Insurance Companies Required to Establish Anti-Money Laundering Programs and File Suspicious Activity Reports

Insurance Companies Required to Establish Anti-Money Laundering Programs and File Suspicious Activity Reports

Under two final rules announced today by the Financial Crimes Enforcement Network (FinCEN), certain U.S. insurance companies are required to both establish anti-money laundering programs and file Suspicious Activity Reports. Insurance companies subject to these rules must establish an anti-money laundering program and start filing Suspicious Activity Reports 180 days after the date of the publication of the final rules in the Federal Register. The final rules apply to insurance companies that issue or underwrite certain products that present a high degree of risk for money laundering or the financing of terrorism or other illicit activity. The insurance products subject to these rules include:

• permanent life insurance policies, other than group life insurance policies; • annuity contracts, other than group annuity contracts; • any other insurance products with features of cash value or investment features. • Independent testing to monitor and maintain an adequate program.

At minimum, insurance companies subject to the rule requiring an anti-money laundering program must establish a program that comprises four basic elements:

• A compliance officer who is responsible for ensuring that the program is implemented effectively; • Written policies, procedures, and internal controls reasonably designed to control the risks of money laundering, terrorist financing, and other financial crime associated with its business; • Ongoing training of appropriate persons concerning their responsibilities under the program; and • Independent testing to monitor and maintain an adequate program.