Anti-Money Laundering Rule Needs Changes On Life Products, Agents

In the case of reinsurance, for example, ACLI said the reinsurance business does not allow for a seamless transfer of funds to disguise their true origin. “On the contrary, the transactions of reinsurance typically involve two corporate entities heavily regulated by the states,” ACLI said.

Additionally, according to ACLI, reinsurance does not possess the elements of “stored value” and “transferability” described in the proposed rule as features of money laundering vehicles.

The situation regarding life insurers and agents and brokers would create an administrative nightmare if the rule were implemented as proposed, particularly as it pertains to independent agents.

The proposed rule requires insurers to provide for ongoing training, but as NAIFA points out, many agents and brokers sell policies for several companies. Imagine the amount of duplicative effort involved–for both insurers and agents–if each insurer had to provide training for every agent who sells its policies.

The situation obviously calls for some kind of streamlining and both associations have made suggestions. For its part, NAIFA says Treasury should encourage the insurance industry to work together to design acceptable training programs and indicate that outside vendors, including trade associations, can offer training.

ACLI says the regulation should allow independent agents to meet the training requirements through certification. Thus, instead of having to train with each life insurer the independent agent represents, the agent would be able to certify that he or she has completed a program that covers the core elements of an acceptable program.

ACLI also wants Treasury to establish a central registry of agents who are certified.

These arguments have merit for anyone even remotely familiar with how the industry works. Nonetheless, getting an agency like Treasury to make exceptions, especially broad ones like these, is dicey at best. This is one case where the famous powers of persuasion of ACLI and NAIFA must be employed to their fullest.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.