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Regulation and Compliance > State Regulation

New York Sends Patriot Act Letter

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NU Online News Service, April 16, 6:09 p.m. – Officials at the New York State Insurance Department say they expect the new federal USA Patriot Act money-laundering regulations to apply to “brokers, agents, and managing general agents” as well as to insurance carriers.

But the New York department is also trying to give agents and brokers some reassurance about the regulations.

“Anti-money laundering programs are not anticipated to be ?one size fits all,’” Gregory Serio, the New York insurance superintendent, writes in Circular Letter Number 10 (2002). “Rather, it is expected that they will be developed using a risk-based approach.”

Congress enacted the USA Patriot Act, formally known as the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act,” last fall, in response to the Sept. 11, 2001, terrorist attacks.

The law requires financial institutions to help fight efforts by terrorists to hide their cash in legitimate-looking investments, bank accounts and insurance policies.

The U.S. Treasury Department is still drafting an anti-money laundering compliance program for insurers, but the program might be similar to the program proposed by the National Association of Securities Dealers, New York, for broker-dealers, Serio says.

All regulated entities, including agents and brokers, will probably have to comply with “know your customer” rules, or minimum standards for verifying that customers are who they say they are and are not on any government lists of known or suspected terrorists, Serio writes.

Organizations that appear to be more susceptible to money laundering may have to give more attention to the problem than others, Serio writes.

Serio predicts insurers will have to develop internal procedures to cope with any level of money-laundering risk that does exist; designate a properly trained compliance officer; train employees; and hire independent auditors to test the programs.

The text of the New York circular letter is available on the Web at

The text of the act is available on the Web at


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