How do criminals launder money through insurance company?

Business professional's finger selecting 'insurance' option

Money laundering in the insurance sector is now a growing global problem. Life insurance providers are the focal point for money launderers, especially those who offer high-value life insurance policies.

Most life insurers offer flexible investment products to deposit money in and with the option to withdraw large amounts of cash at certain periods. Although the vast majority of people are law-abiding citizens whose intentions is to obtain protection for their dependants when they take out life insurance. There are those who launder money through insurance providers by purchasing products and eventually making fraudulent claims. Insurers are also vulnerable to fraudulent claims and therefore need to mitigate their potential risks to which they will be exposed to.

The money launderers essentially wash their money through purchasing insurance products and then making a claim. Insurers need to protect themselves from these sophisticated forms of money laundering.

The first call to action is implementing a competent risk-based approach by way of enforcing policies and procedures. This will prevent your company from becoming involved in financial crime.

A few examples of potential insurance suspicious activities which may encounter.

  • A customer purchases a product that is outside the customer’s range of financial means.
  • A customer purchases product with termination features without concern for the product’s investment performance.
  • A customer purchases a product using a single, large premium payment and payment is made through unusual methods.
  • A customer terminates an insurance product early.

There are various ways money launderers can take advantage of the products insurers provider therefore it is important to implement high levels of scrutiny such as enhanced client due diligence.

If you would like to discuss our services in more detail you can contact us on 0203 985 8553, email us or complete an enquiry form.