Anti-Money Laundering
Table of Contents
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Introduction |
3 |
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Anti-Money Laundering Program and Suspicious Activity Reporting Requirements for Insurance Companies |
5 |
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Terrorism Produces Insurer Risk FATF Recommendations |
5 6 |
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Legal Requirements Adopted |
7 |
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Broker-Dealer Requirements |
9 |
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Customer Identification Programs (CIP) |
10 |
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AML Program Requirements |
10 |
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Insurers required by 5/2006 to develop/implement written AML program applicable to products they sell |
11 |
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Key provision of USA PATRIOT Act says various CE formats okay |
11 |
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At minimum program required to incorporate policies, procedures & internal controls based on their product risk |
12 |
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Each insurer designate a compliance officer |
12 |
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USA PATRIOT Act: Know Your Customer (KYC) |
13 |
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Compliance |
14 |
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Suspicious Activity Reports Filing Requirements |
14 |
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Threshold amt requiring insurer to report |
14 |
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A Change In Thinking |
15 |
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Agents/brokers exempt from definition of “insurer” |
15 |
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Integration stage of ML |
16 |
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Layering Stage of ML |
16 |
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Placement stage of ML |
16 |
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A Global Problem |
17 |
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International community focused on life & cash value products – Financial Action Task Force established in 1989 at summit |
17 |
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Covered Products |
18 |
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Blind Faith |
19 |
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FATF studies methods/trends used to launder money |
20 |
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Insurance Policy Money Laundering Techniques |
21 |
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Nine Identified ML Methods |
22 |
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1. Single Premium Life Insurance Contracts |
22 |
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Enable ML to purchase policy with lump sum pymt |
22 |
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2. Early Policy Redemption |
22 |
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3. Claim Fraud |
22 |
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4. Cash Premium Payments |
22 |
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5. Free Look Periods for Newly Issued Policies |
23 |
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6. Collusion of Customer Intermediary/Insurer Employee |
24 |
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7. Third Party Premium Payments |
24 |
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8. Risks Involved in International Transactions |
24 |
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9. Fraudulent Customers, Insurers, or Reinsurance Co |
24 |
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Money Laundering Indicators Not Unique to Insurance Products |
25 |
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1. Large One-Off Cash Transactions |
25 |
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2. Use of False Addresses |
25 |
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3. Overseas Business From Higher Risk Jurisdictions |
26 |
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Policyholder Characteristics and Behavior |
26 |
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Customer’s profile is way to differentiate between ML & other clients |
26 |
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Elements to Consider |
27 |
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A Known Criminal or Criminal Associate or Relative |
28 |
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Erratic or Abnormal Use of Policies |
28 |
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High Premiums Compared to Verifiable Income |
29 |
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Lack of Concern Over Charges or Costs |
29 |
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Undue Interest in Payout Options |
30 |
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Change of Beneficiary |
30 |
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Insurance on Assets That Appear Inconsistent With Income |
30 |
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Early or Suspicious Claims |
30 |
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When Opening a New Account, Consider |
31 |
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Suspicious Activity |
32 |
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Product Characteristics and Maintenance |
33 |
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1. Policy Payments From Third Parties |
33 |
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2. Multiple Sources of Funds to Pay Premiums |
33 |
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3. Significant Premium Top-Ups to a policy |
33 |
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4. Overpayment of Premium |
33 |
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5. Using An Insurer Like a Bank |
34 |
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6. Early Redemption |
34 |
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7. Unusually High Commission Charges |
34 |
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Customer Due Diligence (CDD) |
35 |
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In Conclusion |
38 |
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Acronyms |
40 |
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Glossary of Terms |
41 |
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United Insurance Educators, Inc.
8213 – 352nd Street East
Eatonville, WA 98328-8638
Telephone: (253) 846-1155
FAX: (253) 846-7536