LMA issues clause to strengthen sanctions compliance

By Michael Jones

July 2 - (The Insurer) - The Lloyd's Market Association (LMA) has issued a new model clause designed to enhance the ability for (re)insurers and brokers to comply with sanctions and financial crime regulations.

The model clause, LMA5670 - General Sanctions Financial Crime Documentation Clause, has been created in response to the increasing complexity of sanctions legislation and speed with which it is introduced.

It introduces a contractual obligation for (re)insureds to provide documentation upon reasonable request, particularly to deal with situations where such obligations arise mid-contract.

The LMA said the contract could be automatically discharged in cases where the insured has not cooperated appropriately.

Arabella Ramage, LMA legal and regulatory director, said: “It provides clarity and contractual certainty for all parties, while ensuring that compliance obligations can be met without unnecessary disruption."

The clause is designed to work alongside existing sanctions clauses such as LMA3100A and LMA3200.

It also includes safeguards to ensure (re)insureds are not penalised for non-compliance for circumstances beyond their control.