New Money Laundering Rule Would Include Insurer Broker-Dealers
Under a proposed Treasury Department rule, limited service insurance company broker-dealers will be subject to suspicious transactions reporting requirements.
The proposed rule, which comes in the aftermath of the Sept. 11 terrorist attacks, would eliminate a current exemption from these reporting requirements applied to limited service broker-dealers.
In its notice of proposed rulemaking, Treasury notes that limited service broker-dealers–those which exist solely to sell variable annuity contracts issued by life insurers–have been exempted from the suspicious transactions reporting requirements of the Bank Secrecy Act (BSA) since 1972.
However, Treasury says, following Sept. 11, Congress passed the USA Patriot Act, which requires Treasury to propose new rules on b-d reporting requirements.
Treasury says it anticipates that in the final rule, the exemption will be withdrawn.
“Once the exemption is withdrawn, persons required to register as broker-dealers in order to offer and sell variable annuity contracts issued by life insurance companies will be required to comply with all applicable BSA requirements,” Treasury says.
Carl Wilkerson, chief counsel for securities with the American Council of Life Insurers, says ACLI takes the responsibilities contained in the proposed rules seriously.
He says ACLI will have to devote a lot of attention to it.
ACLI is examining the proposal to determine whether to file comments with Treasury, he says.
Wilkerson adds that there has been no suggestion or evidence to ACLIs knowledge that limited purpose broker-dealers have been a source of alleged money laundering.
David Winston, vice president of government affairs with the National Association of Insurance and Financial Advisors, says NAIFA supported the spirit of the USA Patriot Act when it was introduced.
“We feel the law is necessary,” he says, adding NAIFA is also examining the proposed rules to determine whether to file comments.