International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, August 3, 2016

OFAC Finds AXA and Humana Violated Foreign Narcotics Kingpin Sanctions By Providing Drug Lords Health Insurance

OFAC has issued a Finding of Violation to AXA Equitable Life Insurance Company (AXA) for violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598 OFAC(FNKSR).  From December 3, 2009 to approximately May 11, 2011, AXA facilitated and/or processed payments and maintained two health insurance policies in which one or more Specially Designated Nationals (SDNs) had an interest.  For more information on this action, please visit the following web notice.

Separately, OFAC has issued a Finding of Violation to Humana, Inc., the parent company of Kanawha Insurance Company (“Kanawha”), for violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598 (FNKSR).  From December 3, 2009 to approximately May 11, 2011, Kanawha facilitated and/or processed payments and serviced two health insurance policies in which one or more SDNs had an interest.  For more information on this action, please visit the following web notice.

AXA AML Violation

In October and November 1992, AXA issued one health insurance policy that provided coverage for Leopoldo Lopez Grayeb and Noemi Lopez Fernandez, and a separate health insurance policy that provided coverage for Juan Manual Lopez Fernandez.  From their inception, these policies were serviced by a U.S. insurance company serving as a Third Party Administrator (TPA), which performed a variety of functions including: servicing the policies, collecting premiums, maintaining policy records, and answering general inquiries from insured parties.  

On December 3, 2009, OFAC designated Leopoldo Lopez Grayeb, Noemi Lopez Fernandez, and Juan Manual Lopez Fernandez pursuant to the Foreign Narcotics Kingpin Designation Act, 21 U.S.C §§ 1901-08, and added these parties to the List of Specially Designated Nationals and Blocked Persons (the “SDN List”).  Subsequent to OFAC’s designations, neither AXA nor the TPA screened the names of the policyholders serviced by the TPA and, as a result, both companies failed to identify and block the policies and premium payments in which one or more of the above-referenced SDNs had an interest.

Between January 11, 2010 and May 11, 2011, the TPA processed (and AXA received) 17 premium payments in the amount of $10,461.98 for the policy held by Leopoldo Lopez Grayeb and Noemi Lopez Fernandez, and an additional 17 premium payments from January 2, 2010 to May 2, 2011 in the amount of $3,944.21 for the policy held in the name of Juan Manual Lopez Fernandez. On June 19, 2011, a separate company assumed responsibility for providing TPA services to the same series of AXA-issued insurance policies. The new TPA identified the policyholders as potential matches against the SDN List, and coordinated with AXA to block and cease providing any services for the policies. 

Humana AML Violation

Humana, Inc. Receives a Finding of Violation Regarding Violations of the Foreign Narcotics Kingpin Sanctions Regulations: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a Finding of Violation to Humana, Inc., the parent company of Kanawha Insurance Company (“Kanawha”), for violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598 (FNKSR). On December 3, 2009, OFAC designated Leopoldo Lopez Grayeb, Noemi Lopez Fernandez, and Juan Manual Lopez Fernandez pursuant to the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. §§ 1901-08, and added these parties to the List of Specially Designated Nationals and Blocked Persons (the “SDN List”).

At the time of the designations, Kanawha was serving as the Third Party Administrator (TPA) for a series of insurance policies issued by a separate, unaffiliated company (the “Insurance Company”). As the TPA, Kanawha provided various functions in connection with these policies, which included servicing the policies, collecting premiums, maintaining policy records, and answering general inquiries from insured parties.  While Kanawha screened the names of insurance providers in connection with servicing these policies, it did not screen policyholders against the SDN List.  Subsequent to OFAC’s designations, neither Kanawha nor the Insurance Company screened the names of the policyholders for these insurance policies against the SDN List, and as a result, both parties failed to identify and block the policies and premium payments in which one or more of the above-referenced SDNs had an interest.

 

https://lawprofessors.typepad.com/intfinlaw/2016/08/ofac-finds-axa-and-humana-violated-foreign-narcotics-kingpin-sanctions-by-providing-drug-lords-healt.html

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