On August 2, 2016, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) issued a Finding of Violation against two health insurance providers for activities that violated U.S. economic sanctions. The companies allegedly had issued health insurance policies that covered individuals on OFAC's List of Specially Designated Nationals and Blocked Persons (the SDN List). In general, U.S. companies are prohibited from performing any transaction with or involving parties on the SDN List.
OFAC updates the SDN List frequently, and often without warning. In this case, after OFAC designated the three parties at issue, neither company (nor their third-party administrators) screened the policyholders against the SDN List. As a result, the companies failed to identify and block the policies and premium payments in which one or more of the SDNs had an interest.
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