New Background Checks Target Managers, Directors

Some insurers will be facing a new compliance regimen as a result of revised federal requirements. Earlier this year, the Office of the Superintendent of Financial Institutions (OSFI), under Guideline E-17, released its “Background Checks on Directors and Senior Managers of Federally Regulated Entities.”

Under the Guideline, which will become effective on January 31, 2009, operational requirements related to mandatory background checks on directors and senior management will be imposed.

“For companies whose background checking processes have not been particularly rigorous or formalized, the Guideline will impose significant new burdens,” Stuart Carruthers, a partner at Stikeman Elliott LLP’s corporate commercial practice in Toronto, explains in a paper about the implications of the Guideline.

“Companies which already have in place diligent, formalized processes will likely feel little new burden, and companies already operating internationally, or considering expanding internationally, may benefit from heightened international regulatory acceptance of the calibre of OSFI’s “home regulator” regime evidenced in part by OSFI’s promulgation of the Guideline in conformity with international standards.”

Carruthers has particular expertise in insurance, reinsurance and financial services. His paper is posted on the firm’s Web site.

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