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Insurance

The global AML landscape is diverse and the insurance industry must keep pace with developing rules and regulations in order to meet their compliance obligations.
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Why Insurers need
AML/CFT ?

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Insurance policies are susceptible to exploitation by fraudsters and criminals. High risks of fraud and money laundering (ML) are posed by policies other than life and accident insurance, flexible investment options, and easy surrender and withdrawal provisions.

As a licenced insurance firm, agent, or broker, you are a "regulated entity" if you:

Engage in the business of arranging insurance contracts

Sell insurance company goods

On behalf of an insurer or customer, you request, negotiate, or initiate insurance contracts

Establish an effective suspicious activity monitoring and reporting process

Develop risk-based anti-money laundering programs

Customer Due Diligence (CDD) and Customer Identification Program (CIP) Programs

Keep records of cash purchases of negotiable instruments,

File reports of cash transactions exceeding $10,000 (daily aggregate amount),

Risk exposure

Insurance products are susceptible to money laundering (ML) since they involve large payouts, transfers of ownership/beneficiaries, and numerous schemes. Single premium and annuity policies, policy loans, top-up insurance policies, and high regular premium savings policies are vulnerable to being used to launder illicit funds since they permit the diversion of funds or the disposal of large sums. Other challenges with which the insurance industry must contend include policy cancellations, withdrawals, and fraudulent claims.
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compliance measures

Compliance Measures

Insurance is a high-risk industry that requires thorough risk evaluation and underwriting. In order to keep criminal factors at bay, client verification (KYC) and risk score are required at each step of onboarding and transfer of ownership process. By identifying the ultimate beneficial owner, assuring enhanced due diligence (EDD) of high-risk insurance products and high-value transactions, and implementing customer due diligence (CDD) through the claims stage, insurers can remain compliant.

Gaps in Compliance

Insurance is a high-risk industry that requires thorough risk evaluation and underwriting. In order to keep criminal factors at bay, client verification (KYC) and risk score are required at each step of onboarding and transfer of ownership process. By identifying the ultimate beneficial owner, assuring enhanced due diligence (EDD) of high-risk insurance products and high-value transactions, and implementing customer due diligence (CDD) through the claims stage, insurers can remain compliant.
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Establish Compliance

It is expected for insurance firms, agents or brokers to establish risk-based compliance program framework. They are further expected to:
  • Perform a risk-based assessment of exposure by client type, insurance policy, service channel, operating country, premium size, client relationship changes, and manner of refund or payout.
  • Develop strategies and controls to reduce and mitigate risks.
  • Create an AML/CTF programme: client identity, beneficial ownership, or commercial relationship with a third party, and screening for sanctions/SDN/PEP.
  • Execute a risk-based strategy with continuous monitoring of transactions, business relationships, and investigation prioritisation.
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Maintain your Compliance Program

As per the regulations of your regulatory body, it is necessary to establish and maintain your compliance program. Penalties for non-compliance may be monetary or criminal in nature.

Constant compliance entails:
  • Selecting a compliance officer, conducting background checks on potential employees, educating staff members on the hazards involved, and keeping them informed of AML/CTF regulations.
  • Carrying out enhanced due diligence (EDD) when signing up for cash-out/cash-in bets, a credit extension, significant cash transactions, or complicated transactions.
  • Constant transaction monitoring for irregularities, overseas transactions, deals with prohibited parties, or when sizable transactions are accompanied by little betting activity.
  • Collecting client information from all touchpoints and keeping records.
  • Submitting compliance reports, suspicious transaction reports (STRs), and other duties as specified by a relevant regulator.
  • Periodically reviewing your risk assessments and compliance programme with outside audits.
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