29. May 2026
FCA Sanctions Systems and Controls Review: Implications for Insurance Brokers, MGAs and Claims Management Companies
Regulatory Briefing Note No. 03/26 - May 2026
Audience: Insurance Brokers, Managing General Agents (‘MGAs’) and Claims Management Companies
Executive Summary
The Financial Conduct Authority (‘FCA’) has published findings from its latest review of sanctions systems and controls across financial services firms, warning that although standards have improved since 2022, firms ‘must do more’ to prevent sanctions breaches.
The FCA’s review covered more than 150 firms across multiple sectors and identified recurring weaknesses in:
- customer due diligence;
- sanctions screening;
- alert management;
- transaction monitoring;
- frozen asset handling; and
- compliance with sanctions licences.
The regulator also highlighted increasing exposure associated with Russia, Iran and North Korea sanctions regimes, alongside growing focus on trade sanctions compliance.
Alongside the publication, the FCA announced a new Memorandum of Understanding with the Office of Trade Sanctions Implementation (‘OTSI’), strengthening coordination and intelligence-sharing between the two organisations.
Although sanctions obligations are often associated primarily with banks and payment firms, the FCA’s findings have significant implications for insurance intermediaries and claims management firms.
The FCA is increasingly treating sanctions compliance as a core systems-and-controls issue across the wider regulated sector, with clear expectations that firms maintain proportionate and effective controls capable of identifying and preventing breaches before they occur.
The FCA’s Supervisory Message
The FCA’s latest review forms part of a broader supervisory trend towards more intrusive assessment of firms’ financial crime frameworks and operational controls.
The regulator confirmed that firms demonstrated examples of strong preventative controls and effective escalation processes. However, it also identified repeated weaknesses that contributed to sanctions breaches or near misses.
The FCA identified particular weaknesses relating to:
- ineffective customer and counterparty due diligence;
- weaknesses in name and transaction screening;
- poor alert handling and escalation;
- deficiencies in frozen asset management;
- failures to comply with OFSI licensing requirements; and
- challenges identifying and managing trade sanctions exposure.
Importantly, the FCA stated that firms are expected to identify potential sanctions breaches before they occur, reinforcing expectations around preventative monitoring and governance.
This reflects an increasingly proactive supervisory approach, aligned with broader FCA expectations concerning operational resilience, systems and controls, Consumer Duty governance and financial crime oversight.
Implications for Insurance Brokers
Insurance brokers may face increased supervisory scrutiny where their business models involve:
- onboarding corporate or overseas customers;
- handling premium or claims payment flows;
- interacting with overseas counterparties;
- placing risks into international markets;
- managing delegated authority arrangements; or
- dealing with complex ownership structures.
The FCA is likely to expect brokers to demonstrate that sanctions controls operate effectively across the customer lifecycle, including onboarding, ongoing monitoring and claims handling.
Particular areas of focus may include:
- screening of customers, directors and beneficial owners;
- rescreening during the policy lifecycle;
- sanctions checks during claims payments;
- escalation and investigation procedures for sanctions alerts;
- governance and oversight of outsourced screening providers; and
- management information provided to senior management.
The FCA’s comments concerning frozen asset handling and licence compliance are particularly relevant where firms may be required to suspend transactions or engage with OFSI licensing processes.
Implications for Managing General Agents (‘MGAs’)
MGAs may face heightened exposure due to their role within delegated authority and underwriting structures.
The FCA is likely to expect MGAs to demonstrate clear accountability for sanctions compliance within delegated arrangements, including clarity around:
- screening responsibilities;
- oversight of cover holders and delegated partners;
- escalation obligations;
- audit rights; and
- sanctions-related contractual provisions.
The FCA’s focus on trade sanctions may also create additional scrutiny for MGAs involved in:
- marine insurance;
- aviation;
- cargo and logistics;
- energy risks;
- export-related activities; and
- cross-border underwriting programmes.
The regulator specifically noted that firms continue to face challenges in detecting and preventing breaches of trade sanctions.
This may indicate increasing supervisory attention on firms operating within internationally exposed sectors where sanctions exposure is more complex.
Implications for Claims Management Companies (‘CMCs’)
Claims management companies may also face increasing expectations regarding sanctions governance and customer due diligence controls.
Relevant areas of exposure may include:
- receipt and distribution of client monies;
- claimant identity verification;
- third-party payment arrangements;
- overseas payment flows; and
- outsourced operational arrangements.
The FCA’s findings regarding weaknesses in transaction screening, due diligence and alert management are directly relevant where firms process settlement or compensation payments.
CMCs using outsourced operations or lead generation arrangements may also be expected to demonstrate appropriate oversight and understanding of sanctions exposure across third-party relationships.
Governance and Senior Management Accountability
The FCA’s findings reinforce the expectation that sanctions compliance forms part of firms’ wider governance and operational control frameworks.
Senior Managers are likely to be expected to demonstrate effective oversight through:
- regular management information;
- escalation reporting;
- breach analysis;
- sanctions risk assessments;
- control testing; and
- staff training oversight.
Weaknesses in sanctions frameworks may increasingly be viewed through the lens of SYSC obligations and broader governance failings, rather than solely as isolated financial crime issues.
Practical Considerations for Firms
Firms may wish to consider whether existing sanctions controls remain proportionate and effective in light of the FCA’s findings.
Areas for review may include:
- enterprise-wide sanctions risk assessments;
- customer and counterparty screening arrangements;
- alert handling procedures and escalation timelines;
- claims and payment controls;
- trade sanctions exposure;
- delegated authority oversight arrangements;
- governance reporting and MI; and
- OFSI licensing and frozen asset procedures.
Firms should also ensure that sanctions frameworks are appropriately documented, tested and capable of evidencing operational effectiveness.
Regulatory Outlook
The FCA’s publication signals continuing supervisory focus on sanctions compliance across the wider financial services sector.
The regulator’s messaging suggests increasing emphasis on:
- preventative controls;
- operational effectiveness;
- governance evidence;
- escalation capability; and
- proactive identification of financial crime risks.
Insurance brokers, MGAs and CMCs should therefore expect sanctions compliance to remain an active area of supervisory scrutiny throughout 2026 and beyond.
Key Sources
- FCA: Firms have improved but must do more to prevent sanctions breaches (28 May 2026).
- FCA: Sanctions systems and controls in our firms: our findings.
- FCA / OTSI Memorandum of Understanding.
The small print...
This document has been prepared by AJG Regulatory Solutions for the purpose of contributing to regulatory discussion and consultation. The views expressed in this response represent the professional opinions of AJG Reg Solutions based on our regulatory expertise and experience supporting firms operating in the financial services sector.
Unless explicitly stated otherwise, the views set out in this document do not represent the views of any individual client of AJG Reg Solutions. Any examples or references to market practice are provided for illustrative purposes only and should not be interpreted as referring to any specific firm.
This response is provided in good faith for the purposes of regulatory engagement and policy development. It should not be relied upon as legal advice, and readers should seek appropriate professional advice in relation to their specific circumstances.
AJG Reg Solutions accepts no responsibility or liability for any loss arising from reliance on the contents of this document. Information contained in this response may be shared publicly by the relevant authority as part of its consultation process unless otherwise indicated.