Insurance Policies Can Be Lucrative for Money Launderers
Money launderers target more than just banks when striving to bring illegal assets into the financial system. Insurance companies are also at risk and tend to be obligated to prevent money laundering when offering life insurance or accident insurance with premium refunds or when engaging in banking operations. This forces them to analyse their processes precisely to identify circumstances where money laundering prevails or potential links to terrorism financing.
Insurance companies submit fewer suspicious activity reports (SARs) to reporting agencies compared to banks, as the latest annual reports from the German Financial Intelligence Unit (FIU) and the Swiss MROS exemplify. However, they remain subject to the same legal requirements, including the KYC/CDD process for identifying contract partners, determining the beneficial owner and checking against sanctions and PEP lists. But that’s not all. Detecting money laundering-related issues is an evolving process in constant flux. Insurance producers must stay on top of it to uncover unusual activities, and ensure compliance with legal requirements, prevent reputational damage and penalties, reduce false-positive alerts and minimise manual processes.