AML/CFT Solutions for Life Insurance Providers

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CFT), and fraud prevention solutions for life insurers’ anti-money laundering compliance that are tailored to applicable AML/CTF (aka CTF) laws, regulations, AML/CTF supervisors' guidance for life insurance providers, sector-specific red flags and indicators, to help your business meet applicable obligations that cover life insurance money laundering and terrorist financing risk mitigation, detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of the AML requirements for insurance companies in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of the life insurance companies’ AML compliance, including but not limited to:

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

 

• Applicable Regulatory and Fraud Prevention Obligations:
• AML/CTF regulations for life insurance providers
• Any life insurance  fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, life insurers’ obligations under:

• Privacy laws
• Financial market laws
• Fair trading laws
• Financial licensing requirements
• Other relevant regulatory frameworks

 

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for life insurance providers
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to insurers’ anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

What Jurisdictions Do Our Life Insurers’ AML Solutions Cover?

• Life insurers’ Anti-Money Laundering Solutions in Australia: AML requirements for insurance companies in Australia are set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the AML/CTF Rules. Life insurers offering products with a financial or investment component (e.g., policies with a savings or cash value element) are considered reporting entities under these laws. Supervision is carried out by the Australian Transaction Reports and Analysis Centre (AUSTRAC).
• Life insurers’ anti-money laundering solutions in New Zealand: AML requirements for insurance companies in New Zealand are governed by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Life insurers offering investment-linked or savings-oriented policies are captured as reporting entities. Supervision is shared between the Reserve Bank of New Zealand (RBNZ) for prudential aspects and the Financial Markets Authority (FMA) for market conduct oversight.
• Life insurers’ anti-money laundering solutions in the United Kingdom: AML obligations of insurance companies in the United Kingdom are set out in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (updated in 2020). Life insurers are supervised by the Financial Conduct Authority (FCA), with a focus on products that involve investment or cash value elements.
• Life insurers’ anti-money laundering solutions in the USA: Life insurers' AML requirements in the USA are governed by the Bank Secrecy Act (BSA), specifically regulations like 31 CFR § 1025 and 31 USC § 5318. Only insurers offering products with cash value or investment components (e.g., annuities, whole life policies) are required to implement AML programs, including Customer Due Diligence (CDD) and Suspicious Activity Reporting (SAR). Supervision is provided by the Financial Crimes Enforcement Network (FinCEN).
• Life insurers’ anti-money laundering solutions in Singapore: AML requirements for insurance companies in Singapore are set out in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and the Monetary Authority of Singapore (MAS) Act. Life insurers offering investment-linked or cash-value policies are subject to AML/CFT guidelines, including MAS Notice 314, which mandates Customer Due Diligence (CDD) and transaction monitoring. Supervision is conducted by the Monetary Authority of Singapore (MAS).

 

What Types of Insurance Companies Do We Support?

• Whole Life Insurance AML Advisory
• Universal Life Insurers AML Support
• Variable Life Insurance Companies AML Requirements
• Indexed Life Insurers AML/CFT Managed Solutions
• Other insurance companies that are subject to AML requirements

 

Insurance Companies’ AML Advisory and Support

Our AML/CFT advisory services for insurance providers include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the AML requirements for insurance companies for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• Insurance providers' fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to insurance providers. Also, tailored to insurance providers’ fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising insurance companies and life insurance providers service providers on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping insurance providers compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with insurance companies’ AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic life insurers’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help insurance providers to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support insurance providers' anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

 

AML/CFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to  insurance companies’ AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the insurance companies’ AML requirements, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the insurance companies’ AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to life insurance money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for insurance providers
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The life insurance money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to life insurance money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of the Cross-border custodial services – optional
• Other obligations related to the AML requirements for insurance companies

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world life insurance money laundering, terrorist financing, and common insurance providers’ fraud scenarios, as well as specific challenges related to the insurance companies’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions page for an extensive list of AML/CFT training solutions we offer to insurance providers and other businesses subject to AML/CFT regulations.

 

Comprehensive AML/CFT Managed Solution for Insurance providers

Our insurance companies’ AML/CFT compliance management solutions include but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka “Money Laundering Reporting Officers” or (MLROs optional)) and as compliance managers, fully managing AML/CFT compliance and handling the life insurers’ anti-money laundering obligations for your business.
• Insurance providers' anti-money laundering risk management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO Verification Streamlining: Verification of beneficial ownership in line with the AML requirements for insurance companies, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the AML requirements for insurance companies in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and Money Laundering Prevention: Related to the above, we also help with the implementation of ML/TF alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the AML requirements for insurance companies and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:

• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific life insurance money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to the AML requirements for insurance companies
• ongoing progress against your organisation-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with the AML/CFT compliance requirements for insurance providers.

• Insurance Companies' AML/CFT Compliance and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with life insurers’ anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with the AML requirements for insurance companies for statutory reporting.

