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Life Insurers May Face New Money Laundering Rules

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NU Online News Service, Sept. 18, 3:33 p.m. — Washington

Life insurance companies would have to establish anti-money laundering programs under a proposed regulation issued today by the U.S. Treasury Department.

The proposed rule says life insurers must establish and maintain a written anti-money laundering program that, at a minimum, contains four elements:

  • The program must incorporate internal policies, procedures and controls based on the company’s assessment of its money-laundering risks.
  • The program must designate a compliance officer.
  • The insurer must establish an ongoing employee training program.
  • The insurer must set up an independent audit procedure to test its programs.

In addition, the Treasury Department issued a final rule implementing procedures that encourage sharing of information between government authorities and financial institutions, and among financial institutions themselves.

Financial institutions receiving names of suspects from law enforcement authorities now must search their account and transaction records for potential matches.

The new rules establish procedures that allow financial institutions to share law enforcement information with each under the protection of a statutory safe harbor from liability.

Victoria Fimea, senior counsel for litigation with the American Council of Life Insurers, Washington, says the regulations will have a significant effect on life insurers and reinsurers.

“At a minimum, compliance, legal and fraud personnel will have increased workloads,” she says.

“Some companies will be purchasing or building software to interface with law enforcement authorities,” Fimea adds. “The cost to companies to comply with the Patriot Act regulations will range from thousands to even hundreds of thousands of dollars.”


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