Sanctions & financial crime
Find information on active and pending legislation regarding financial crime, international sanctions and regulatory risk.
Policy documentation that bears the Lloyd’s logo, London address and contains reference to ‘Lloyds Risk Assets Management Ltd’ and/or ‘Lloyds Risk Insurance and Reinsurance Plc’ as underwriter or reinsurer is in circulation. These two entities are not associated with Lloyd’s or the Lloyd’s market and such policy documentation should be reported to Lloyd’s. Extreme caution should be exercised when relying on cover purported in this documentation.
Lloyd’s is not an insurance company, it is a global insurance marketplace where syndicates of underwriters transact business for their own account and risk. The Corporation of Lloyd’s oversees and supports the Lloyd’s market, ensuring it operates efficiently, but does not itself underwrite insurance. Individual insurance policies are arranged by firms of insurance brokers authorised to transact in the Lloyd's marketplace and it is these firms who maintain the records of written contracts.
The identification of fraudulent documentation alleging Lloyd’s writing of performance guarantee or surety bond business has also increased. Lloyd’s does not offer these and any assertion to the contrary should be met with caution and reported to Lloyd’s.
Where members of the public wish to verify insurance cover or have queries over the legitimacy of policy documentation, queries related to verification of cover should be directed to the broker arranging the cover. You can check how to verify your policy here. Market participants and their contact details can be located via the Lloyd’s Market Directory.
Should you have any further queries, you may contact Lloyd’s via email at email@example.com or the regional office most relevant to your query here.
Money laundering is the process used by criminals to disguise the origin and ownership of the proceeds of their criminal activity in order to avoid prosecution, conviction and confiscation. General insurance is considered to face a lower risk of money laundering than other sectors.
UK legislation imposes obligations to report any suspicious transactions to the National Crime Agency (NCA). This requires Lloyd’s market participants to have training and awareness in place for their employees.
IRR offers training and guidance to managing agents to support their anti-money laundering efforts and can assist in reporting suspicious transactions to NCA on behalf of managing agents.
The UK Bribery Act came into force 1 July 2011. It simplifies previous legislation to enable more effective enforcement and prosecution, as well as introducing greater corporate responsibility.
The Act provides for four offences: bribing a person; being bribed; bribing a foreign public official and corporate liability for failing to prevent bribery by associated persons. ‘Associated person’ is defined broadly as any person or entity which performs services for the corporation.
The offence of corporate liability for failing to mitigate the risk of bribery is a strict liability offence and the only defence for a commercial organisation is to demonstrate that it has adequate systems in place to prevent associated persons from engaging in bribery.
These offences can be triggered by illegal contact anywhere in the world. Lloyd’s has produced guidance for managing agents on the impact of the Bribery Act and the implementation of adequate systems and controls.
City of London Police
The City of London Police has commissioned this short crime prevention video to demonstrate the impact that a corruption investigation could have on companies and individuals who ignore the Bribery Act and break the law.
Sanctions include a range of financial or trading restrictions, such as freezes on the assets of and travel restrictions on nominated individuals, bans on financing of state-owned enterprises, prohibitions on the supply of technical, financial and other assistance and outright prohibitions on trade.
Economic, trade or financial sanctions are imposed by governments or the United Nations to exert pressure on individuals or political regimes and for the advancement of foreign policy objectives. In the UK, a person or firm who breaches the terms of a sanction is guilty of a criminal offence.
The most important sanctions for Lloyd’s are those imposed by the US government and the EU. EU sanctions are typically imposed through Council Regulations, which have immediate legal effect in member states (including the UK). In the US and the EU, sanctions often implement measures contained in Resolutions of the United Nations Security Council.
Sanctions can be applied unilaterally or collectively and different rules will apply to each sanctions regime. Some of these sanctions affect designated individuals only in the targeted country. There are also sanctions in place against named individuals or entities who are:
- related or belong to the Taliban and the Al-Qa’ida network
- suspected terrorists
The HM Treasury publishes a consolidated list of financial sanctions targets listed by the United Nations, the European Union and the UK. This list includes all individuals and entities noted on all current sanctions lists.
There is no specific statutory or regulatory obligation on general insurers to check their customer lists against the HM Treasury sanctions lists; however, in order to avoid committing an offence of non-disclosure, it would be prudent for firms to do so.
There are a number of statutory instruments relating to financial sanctions and terrorist financing. These measures apply to all firms regulated under the FSMA (rather than just to banks, on whom additional obligations are placed) and create a number of offences including that of failing to disclose knowledge or suspicion that any person on the relevant HM Treasury sanctions list is, or has been, a customer of the firm.
In addition, the Department of Business, Innovation and Skills (BIS) has guidance on the www.gov.uk website about trade sanctions including arms embargoes specific to certain countries.
The US Government, via its Office of Foreign Assets Control (OFAC), also publishes guidance about the sanctions regimes it imposes. In addition, OFAC has published a consolidated list of those entities and individuals designated as subject to sanctions and has a tool called “Sanctions Search List” to facilitate searching through the consolidated list.
Lloyd's produces detailed due diligence process guidance to assist managing agents in understanding the impact of UK and US sanctions legislation.
The Export Control Order 2008, in part, imposes requirements on UK entities with regard to the movement of controlled military goods from an overseas country to an embargoed destination.
The provision of insurance and reinsurance involved in moving these goods is subject to a licence being obtained from the UK Government, without which criminal penalties may ensue. This impacts on UK individuals and companies anywhere in the world or to persons operating in the UK.
IRR, alongside the Lloyd’s Market Association (LMA) and London International Insurance Brokers Association (LIIBA), has produced guidance and recommendations for practical solutions in complying with this legislation and has also negotiated the release of an Open general Trade Control Licence (Insurance and Reinsurance) related to UN mandated/authorised missions.
Country specific sanctions
Visit Crystal or contact:
Lloyd's International Trading Advice (LITA)
t: +44 (0)20 7327 6677