faqs – sanctions related frequently asked questions issued by HM Treasury

https://www.handbook.fca.org.uk/handbook/FC/link/PDF.html – Chapter 7 of Part 1 of the FCA’s “Financial Crime – a guide to firms”

www.jmlsg.org.uk – Chapter 4 of Part III of the JMLSG guidance



Categories: Commercial Lines, Personal Lines

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