Ecosystem Partner POV: sanctions.io on Underwriting Intelligence and Professional Lines

Thorsten J. Gorny is Co-founder & CEO of sanctions.io. He has worked for more than 15 years in the tech industry with focus on bringing ideas to life, and building great teams and products. At sanctions.io he’s primary responsibility is Business Development, Growth and Strategy.

We invited Thorsten to discuss the benefits of sanctions.io because the integration with DigialEdge Policy has had such a positive impact on time spent reviewing submissions for sanctions and money laundering. Through this integration, submissions are automatically flagged for sanctions and blocked until addressed by authorized users.

For people who are not aware of the growth in sanctions and money laundering, can you give us an overview of the landscape?

“Sanctions are measures against countries or individuals intended to alter the behavior of governments or entities involved in issues like human rights violations or terrorism. Since the 2022 Russian invasion of Ukraine, the number of sanctions has significantly increased, with many countries imposing stringent economic and political restrictions to pressure Russia and address geopolitical concerns. 

Money laundering involves disguising illicitly obtained funds as legitimate. Recent years have seen stricter regulations and advanced detection technologies, driven by the need to combat financial crime and uphold financial system integrity. The focus has intensified globally to prevent terrorism financing and other illegal activities.”

How has this trend impacted insurers of professional liability lines and insurance companies in general?

“The heightened focus on sanctions and money laundering has profoundly impacted insurers of professional liability lines and other insurance sectors. Insurers now face increased scrutiny and more stringent regulatory requirements to ensure compliance.

Firstly, regarding sanctions, all companies, regardless of their regulatory status, must adhere to the U.S. Treasury’s Office of Foreign Assets Control (OFAC) regulations. This includes strict compliance with sanctions such as the Specially Designated Nationals (SDNs) list.

For AML compliance, the Bank Secrecy Act (BSA) mandates that financial institutions develop and implement anti-money laundering (AML) programs. As insurance companies are classified as “financial institutions,” they must adhere to these requirements.

Additionally, the USA PATRIOT Act of 2001 requires the Secretary of the U.S. Department of the Treasury to set minimum standards for AML compliance programs and suspicious activity reporting. The insurance sector is particularly implicated due to its involvement in high-value transactions and financial products that can be exploited for money laundering.

While some insurance products have more stringent AML requirements due to their higher risk profiles, all insurers should leverage sanctions and AML screening services to ensure comprehensive compliance.

In 2024, with money laundering in focus and sanctions lists being updated daily, insurers must navigate the fast-paced and unpredictable world of AML and sanctions compliance robustly. For example, sanctions.io offers data updated every 60 minutes, helping to mitigate AML and sanctions risk with real-time updates.”

Do you have examples of the financial impact of non-compliance for insurers in the P&C space with respect to sanctions?

“In terms of sanctions compliance, P&C insurers might inadvertently provide coverage to individuals or entities on sanctions lists, such as those linked to terrorism or money laundering activities. This can lead to severe legal and financial consequences, including substantial fines and regulatory penalties.

For example, in 2019, the Office of Foreign Assets Control (OFAC) imposed a financial penalty of $270,690 on the U.S. arm of Allianz Global Risks, a property and casualty insurer, for sanctions violations.”

Can you give us an overview of how large your data sets are and how complex the process of gathering and maintaining these are?

“sanctions.io manages extensive and complex data sets to ensure comprehensive sanctions and AML compliance. With over 200 customers relying on our services, we conduct millions of daily screenings to maintain up-to-date and accurate information.

Our data encompasses almost 100 sanctions lists and over 8,000 most-wanted records, which are continuously updated every 60 minutes. This real-time update frequency is crucial for maintaining the integrity and relevance of our screenings. Additionally, we manage over 1 million Politically Exposed Person (PEP) profiles, ensuring global coverage across various jurisdictions.

Maintaining and updating these vast datasets involves a sophisticated and robust process. Our systems are designed to handle large volumes of data efficiently while adhering to SOC2 compliance standards. This ensures that our processes for gathering, verifying, and updating information are both secure and reliable.” 

Can you talk about the benefit to the underwriter of having the integration of sanctions.io available within the underwriting workbench? 

“This integration offers substantial benefits to underwriters: with sanctions.io’s real-time data and comprehensive coverage embedded directly in their workbench, they can conduct thorough checks quickly and efficiently. Not only does this streamline the underwriting process, but it also enhances accuracy and compliance by providing up-to-date information, allowing underwriters to make well-informed decisions with greater ease and confidence. We are delighted that our shared customer is saving an average of 15 minutes per submission with the integration of sanctions.io with DigitalEdge Policy.”

– Thorsten J. Gorny, Co-founder & CEO of sanctions.io

For more insights on this use case with professional lines, enjoy the customer success story, Professional Liability MGA Leverages Data and Automation.