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Life Settlement Plans Remain a Money Laundering Risk, say Consultants
By Brian Orsak
printIt sounds like the makings of the macabre thriller: drug traffickers, seeking to hide illicitly obtained funds, buy up the life insurance policies of the ailing and elderly. The sooner those former policy holders die, the greater the return on the criminals' investment. In a bizarre plot reminiscent of a B movie script, in 2001 and 2002 five men tied to a Colombian cartel were indicted for investing $100,000 in drug proceeds with Jackson National Life Insurance, a company that buys policies from holders wishing to cash in and resell to investors who collect when the original holder dies. One...
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In every longstanding relationship, there comes a point when both parties begin to question something they once thought they had agreed on. Talk to a Bank Secrecy Act officer at a conference, over dinner or in a bar and one point of friction with federal regulators inevitably becomes clear.
The Financial Action Task Force reiterated its call Monday for anti-money laundering controls by life insurance companies in a report outlining how the industry can apply risk-based checks.
Brian Mannion, of the Nationwide Mutual Insurance Company, spoke with reporter Larissa Bernardes about the possibility of insurance companies receiving enforcement actions, the compliance differences between banks and insurance products and the challenge of independent agent training.
Insurers filed 642 suspicious activity reports between May 2, 2006, and May 1, 2007, the first year they were required to do so, the U.S. Treasury Department's Financial Crimes Enforcement Network said in a report issued Tuesday.
The U.S. Treasury Department's Financial Crimes Enforcement Network issued a rule confirming that precious metals dealers and insurance companies are required to maintain anti-money laundering programs.
To meet certain reporting requirements, banks serving as agents to insurance and mutual fund companies often must identify those firms' customers initiating the underlying transactions. That is no easy task, say compliance professionals.
Insurers were on pace to file 280 for the year ended this month, according to a FinCEN study issued last week. That compares with 5,723 SARs submitted by money services businesses in 2002, and 4,267 by securities and futures dealers in 2003, the first years those industries had to file the reports.
Bob Walsh, v.p. of anti-money laundering compliance for AXA Financial, says insurance companies uncertain about their Bank Secrecy Act responsibilities face a number of challenges related to the newness of the requirements and the fact the industry has old systems in place to help them comply.
The IRS will use these first exams, which target 14 insurers of various sizes, to gather information and fine-tune procedures for future audits.