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IDP Helps Cooperativa Search Against OFAC

Puerto Rican carrier streamlines compliance efforts and avoids penalties by qutomating matching process.

As part of its effort to comply with trade sanctions imposed by the Office of Foreign Asset Controls (OFAC) of the U.S. Department of the Treasury, P&C underwriter Cooperativa De Seguros Multiples (San Juan, Puerto Rico; $840 million in assets) began the arduous effort of manually comparing the names of those involved in Cooperativa transactions with the names found on the OFAC's list of specially designated nationals and blocked persons. Soon after it began managing the task, however, the underwriter, which also has locations in Florida, realized that the job was just too big for it too handle. The situation was especially discouraging since the OFAC list grows at an exponential rate.

The Name Game

"The process of matching possible combinations of names was a full-time job," stresses Manuel Sanchez, vice president of information systems, Cooperativa. "We knew that something needed to be done so that we could turn this task into an automatic process." The need for automation was especially urgent because the time-consuming job of comparing names was prone to human error.

Armed with requirements for a tool that could provide fast and accurate comparisons that were free of human intervention, Sanchez and Cooperativa's information systems manager began investigating solutions in March 2003. The pair agreed that accuracy was an especially important criterion since failure to meet OFAC requirements can result in corporate fines of up to $1 million, personal fines of up to $250,000 and up to 12 years in jail.

After reviewing three solutions that matched the insurance carrier's wish list, the two-man team awarded the contract to IDP (Wyncote, Pa.) - just three weeks after beginning the search - for use of the vendor's OSCAR (OFAC SDN Compliance and Reporting) service. Cooperativa's familiarity with the vendor counted in IDP's favor; Cooperativa has been a loyal user of IDP's VISION 2.5 P&C management system since the summer of 2001.

Additionally, the underwriter decided on IDP's service because it didn't require the company to install anything on its internal systems - OSCAR is installed and runs on IDP's systems. And the price was right for the carrier, which could automate the process with IDP's solution for a fraction of what it would cost to do it manually in-house, according to Sanchez.

In the same month it signed the contract, Cooperativa began supplying IDP with data files. IDP's OSCAR service processes policies, claims and profiles each month and compares the information against the most recent OFAC/SDN list.

Automated Compliance

"IDP only requires that you send a file each month which contains information that includes the names of people involved in any new transactions that appear in your system," explains Sanchez. The solutions provider then returns a list of matches and scores the accuracy of each match based on information found on the OFAC list so Cooperativa can respond accordingly. After using IDP's service for one year, says Sanchez, Cooperativa has identified a number of matches that have required further investigation.

Aside from avoiding costly OFAC fines for failure to comply with its trade sanctions, Sanchez reports that Cooperativa has also been able to save money by automating the formerly manual process. "The return on investment was immediate," relates Sanchez. "Users just have to pay for the amount of records that are sent each month for processing." The insurance company can also be confident that it is not contributing to the prosperity of individuals that the government has identified as dangerous.

COMPANY: Cooperativa De Seguros Multiples; San Juan, Puerto Rico; $840 million in assets.

LINES OF BUSINESS: Property & Casualty.

VENDOR/TECHNOLOGY: IDP's (Wyncote, Pa.) OSCAR (OFAC SDN Compliance and Reporting) service.

THE CHALLENGE: Automate OFAC trade-sanction compliance efforts.

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