Kenneth Rijock

Kenneth Rijock

Monday, November 12, 2018

FATF PUBLISHES WHITE PAPER ON AML/CFT RISK IN THE INSURANCE INDUSTRY


 The Financial Action Task Force (FASF) has issued a white paper entitled Guidance for a Risk-Based Approach for the Life Insurance industry. Given the risks, threats and vulnerabilities of life insurance products to both money laundering and terrorist financing, we welcome the publication of this 64-page Guidance. It details the issues in a financial sector that has historically failed to acquire sufficient AML technology to combat ongoing problems, where remote clients can access their products, often without sufficient Customer Identification Procedures, since the local agents, commission-driven, are part of the problem.

Far too many insurance companies and their local agents fail to maintain effective AML//CFT programs, resulting in the placement and laundering of illicit capital. This is mainly due to their inability to detect suspicious transactions, and to act as gatekeepers.

The insurance industry, including the smallest component, the field agents/sales staff, must maintain effective compliance programs, at the level of banking best practices, if it is ever to block enterprising and clever money launderers and terrorist financiers, who seek to hide their illicit assets within their investment products, and in the process, launder them in an industry that has been traditionally ignored by law enforcement investigators.

Readers who wish to review the Guidance may access the complete text here.

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