Insurers across the UK continue to do battle against fraud and financial crime, and these efforts have had a significant and positive impact. However, the risks are evolving, technology is advancing at a rapid pace, and regulators are starting to show interest in applying more scrutiny on insurers’ risk management frameworks.
There are key areas where firms may be more vulnerable to failings, such as broker-based customer introductions and treaty reinsurance. Insurers and reinsurers are at greater risk due to the lack of direct contact with, or knowledge of the customers involved, and a reliance on the due diligence controls of third parties. However, the increasingly complex sanctions landscape threatens to open insurers and brokers to more regulatory scrutiny of controls, and potential penalties for identified failings. Insurers and brokers that fail to stay proactive in identifying sanctions targets on their books can still face millions in fines and even more severe reputational damage.
To avoid risk, insurers and brokers should have a good AML process, a know your customer process and third-party vendor management processes that can identify financial crime risks at onboarding or during the customer lifecycle.
Internationally, the FATF recognises life assurance as being at risk to money laundering and terrorist financing. Life assurance business is covered by the Money Laundering Regulations 2019 (“the regulations”).
The UK insurance market is third largest in the world, employing over 300,000 people and managing investment amounting to 26% of the UK’s total net worth. The insurance sector is one of the UK’s biggest exporters with almost 30% of its net premium coming from overseas business.
Accordingly, governments and authorities implement a range of anti-money laundering insurance regulations. With compliance penalties including fines and prison terms, insurance firms should ensure they understand their obligations and how to implement them as part of their AML policy.
Anti-Money Laundering for the Insurance sector
AML & Compliance by The Strategic Partner have worked alongside the insurance industry for a significant period of time and we have in our business ACII qualified staff who have a detailed knowledge of the industry where they can apply this experience to build effective risk and compliance strategies that work for insurance agents and insurance brokers in practice.
We help insurance brokers and insurance agents achieve a compliant structure through an effective AML, Risk and Regulation programme that protects them, their business, and their staff.