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Insurers can use technology to stop money laundering. (Technology Notes).


Breaking up an $80 million money-laundering ring involving international life insurance shouldn't be seen as a sign of a systemic problem within the industry, said a spokesman for the American Council of Life Insurers.

How much of an effect the federal USA PATRIOT Act Patriot Act: see USA PATRIOT USA PATRIOT - Uniting and Strengthening America By Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (US legislation) Act. would have had on stopping this scheme isn't clear, and while the act only applies to life and annuity writers, creative property/casualty insurers should be joining life insurers in deploying information technology to catch or prevent possible money laundering
Money Laundering
The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.

Notes:
Some estimate the size of the problem is over $500 billion annually. Often thought of as a victimless crime, money laundering is a very serious issue. Without it, international organized crime would not be able to function.
, experts said.

In the $80 million case, Colombian drug-trafficking organizations were buying investment-grade life insurance policies in the United States, the Isle of Man, and other locations, with cartel associates as the beneficiaries.

Carl Wilkerson, chief counsel for securities and litigation with the ACLI ACLI - Ada Command Language Interpretation
ACLI - American Council of Life Insurance
ACLI - American Council of Life Insurers
ACLI - Associazione Cristiana dei Lavoratori Italiani (Italian Workers Christian Association)
 said any U.S. company subject to the PATRIOT Act would have to have a risk-based approach in its anti-money-laundering compliance program. The Treasury Department's Financial Crimes Enforcement Network also issued proposed rules that require life insurers to file reports of any suspicious activities such as money laundering to the federal government. "It's certainly a large-dollar incident that merits attention," Wilkerson said. "It shouldn't be over-read to suggest there is a systemic deficiency in the life insurance industry. The industry response and Treasury regulations would filter out these types of organized money-laundering activities."

The Treasury Department has already recognized the importance of applying anti-money-laundering controls to the life insurance industry and, as part of the PATRIOT Act, issued proposed rules that for the first time require some insurance companies to establish anti-money-laundering programs. President Bush signed the PATRIOT Act into law in October 2001 to hinder the finances of terrorists after the Sept. 11 attacks.
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Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 1, 2003
Words:283
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