Money

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launderingExamples of money laundering and suspicious transactions involving insurance This document contains examples of money laundering and suspicious transactions involving insurance. It was originally created as an appendix to the IAIS Guidance paper on antimoney laundering and combating the financing of terrorism (October 2004) and is updated periodically to include additional examples identified.

Contents Indicators.................................................................................................................................. 1 Life insurance ........................................................................................................................... 3 Non-life insurance .................................................................................................................... 4 Intermediaries........................................................................................................................... 5 Reinsurance ............................................................................................................................. 6 Return premiums...................................................................................................................... 7 Over payment of premiums ...................................................................................................... 7 High brokerage/third party payments/strange premium routes ................................................ 7 Claims ...................................................................................................................................... 7 Assignment of claims ............................................................................................................... 8 Non-life insurance – fraudulent claims ..................................................................................... 8

Indicators The following examples may be indicators of a suspicious transaction and give rise to a suspicious transaction report: • • • application for a policy from a potential client in a distant place where a comparable policy could be provided “closer to home” application for business outside the policyholder’s normal pattern of business introduction by an agent/intermediary in an unregulated or loosely regulated jurisdiction or where organised criminal activities (e.g. drug trafficking or terrorist activity) or corruption are prevalent any want of information or delay in the provision of information to enable verification to be completed an atypical incidence of pre-payment of insurance premiums

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IAIS – Examples of money laundering and suspicious transactions involving insurance October 2004 Page 1 of 9

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the client accepts very unfavourable conditions unrelated to his or her health or age the transaction involves use and payment of a performance bond resulting in a crossborder payment ( wire transfers) = the first ( or single) premium is paid from a bank account outside the country large fund flows through non-resident accounts with brokerage firms insurance policies with premiums that exceed the client’s apparent means the client requests an insurance product that has no discernible purpose and is reluctant to divulge the reason for the investment insurance policies with values that appear to be inconsistent with the client’s insurance needs the client conducts a transaction that results in a conspicuous increase of investment contributions any transaction involving an undisclosed party early termination of a product, especially at a loss, or where cash was tendered and/or the refund cheque is to a third party a transfer of the benefit of a product to an apparently unrelated third party a change of the designated beneficiaries (especially if this can be achieved without knowledge or consent of the insurer and/or the right to payment could be transferred simply by signing an endorsement on the policy) substitution, during the life...
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