The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) recently settled with American Life Insurance Company (“ALICO”), a Delaware-based subsidiary of MetLife, Inc., for $178,421, addressing apparent violations of the Iranian Transactions and Sanctions Regulations (“ITSR”). These violations occurred over an 18-month period, from February 2022 to August 2023, during which ALICO issued group life and medical insurance policies, collected premiums, and processed claims for entities located in the United Arab Emirates (“UAE”) that were owned or controlled by the Government of Iran (“GOI”). OFAC identified these activities as constituting the exportation of prohibited services to Iran and engaging in transactions involving blocked property.
The enforcement action arose out of ALICO’s provision of insurance services to three policyholders linked to the GOI. In one instance, a sales agent in the UAE sought a customized group policy for an entity owned by the Iranian embassy. Sanctions screening flagged the application due to its Politically Exposed Person (“PEP”) status, triggering an escalation to MetLife’s Global Anti-Financial Crimes Unit (“AFCU”), which directed ALICO to reject the application. Despite this guidance, the sales agent later submitted a new application for the same entity through a third-party administrator. The policy was issued after sanctions screening protocols failed to detect the connection to the Iranian embassy. When questions arose after the policy had been issued, the sales agent produced a manipulated trade license, purporting to reflect new ownership and removing references to the Iranian embassy. The manipulated document displayed distorted text in the ownership section and omitted a QR code.
In separate but related incidents, the same sales agent pursued policies for two UAE-based schools linked to the Iranian government. For the first school, the sales agent submitted an application through a third-party administrator. Despite the school’s name explicitly including “Iranian,” sanctions screening during onboarding raised no alerts, and the policy was issued. Payments for this policy were later attempted via a check drawn on Bank Melli, a blocked financial institution. Although this payment was rejected, the sales agent facilitated alternative arrangements for the premiums to be paid in cash, which ALICO accepted after re-screening the individuals involved. For the second school, documents submitted during onboarding included a letterhead referencing the Islamic Republic of Iran. This information, which clearly indicated ownership or control by the Government of Iran, was overlooked during the review process, allowing another prohibited policy to be issued. Although ALICO ultimately identified and suspended the policies for both schools, delays in enforcement allowed claims to continue being processed through the third-party administrator, further exposing deficiencies in ALICO’s compliance framework.
The apparent violations totaled $446,077 in premiums and claims, but OFAC ultimately categorized the matter as non-egregious. Several factors influenced this determination, including the fact that ALICO voluntarily self-disclosed the violations and cooperated with OFAC’s investigation, provided detailed information to OFAC during the course of the invesigation process, and implemented robust remedial measures to address identified deficiencies. Among these measures were enhanced sanctions screening processes, improvements to the onboarding of new policyholders, and comprehensive revisions to training materials to include explicit prohibitions on dealings with sanctioned jurisdictions. Furthermore, ALICO conducted a three-year review to identify other rejected applications that may have been resubmitted and created a database to ensure that such applications would be flagged in the future.
Despite these mitigating factors, OFAC identified several aggravating circumstances. ALICO failed to exercise adequate due care in complying with sanctions requirements, issuing policies even when information provided during the onboarding process suggested that entities were owned or controlled by the GOI. Documentation provided by the UAE-based school, for example, explicitly referenced the Iranian government, and yet no further due diligence was conducted to verify ownership. Similarly, the company’s reliance on a third-party administrator to process claims exposed additional vulnerabilities, as the administrator continued to pay claims on suspended policies despite direct instructions from ALICO to cease such activities. OFAC also noted that ALICO’s status as a large, commercially sophisticated insurer with extensive global operations heightened the expectations for its compliance program, making the lapses particularly concerning.
This enforcement action underscores the critical importance of effective sanctions compliance programs—particularly for companies operating in regions where the risk of dealing with sanctioned entities is elevated. ALICO’s failure to identify indirect ownership links, combined with its reliance on external administrators without sufficient oversight, demonstrates the need for enhanced due diligence and monitoring processes. Moreover, the case illustrates the necessity of maintaining robust systems to track and flag previously rejected applicants, ensuring that efforts to circumvent compliance controls are promptly identified and addressed. While the voluntary disclosure and subsequent remedial actions ultimately mitigated the severity of the penalty imposed on ALICO, the case serves as a reminder that sanctions compliance requires vigilance, proactive measures, and a commitment to continuous improvement.