 

KYB Solutions for Life Insurers’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with the insurance companies’ AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

Core Policies and Procedures for Insurance Companies’ AML/CFT Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective insurance companies’ AML/CFT compliance management, including the following:

• Insurance companies’ AML/CFT Framework Development: Covering specific AML requirements for insurance companies and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the AML requirements for insurance companies for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by insurance providers as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to life insurers’ anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our insurance companies’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information

• Insurance companies’ AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of insurance companies’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and AML requirements for insurance companies as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of insurance providers' anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with insurance companies’ AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That is why another part of our insurance companies’ AML/CFT solution focuses on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:

• updates in the AML/CTF laws, insurance companies’ AML regulations or AML supervisors’ sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, insurance providers’ fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance & CRM Management: Our insurance companies’ AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for efficient insurance companies’ anti-money laundering compliance management. This includes AML compliance technologies and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT reporting
• Insurance Companies’ AML/CFT Obligations for External Reporting
• AML/CFT Incident Management
• Exception Escalation and Management
• AML/CFT Management Automation: Including automated response workflows and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• Insurance Companies’ AML/CFT Obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to life insurance money laundering and terrorist financing red flags
• Effective CRM for handling AML requirements for Insurance Companies

 

 

Insurance Companies’ AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with life insurers’ anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both local AML/CTF obligations and specific insurance companies’ AML requirements. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for insurance companies’ AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare insurance providers for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting AML requirements for insurance companies and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• life insurers’ anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CFT compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to life insurers’ anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CFT compliance. Please visit our Internal AML/CFT Review Solution page for more information.

 

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our insurance companies’ AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

 

Broader Risk & Compliance Solutions for Insurance Providers

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the AML requirements for insurance companies into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for insurance providers, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options. Visit our Compliance Solutions page for Insurance Providers for more information.
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for insurance providers, including preparation, licensing process management, regulator liaison, and post-licensing support in:

• Australia
• New Zealand
• Singapore
• The United Kingdom
• The United States
• Offshore financial centres and tax havens
• The European Union

 

Common Money Laundering Risks for Insurance Providers

Life insurance money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by insurance providers represent only a sample and are not exhaustive.

Product-Related Risks and Insurance Providers’ AML Compliance

Some of the product-related ML/TF risks relevant to life insurers’ anti-money laundering compliance include:

• Early Policy Surrenders or Policy Loans Without Justification: Lack of controls to monitor early policy surrenders or loans taken against their cash value facilitates laundering under the guise of legitimate payouts.
• Premium Overpayments Followed by Refund Requests: Failure to flag significant premium overpayments and subsequent refund requests enables laundering by converting illicit funds into "clean" money.
• Complex Ownership and Beneficiary Structures: Insufficient due diligence on policies held by trusts, shell companies, or nominees obscures the beneficial owner and the origin of funds.
• Frequent Policy Transfers or Assignments: Weak oversight of policies transferred or assigned to third parties can be exploited to obscure the original policyholder's connection to the ultimate beneficiary.
• Overinsurance or Excessive Policies: Failure to detect excessive premium payments or the purchase of multiple high-value policies without clear justification creates opportunities for layering illicit funds.

 

Jurisdictional Risks and Insurance Providers’ AML Compliance

Some of the jurisdictional risks relevant to life insurers’ money laundering prevention include:

• Jurisdictional Exploitation in Policy Structuring: Policies purchased in low-regulation jurisdictions, without enhanced due diligence measures, create risks when payouts occur in different regions.
• Funds from High-Risk Jurisdictions Without Enhanced Due Diligence: Weak controls to identify and monitor premium payments or payouts linked to jurisdictions with high corruption or financial crime levels increase vulnerabilities.
• Policies for Non-Resident Clients Without Sufficient Scrutiny: Lack of onboarding measures for non-resident clients from high-risk jurisdictions exposes insurers to ML/TF risks.
• Policy Payouts to High-Risk Jurisdictions Without Screening: Insufficient monitoring of payouts directed to accounts in high-risk regions exacerbates exposure to financial crime.
• Inadequate Monitoring of High-Risk Jurisdiction Intermediaries: Weak oversight of intermediaries in high-risk jurisdictions exposes insurers to indirect ML/TF risks.

Delivery Method Risks and Insurance Providers’ AML Compliance

Some of the delivery method-related ML/TF risks relevant to life insurers’ AML compliance include:

• Non-Face-to-Face Onboarding Without Robust Verification Controls: Offering policies through digital platforms without strong identity verification measures increases risks of impersonation and fraudulent applications.
• Premium Payments via Anonymity-Enhancing Channels: Failure to monitor premium payments made through prepaid cards, online wallets, or other anonymity-enhancing methods facilitates the layering of illicit funds.
• Cross-Border Premium Payments Without Transaction Monitoring: Accepting premiums across jurisdictions without robust monitoring mechanisms increases the risk of undetected suspicious activity.
• Use of Third-Party Agents Without Integrated AML Oversight: Lack of controls to ensure brokers and intermediaries adhere to AML requirements creates systemic vulnerabilities.

