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By Marcia Benshoof
Chief Business Officer
Pinnacol Assurance (Colorado)
In late spring 2003, the benefits of AASCIF
membership became even more apparent to me as a result of conversations
with Rona Finkelstein, Maryland, and Doug Hayden, New York, of the AASCIF
Law Committee. Doug and Rona contacted me as an alert to the National
Issues Committee regarding the elements of OFAC (Office of Foreign Assets
Control) legislation and the imminent need for state funds to comply.
I forwarded the information to my fellow National Issues Committee members.
In my role as chief business officer at Pinnacol Assurance, I set about
developing and executing a compliance plan for our company.
I anticipated it would be complicated and onerous. But in retrospect Colorado’s
compliance activities have been fairly straightforward. Here are the steps
Pinnacol Assurance took:
1. Research the parameters and obligations of the OFAC legislation
with general counsel.
Since OFAC is a federal statute and has not received much legal or regulatory
“airtime,” it is imperative that the general counsel of each
state fund be a knowledge resource for internal state fund staff, as well
as to state regulators.
2. Initiate a dialogue with state regulators.
Since the federal statutes surrounding OFAC compliance are pre-emptive,
it is advisable that state funds discuss and notify their state regulators
of the need and intent to comply with OFAC.
State funds may find themselves ceasing benefits to an injured worker
or canceling the policy of an employer found to be a Specially Designated
National (SDN) or blocked person.
We have interfaced with the regulators in Colorado, who have been very
interested in knowing more about OFAC and have indicated an understanding
of our requirement to comply.
3. Research and select a software product to act as a search-and-data-match
engine.
There are a handful of off-the-shelf products to choose from, and most
are listed on the OFAC site via the U.S. Department of Treasury.
Per NCCI, there are no current services or products around OFAC data matching,
nor does NCCI plan to develop any products or services at this time.
Pinnacol Assurance’s information technology team built a proprietary
system that updates our database of SDNs and blocked persons from the
U.S. Treasury weekly and performs a match against every payee in our operating
system. If a match occurs, this proprietary system assigns an acuity rating—low,
medium, high—based on the number and type of characteristics matched,
and sends an alert email to our OFAC Compliance Committee.
4. Create a multi-disciplinary OFAC Compliance Committee.
Compliance with OFAC obligates state funds to avoid doing business with
any SDN. Pinnacol Assurance chose to take this requirement literally.
As such, our core compliance committee is comprised of senior staff from
several disciplines and groups: special investigations, legal, policy,
claims, finance, technology, human resources, and the strategic business
groups.
Additionally, we created an ad hoc advisory group of senior staff from
groups that include internal audit, marketing, provider relations, communications,
and the chief executive officer. The involvement of specific ad hoc members
would become necessary if an SDN match occurred within their areas of
expertise, such as marketing and a match with an agent.
5. Create a OFAC Compliance Charter.
Our charter outlines the roles and responsibilities of committee members
and the processes for database searches, match identification, match verification,
notification of a match to the U.S. Treasury and, above all, confidentiality.
Author Marcia Benshoof can be reached at (303) 361-4671 or marcia.benshoof@pinnacol.com.
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