Sanctions and PEP Screening for Insurance Staff

Sanctions screening in insurance means checking the names behind a policy or a claim against official sanctions lists, before you offer cover, take a premium or pay money. If a name matches, you stop and escalate. You do not carry on, and you do not warn the customer. This guide explains what sanctions are, when to screen, how to work through a hit, and how political exposure fits in.

You do not need a legal background. You need to know when to screen, how to read a result, and when to hand the case to someone with the authority to decide. The exact lists, penalties and licensing rules depend on the country and the insurer. Your employer's procedure is the authority at your desk.

What sanctions are and who imposes them

Sanctions are legal restrictions placed on people, companies, governments or whole sectors, to put pressure on behaviour that other countries or international bodies reject. They are set by governments and by international organisations. The body that imposes them, the list it publishes and the exact legal effect depend on where you work.

For an insurer, the idea is simple. If a person, company or vessel is under sanctions, you must not deal with them, and you must not make funds or economic benefit available to them. Dealing includes selling a policy, renewing it, handling a claim or sending money.

Sanctions are not the same as a crime check. A person may be on a list without any conviction. The list is a legal fact, and you obey it whether or not you think it is fair.

Individuals, entities, vessels, sectors and territories

Sanctions can attach to different things. It helps to know the five kinds.

Individuals. A named person, often with a date of birth, a nationality and sometimes other names.
Entities. Companies, charities, banks and other organisations.
Vessels. Ships, which matters for marine and cargo insurance.
Sectors. Whole industries, such as certain types of trade or finance, with limits on specific activities.
Territories. Regions or countries where dealing is restricted, in full or in part.

A person can be safe, but the activity can still be restricted. A shipping company that is not listed may still carry cargo for a restricted trade. So you check the people, the objects insured and the activity.

Why paying a claim can be a sanctions breach

Many staff think sanctions only matter when you sell. They matter just as much when you pay.

Say a cargo policy is issued to an unlisted company. Later, a claim arrives. The money would go to a person who turns out to be listed, or to a repairer owned by a listed person. Paying that claim could be a breach, even though the policy was fine when sold.

That is why screening does not end at the start. The people who receive money, such as claimants, beneficiaries, repairers, lawyers and brokers, are part of the check. The article on sanctions screening for claims payees, repairers and beneficiaries goes through who to include.

A second point: a cover that was legal when issued can become a problem if a party is listed later. In that case, you do not decide alone. You report it, and your sanctions officer decides what the law allows and whether a licence or approval is needed.

Ownership and control: unlisted but still sanctioned

A company that is not on any list can still be treated as sanctioned if a listed person owns it or controls it. The rules differ between countries. Some look at ownership above a stated share. Some look at control through influence, directors or contracts.

Why it matters: a listed person can hide behind a chain of companies, or put assets in a relative's name. If you screen only the name of the company, you miss it.

What you do at the desk:

Collect the owners and controllers during onboarding. Our know your customer guide shows how to follow the chain.
Screen the owners and the controllers, not only the company.
Pass any doubt about the combined ownership to your sanctions officer. Do not do the arithmetic alone if your procedure says otherwise.

The article on the sanctions ownership and control rule works through an example with percentages.

Working a screening hit

A screening system compares the names on your file with a list and flags matches. A flag is called a hit. Most hits are not real. A common name will match many strangers.

The goal is to decide, with evidence, whether the hit is the same person or a different one. This is called clearing a false positive. A good workflow looks like this.

Compare the identifiers. Name spelling, date of birth, nationality, address, passport number, company number, vessel number.
Look at what does not match. Different birth year or country is a strong sign of a different person.
Look at what does match. If most identifiers match, or the available ones match and nothing contradicts, treat it as real.
Record your reasoning. Write what you compared and why you decided. A note that says only "false positive" is not enough.
Escalate when unsure. If you cannot be sure, treat the case as unresolved and hand it to your sanctions officer.
Hold the transaction. Until the hit is cleared or decided, do not issue, renew, pay or release.

Do not tell the customer they are on a list. Use a neutral explanation such as "we need to complete a routine check".

See how to clear a sanctions screening false positive for a worked case.

Screening at quote, inception, change, renewal and claim

Screening is not a one-time event. A list changes over time, and so does the information on your file.

Quote. Screen the proposer and the main parties before you commit.
Inception. Screen again before cover starts, with the full set of parties.
Change. A new policyholder, beneficiary, payer, address, vessel or route needs a fresh screening of the new party.
Renewal. Screen all parties again against the lists as they stand at renewal.
Claim. Screen the claimant, the payee and any other recipient before you pay.

