Sanctions Failures Are a Wake-Up Call: Is Your Firm Ready?

Roland Romata
23 hours ago
3 min read

Very recently, the UK’s Office of Financial Sanctions Implementation (OFSI) publicly disclosed that Vanquis Bank Limited failed to promptly freeze a designated individual’s account, even after being warned.

For eight days, that individual continued to withdraw funds and make purchases before the account was finally frozen.

Vanquis is FCA-regulated and well-resourced; yet, a process breakdown, not a lack of awareness, allowed this breach to occur. It’s a stark reminder that even established firms can be caught off guard when alerts aren’t escalated fast enough.

What This Means for Insurance and Reinsurance Firms

You might assume this is a “banking problem.” But it’s not. Whether you’re an insurance broker, MGA, or UK reinsurance broker, sanctions compliance still applies.

Imagine these scenarios:

· Receiving premium funds from a designated person.

· Remitting a claims payment to a sanctioned account.

· Onboarding a client but failing to re-screen beneficial owners when lists change.

Any of these can expose your firm to breaches of sanctions law, reputational harm, regulatory scrutiny, and potentially enforcement.

For reinsurance brokers specifically, there’s often confusion about whether the Money Laundering Regulations 2017 (MLR 2017) apply. They don’t: reinsurance contracts are explicitly excluded under current rules and the upcoming 2025 amendments.

But exclusion from MLR 2017 doesn’t mean exclusion from sanctions obligations. All UK firms, including reinsurance brokers, must comply with:

· The Sanctions and Anti-Money Laundering Act 2018,

· FCA SYSC rules on robust systems and controls,

· Reporting duties under POCA 2002.

In practice, this means implementing sanctions and PEP screening at both the onboarding stage and the quote or contract stage, as well as periodically thereafter, with the frequency determined by risk rather than fixed dates.

Where Firms Typically Fall Short

The Vanquis case shows that compliance failures often come down to process gaps:

· Manual alert queues,

· Disconnected internal systems,

· Slow escalation of red flags.

Many smaller insurance intermediaries and reinsurance brokers lack access to real-time screening tools or automated re-checks. Unfortunately, regulators don’t scale expectations to firm size: they expect prompt, documented action.

Making Sanctions Compliance Practical: RegZone.io

This is where RegZone.io helps close the gap. Built for intermediaries, including reinsurance brokers, it offers pay-as-you-go access to screening and monitoring without the high costs associated with enterprise RegTech platforms.

Key benefits include:

· Sanctions & PEP screening in seconds for clients, directors, UBOs, and counterparties.

· Audit-ready reports with timestamps and reference IDs to evidence checks.

· Automated re-checks to keep ongoing relationships compliant, not just at onboarding.

· Risk-based configuration to focus on higher-risk jurisdictions, PEPs, or state-owned entities.

· Pay-as-you-go pricing so you pay only for the checks you run, no bulk licensing or upfront fees.

For brokers operating across the EEA or in emerging markets, the ability to adjust screening frequency for higher-risk territories is particularly valuable.

The Bottom Line: Regulators Expect More

OFSI’s stance is clear: even when no fines are issued, failures are made public. No regulated firm, large or small, can afford such a reputational hit.

Clients also expect reassurance that their intermediaries are operating with strong governance. Having effective sanctions and PEP controls in place is no longer optional; it’s part of earning trust.