The offence under Proceeds of Crime Act (POCA) relates to any activity involving criminal or terrorist property. This is a much broader definition than the commonly understood definition of money laundering. A business can commit an offence under POCA by unwittingly facilitating an act of fraud.
General Insurance is regarded as being a greater risk of fraudulent claims, rather than the conduit for the proceeds of crime or money laundering. The implementation of risk management can be a simple process depending on the range of products on offer and should be linked to the profile of the customer.
Insurers who offer life products will need to undertake Customer Due Diligence and the nature of each type of category of products gives rise to different levels of risk (Protection, Pensions and Investments). Some will only pay out on death or illness, whilst others are accessible only after many years of contribution. The following are features which may tend to increase the risk profile of a product:
Accept cash payments
Be traded on a secondary market
Accept payments or receipts from third parties
Accept frequent payments (outside of a normal regular premium policy)
Be used as collateral for a loan and/or written in a discretionary or other increased risk trust
Accept very high value or unlimited value payments or large volumes of lower value payments
Provide significant flexibility as to how investments are managed to be liquidated quickly (via surrender or partial withdrawal) and without prohibitive financial loss
The following are features that may tend to reduce the risk profile of a product:
Restricted capacity to accept third party receipts or make third party payments;
Have total investment curtailed at a low value due to either the law or a firm’s policy;
Be relatively small value regular premium policies that can only be paid via direct debit;
Require the launderer to establish more than one relationship with a firm or another official
Body (e.g., certain types of pension products where the customer has to set up the product with the provider and to get HMRC approval and possibly appoint a Pensioner Trustee);
Have no investment value and only pay out against a certain event (death, illness etc) that can be checked by the Product Provider; and/or be linked to known legitimate employment.
Investment Management includes both discretionary and advisory management of segregated portfolios of assets (securities, derivatives, cash, property etc) for the firm's customers. In terms of money laundering risk, there is very little difference between discretionary and advisory Investment Management. In both cases, the firm may itself physically handle incoming and outgoing funds, or IT may be done entirely by the client’s Custodian.
The recommended industry standard for Pension Products is to apply simplified Due Diligence. Therefore apart from on-going monitoring for Sanction and PEPs,initial Customer Due Diligence does not apply to either the Customer or the Scheme.
Much of the Professional Regulated Sector have realised the benefits of operating SmartSearch giving them a single platform for all of their Individual and Business AML, Sanction & PEP compliance requirements. The ability to retain all of their AML verification data and outcomes in a real-time environment where information can be retrieved on demand to satisfy any internal audits or regulatory visits.
Much of the Professional Regulated Sector have realised the benefits of operating SmartSearch giving them a single platform for all of their Individual and Business AML, Sanction & PEP compliance requirements. The ability to retain your AML verification data and outcomes in a real-time environment where information can be retrieved on demand to satisfy any internal audits or regulatory visits; this is just one of the features that saves our clients time and cost and gives them peace of mind to concentrate on their own business matters.
When the Regulator changed from OFT to HMRC this increased the focus on AML, Sanction & PEP compliance. As a consequence an ever increasing number of firms have upgraded their compliance regimes to incorporate electronic verification, demonstrating their compliance with regulations in a much more efficient and cost effective manner significantly reducing their operational risk.
Banks, Building Societies & Financial Communities are steadily catching up with the Professional Regulated Sectors with an increasing number of Financial Organisations switching to SmartSearch for their AML, Sanction & PEP compliance. These Communities are not renowned for being early adopters as they typically have long standing legacy IT systems that usually take several years to implement change.
Networks and Compliance Specialists provide their clients with large range of support products and services. SmartSearch partners with some of the largest Networks to provide their Members with fully integrated cost effective AML, Sanctions & PEP solutions, helping Firms to comply with the latest Money Laundering Regulations.
In the instant decisioning world of global stock markets “time is of the essence” therefore using traditional documents is a totally ineffective means of complying with AML regulations. Likewise checking against other mandatory data sources such as Sanctions & PEPs on a regular basis is not commercially practical unless this is fully automated.