In recent weeks, the U.S. and British governments have unveiled new measures for fighting the Islamic State of Iraq and Syria (ISIS). These measures are designed to counter the terrorist group’s financial structure.
On the U.S. side, in an effort to starve ISIS of oil revenue, the U.S. Government in cooperation with others, have threatened sanctions against individuals and entities that purchase this black market oil or otherwise support ISIS. Insurance companies need to be vigilant in this environment about ensuring they are up-to-date on current sanctions. U.S. sanctions can be obtained via the Office of Foreign Assets Control (OFAC) and Specially Designated Nationals (SDN) List. Furthermore, robust due diligence programs at all levels of the customer relationship will help to ensure that insurers and reinsurers do not run afoul of sanctions laws and regulations.
In the United Kingdom, the government is taking aim at the ransom revenue. On November 26, 2014, the British Government introduced a Counter-Terrorism and Security Bill (Bill). Part 6 of the Bill amends the 2000 Terrorism Act (Act). Section 34 of the Bill amends Section 17 of the Act by adding “17A Insurance against payments made in response to terrorist demands.” This section makes it an offence if
(1)(a) the insurer makes a payment under the contract, or purportedly under it,
(b) the payment is made in respect of any money or other property that has been, or is to be, handed over in response to a demand made wholly or partly for the purposes of terrorism, and
(c) the insurer or the person authorising the payment on the insurer’s behalf knows or has reasonable cause to suspect that the money or other property has been, or is to be, handed over in response to such a demand.
As British Home Secretary Theresa May explained,
To put an end to uncertainty about insurance and reinsurance payments for kidnap and ransom, and to help prevent an important element of terrorist financing, the Bill will amend existing law to make sure UK-based insurance firms do not provide cover for the payment of terrorist ransoms. To put this important issue into context, along with oil sales, taxation and extortion, the UN estimates that ransom payments raised up to £28 million for ISIL in the last twelve months alone. A new offence will apply to ransom payments once the Bill is introduced.