Anti-Money Laundering (AML) in Insurance

As regulated businesses, insurers and insurance brokers must meet certain anti-money laundering (AML) commitments.

In this post we’ll take a look at the sort of AML trends that might impact regulated businesses like yours.

Artificial Intelligence in Anti-Money Laundering Processes – New Opportunities and Threats

Artificial intelligence (AI) is quickly transforming the way we live and work, creating new opportunities and threats in multiple sectors. AI and machine learning tools are capable of processing huge amounts of data in next to no time. Insurers and insurance brokers can therefore use AI models to automate time-consuming and repetitive tasks, enhancing the efficacy of AML processes.

Yet regulated businesses must ensure the AI models they use can be trusted to deliver the accuracy, reliability, and transparency they need to remain compliant. They must also be aware of AI’s potential to return false positives, along with the risk that criminals may also turn to AI to improve the efficiency of their money laundering schemes.

Any insurer or broker that wants to join the AI revolution should outline a detailed implementation plan, including a thorough onboarding process for your AML teams. For this, you may have to work with an expert consultant, or else outsource the process to a dedicated third party provider.

AML Regulatory Developments

A major challenge with meeting AML and other regulations is that the regulations tend to change from year to year.

Regulations in Response to AI

For example, regulators have been forced to introduce a host of new regulations in recent years in response to the rise of artificial intelligence. The FCA, for example, released a report on the use of AI in financial services.

The report recommended that businesses conduct regular assessments of the possible impact that any AI systems might have on compliance and risk management. But, as AI gets more widespread, expect to see further regulations and further measures to enforce them.

Co-operation and Information Sharing Regulations

Beyond AI, the EU is planning to enforce new regulations to enhance cooperation and information sharing across their member states. This will involve the creation of a dedicated AML authority: to act as “the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules.”

Reviewing Your AML Policies

Not all new regulations will apply to all regulated businesses and insurers and brokers should periodically review their AML policies in line with the current and developing regulations.

To remain compliant, you should be prepared to revise your procedures and to conduct additional staff training and development, wherever necessary.

Growing Role of the AML Specialist

Often, regulated businesses have viewed AML as a single aspect of a wider war on financial crime and fraud. Largely down to the growing power of AI, financial criminals and fraudsters are getting smarter, faster, and more sophisticated all the time.

The role of the AML specialist will need to evolve to meet this growing threat. This might result in more integrated AML processes. Businesses must look beyond pure compliance and instead strive for a holistic approach to AML and risk management.

AML specialists will work across teams, channels, products, and systems, while sharing information with both regulators and law enforcement agencies therefore, they aim to create a united front against the changing face of financial crime and fraud.

Insurers and brokers may increasingly rely on software as service (SAAS) systems to achieve this more holistic and integrated approach to risk management and compliance.

We offer bespoke insurance software solutions for insurance companies of all sizes. Our technology solution reduces your risks and can include both tailored brokerage and end-to-end fulfilment solutions.

Learn more about how our award-winning SAAS helps insurers, brokers, MGAs, agents and program providers.

If you have any questions contact the Tapoly team at info@tapoly.com or call our info line on +44(0)207 846 0180, or use the chat box on our website.