Certain products, customers and geographic regions present a higher risk of money laundering and terrorist financing for life insurance companies

• The inherent risk of money laundering and terrorist financing can be lower in the life insurance sector relative to some other sectors.
• However, life companies should note that certain products, customers and geographic regions may present a higher risk
• Central Bank expects life companies to carefully consider the issues raised in its report

The Central Bank of Ireland today published a report of its observations on Anti-Money Laundering, Countering the Financing of Terrorism and Financial Sanctions compliance by life companies in Ireland.

The report is based on a combination of on-site inspections and off-site desk top reviews carried out by the Central Bank over the course of 2014 and 2015.

Head of Anti-Money Laundering at the Central Bank Domhnall Cullinan said:

The inherent risk of money laundering and terrorist financing can be lower in the life insurance sector relative to some other sectors, but life companies need to be cognisant that there are products, customers and geographic regions that present a higher risk.

The life insurance sector in Ireland offers a diverse range of products sold through a range of distribution channels, both domestically and cross border. Life companies must understand the risks applicable to their own business and implement controls that are appropriate to effectively mitigate those risks.

The Central Bank expects all life companies to carefully consider the issues raised in this report, and to use the report to inform the development of their AML/CFT and FS frameworks. In many instances, life companies had satisfactory procedures and systems and controls in place, but issues identified in the report include:

• Non-adherence to internal policies;
• Weaknesses in the suspicious transaction reporting process;
• Deficiencies in the on-going customer and transaction monitoring processes;
• Insufficient evidence of life companies determining the adequacy of documentation and/or information held for existing policyholders pre-July 2010; 
• Deficiencies in the policies and processes in place relating to third party reliance and outsourcing arrangements;
• Deficiencies in the policies and procedures in place with respect to the definition and identification of Politically Exposed Persons;
• Failure to sufficiently identify, verify and document Source of Funds and Source of Wealth.