Many insurers also run automatic rescreening of the whole portfolio when a list changes. If yours does, you still screen at each event, because the system may not know about a party added to the file in a note or a letter.

Claimants, repairers and other payees

At claim time, the money may go to people who were never customers. A garage repairs a car. A hospital treats a person. A lawyer represents a claimant. A contractor rebuilds a house. Each is a payee.

Screen:

the claimant;
every person or company who will receive money;
the bank account owner, if it is a different name from the payee;
the owners of a company payee where your rules require it.

Be careful with last-minute changes of payee or bank details. These are a fraud risk and also a sanctions risk. Hold them for extra checks.

Voyages, locations and destinations

For marine, cargo, aviation and travel cover, where the insured thing goes matters as much as who owns it.

Check:

the ports of loading and discharge;
the route and any stops;
the flag and the owner of the vessel, plus its previous names;
the place where the insured property sits;
the final destination of goods.

A voyage between two harmless places can still pass through a restricted territory or touch a listed vessel. A change of destination in the middle of a policy is a trigger for fresh screening. If a customer asks for a clause or a wording change that hides the final destination, report it.

Who is a politically exposed person

A politically exposed person, often called a PEP, is someone who holds or has held a senior public role. Examples are heads of state, ministers, senior judges and military officers, senior managers of state companies, and top officials of political parties. Family members and close associates are usually included.

A PEP is not a bad person. Many PEPs are honest. The reason for extra care is that public office gives access to public money, and corruption is a major source of dirty funds. So a PEP relationship is higher risk by nature, not because of any wrongdoing.

The precise definition, how long a person stays a PEP after leaving office, and which family members count, are set by the rules where you work and your employer's policy. Do not guess them. See who is a politically exposed person in insurance.

Managing a politically exposed relationship

When a customer is a PEP, your employer's procedure will usually require extra steps. The common ones are:

senior approval before you take the customer or continue the relationship;
a closer look at the source of funds and source of wealth, with evidence;
a higher risk rating and more frequent reviews;
closer watching of payments.

Treat the customer politely. Explain that these steps apply to everyone in this category. Do not suggest wrongdoing.

Say you discover that a customer became a PEP after the policy started, for instance after an election. This happens. You do not cancel the policy on your own. You report it, and the procedure tells you what extra steps to take. The article on what to do when a PEP is discovered after inception covers this case.

A sanctions hit and a PEP hit are different. A sanctions hit usually means you must stop. A PEP hit usually means you must add care and approval. Do not mix the two.

Quick reference: the screening moments

Moment	What to screen	If there is a hit
Quote	Proposer, main parties	Hold the quote, escalate
Inception	All parties, owners, controllers, vessels, locations	Do not issue cover until cleared
Change	The new or changed party	Hold the change
Renewal	All parties again	Hold the renewal
Claim	Claimant, payees, bank account owners	Do not pay until cleared
PEP result	The person and close family and associates	Senior approval, extra checks

Always write down what you screened, the date, the result and your reasoning.

Learn this in five minutes

The track "Why an Insurer Cannot Deal with a Sanctioned Party" in InsureSkills covers what sanctions are and who imposes them, the five kinds of target, why paying a claim can be a breach, ownership and control, and what happens when a breach occurs. Each lesson takes five minutes.

Questions people ask

Do I screen the customer's name only?

No. Screen every party who plays a role: the policyholder, the payer, the insured, the beneficiary, the owners and controllers of a company, the claimant and any payee. For marine and cargo, also screen vessels, ports and routes.

What do I do if the name is similar but not identical?

Do not clear it by eye alone. Compare every identifier you have, write down what matched and what did not, and escalate to your sanctions officer if you cannot be sure. Names are spelled in many ways, so a near match may be the same person.

Can I tell the customer they are on a sanctions list?

No. Do not tell the customer, a broker or a third party. Use a neutral reason for the delay and pass the case to compliance. Our article on tipping off covers wording in a related situation.

Is a PEP the same as a sanctioned person?

No. A PEP holds or held a public role and needs extra care. A sanctioned person is under legal restriction and usually cannot be dealt with at all. A person can be both, and then the sanctions rule comes first.

Who decides whether a hit is real?

Your sanctions officer or the team named in your procedure. You do the first comparison, record it and escalate. Which lists and which rules apply depends on where you work, so ask your compliance team rather than assuming. For the wider anti-money-laundering picture, see our guide on how money laundering works through insurance.