OFAC compliance refers to an insurer's and producer's obligation to follow regulations issued by the U.S. Treasury's Office of Foreign Assets Control, which administers economic and trade sanctions against certain countries, entities, and individuals. Insurance companies must screen applicants, policyowners, beneficiaries, and payees against OFAC lists, such as the Specially Designated Nationals list, to prevent doing business with sanctioned parties. If a match is identified, the insurer may be required to block transactions, freeze assets, or report activity to regulators. Failure to maintain robust OFAC compliance programs can lead to significant fines, reputational damage, and legal exposure for carriers and intermediaries. As a result, sanctions screening has become standard in modern insurance operations.

In everyday practice, advisors encounter OFAC compliance mostly behind the scenes, as carriers automatically screen new applications, changes of ownership, and claim payments against sanctions lists. Occasionally, a producer may be contacted when a potential name or address match requires clarification, such as confirming correct spelling, date of birth, or citizenship. Advisors must avoid promising that coverage or payments are guaranteed if OFAC issues arise, because carriers are legally obligated to follow federal sanctions rules. Firms also train producers not to circumvent controls by rerouting payments or altering information. In cross-border planning, advisors work closely with compliance departments to confirm whether proposed insureds, payees, or premium sources trigger OFAC concerns. By understanding OFAC compliance at a basic level, producers appreciate why certain controls exist, respond appropriately to screening inquiries, and support their organizations in meeting critical regulatory requirements designed to combat terrorism, money laundering, and prohibited transactions.