The New York State Insurance Department (the "Department") recently issued Circular Letter No. 11 to remind licensees of their obligations to comply with three federal laws: (i) the Bank Secrecy Act set forth in 31 U.S.C. §§ 5311-5330 ("BSA"); (ii) the Foreign Corrupt Practices Act set forth in 15 U.S.C. § 78dd-1-78dd-3 ("FCPA"); and (iii) requirements issued by the Office of Foreign Assets Control set forth in 31 U.S.C. § 313(a)(6)(c) ("OFAC", collectively with BSA and FCPA, the "Federal Laws").
Bank Secrecy Act
Under the BSA, the United States Department of Treasury requires each insurance company to develop a written anti-money laundering program designed to detect and prevent the use of "covered products" in terrorist activists. Covered products include permanent life insurance policies, annuity contracts, or any other insurance product with features of cash value or investment.
Foreign Corrupt Practices Act
The United States Securities and Exchange Commission and the Department of Justice are charged with the enforcement of the FCPA. The FCPA make it unlawful for U.S. citizens and corporations with a principal place of business in the United States to pay, offer, or promise to pay a foreign official with the corrupt intent to obtain or retain business or to secure an improper advantage.
Office of Foreign Assets Control
OFAC is an agency of the United States Department of Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy against specific foreign nations and terrorists. OFAC prohibits United States-based underwriter, broker, agent, primary insurer, reinsurer or United States citizen employee of a foreign insurance firm from engaging in any transaction that involves any person or entity on its Specially Designated National List.
The Department will assess compliance under the Federal Laws as part of its routine review of a company’s overall compliance. The Department may, upon its discretion, inquire the members of a licensee’s senior most governing body or senior management about the policies the licensee maintains in order to comply with the Federal Laws and may review the licensee’s policies to ensure compliance.