Money laundering in the insurance industry: Top tips for strengthening your AML efforts  

An example of this is a tool that executes continuous know your customer (KYC) scanning. There are a lot of players in the anti-money laundering (AML) space and pretty much all of them are either already incorporating artificial intelligence (AI) or in the process of figuring out how to leverage it to make their solutions even better. Tools that combine KYC data, customer risk rating and enhanced due diligence data, products used by the customer and other operational data can provide a full 360-degree view of who your customers are and how they are engaging with your organization, enabling you to better identify red flags. Transaction monitoring tools can bring money laundering red flags to life by generating alerts of known red flags for your compliance team to review. The more sophisticated solutions also leverage AI to continually refine their rule set based on emerging typologies and identifying changes in expected behaviors. 

It is also critical to ensure adherence to Financial Action Task Force (FATF) standards to help maintain consistency and effectiveness across borders. In the United States, the Financial Crimes Enforcement Network (FinCEN) has put out a proposed rule that, among other things, will require financial institutions to incorporate government-wide AML priorities into their programs, promote clarity and consistency across program rules for different types of financial institutions and bolster the development of risk-based programs and innovation by requiring institutions to complete an AML risk assessment. This is a good step in the right direction to really get to the heart of what we are trying to accomplish with AML regulations and how each institution can tackle their unique risks in a more meaningful way.   

This should happen shortly after hire and annually with refresher content for every team member. It should cover the key money laundering risks for your organization, trends in the industry and activities and controls for their role specifically. In addition, compliance departments need to stay updated on emerging trends and the impact on your organization. Often, they will receive external training each year from sources like the Association of Certified Anti-Money Laundering Specialists. Participating in industry conferences, webinars and thought leadership, subscriptions to newsletters and news alerts are all also great ways to stay on top of things. For more information on how to best train your organization to achieve BSA/AML compliance, refer to our article on the subject.  

Financial penalties and jail time are on the table, both for the organization and the individual. This is critical to driving home the significance of these regulations and the impact they have on the economy, society broadly and locally, as well as the safety and soundness of your organization. Operational risks also come into play – exposure to money laundering can mean exposure to fraud and financial instability that can disrupt your business operations significantly. It can impact your organization financially, prevent you from doing mergers and acquisitions or even result in closure. Finally, the reputation damage is significant. These cases get a lot of media attention and in this case the phrase ‘all press is good press’ does not apply. You can lose existing customers and prevent new customers from joining.