 

 

Customer Type Risks and Insurance Providers’ AML Compliance

Some of the customer type-related ML/TF risks relevant to life insurers’ money laundering prevention include:

• Inadequate Screening for Politically Exposed Persons (PEPs): Lack of enhanced due diligence measures for PEPs purchasing high-value policies creates exposure to laundering of proceeds from corruption.
• Unrelated Parties as Beneficiaries: Failure to verify the connection between policyholders and named beneficiaries allows fraudulent schemes to exploit insurance payouts.
• Weak Verification of Source of Funds for High-Value Policies: Insufficient scrutiny of fund origins for high-premium policy purchases enables laundering activities.
• Lack of Risk Categorisation for Different Customer Profiles: Failure to categorise customers by ML/TF risk levels undermines the effectiveness of monitoring and ongoing due diligence.

 

 

Institutional Risks and Insurance Providers’ AML Compliance

Some of the institutional risks relevant to life insurers’ AML compliance include:

• Weak Oversight of Third-Party Distributors: Lack of monitoring for brokers, agents, or other intermediaries distributing life insurance products creates vulnerabilities to ML/TF risks.
• Insufficient Scrutiny of Reinsurance Transactions: Inadequate controls over reinsurance arrangements, particularly those involving entities in high-risk jurisdictions, allow layering or integration of illicit funds.
• Dependence on Outsourced AML Functions Without Regular Audits: Relying on third-party vendors for AML compliance without conducting regular assessments of their practices creates systemic weaknesses.

 

 

Standard Anti-Money Laundering Requirements for Life Insurance Providers

Given the variety of AML requirements for insurance companies, this list is not exhaustive:

• Conducting Thorough KYC Checks: Ensuring detailed verification of client identities, focusing on beneficial ownership and legal entity customers.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for life insurance providers.
• Independent AML/CFT Audits and Life Insurance Providers: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Enhanced due diligence for high-risk clients and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

 

Common Life Insurance Providers’ AML/CFT Issues

This is not an exhaustive list and could include:

During Customer Onboarding

• Inadequate Beneficial Ownership Verification: Weak processes to identify and verify beneficial owners in complex policy structures increase vulnerabilities to misuse for concealing illicit funds.
• Failure to Assess Source of Premiums: Absence of robust measures to verify the source of funds used to pay premiums, particularly for high-value policies, enables the integration of illicit funds.
• Insufficient Scrutiny of Policy Purpose: Lack of controls to assess whether a policy’s intended purpose aligns with the client’s profile increases risks of policies being used as financial layering tools.

After Customer Onboarding

• Weak Monitoring of Policy Transactions: Failure to continuously monitor financial transactions related to policies, such as premium overpayments, surrenders, or loans, allows ML/TF activities to remain undetected.
• Inadequate Scrutiny of Beneficiary Changes: Failure to scrutinise frequent or unexplained changes in policy beneficiaries raises risks of payouts being directed to high-risk or unrelated individuals.
• Lack of Controls for Payout Channels: Weak oversight of payout mechanisms, including payments to offshore accounts or third parties, increases exposure to misuse during claims processing.

 

 

Common AML/CTF Red Flags for Insurance Providers

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following non-exhaustive list of ML/TF red flags for insurance providers:

• Premium Payments from High-Risk Jurisdictions: Lack of sufficient controls to verify the source of premium payments originating from jurisdictions with weak AML/CFT regulations.
• Frequent Policy Cancellations or Refunds: Policies that are repeatedly cancelled with refunds issued, especially when these activities lack a legitimate business explanation.
• Unusual Payment Patterns: Premium payments inconsistent with the policyholder's financial profile or declared sources of wealth.
• Third-Party Payments Without Justification: Premiums paid by unrelated third parties without clear documentation or economic rationale for their involvement.
• Early Policy Redemptions Without Cause: Policies redeemed earlier than expected, particularly those with high cash values, without a plausible financial necessity.
• Frequent Loans or Withdrawals Against Policy Cash Value: Repeated utilisation of policy cash values for loans or withdrawals that appear inconsistent with the policyholder’s financial situation.
• Unrelated or Opaque Beneficiary Designations: Beneficiaries with no apparent connection to the policyholder or the insured party, raising concerns about potential obfuscation.
• Complex Policy Structures Without Clear Justification: Requests for policies with complex terms or structures that lack transparency or are designed to obscure beneficial ownership or the economic purpose of the insurance arrangement.
• Sudden Increases in Policy Value: Significant and unexplained increases in policy values, especially when unsupported by a clear economic rationale.
• Policies Linked to Politically Exposed Persons (PEPs): Policies associated with PEPs or their close associates without adequate enhanced due diligence measures.
• Policies Owned by Trusts with Opaque Ownership: Policies held in trusts or other legal arrangements where beneficial ownership is difficult to ascertain or verify.
• Cross-Border Transactions Without Sufficient Monitoring: Policies involving funds or entities across multiple jurisdictions, particularly high-risk ones, without adequate transaction monitoring or reporting.
• Inconsistencies in Policy Applications: Discrepancies in information provided during the application process, such as mismatched income or asset details.
• Rapid Succession of Policy Transfers or Assignments: Frequent transfers or assignments of policies to new owners or beneficiaries without a clear and legitimate purpose.
• Use of Policies for Non-Insurance Purposes: Policies used primarily as financial instruments, such as for collateral or non-traditional purposes, without clear documentation or a legitimate economic rationale.