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Treasury Issues Proposed Regulations Requiring Anti-Money Laundering Programs for Insurance Companies.

Article Excerpt
By Amy G Rudnick and Linda Noonan

Originally published October 3, 2002

On September 26, 2002, the Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN") published in the Federal Register proposed Bank Secrecy Act ("BSA") regulations that would require insurance companies to implement anti-money laundering ("AML") programs with respect to life and annuity products and certain other investment products. 67 Fed. Reg. 60625. Comments on the proposal are due on or before November 25, 2002.1

Background

Although insurance companies have been included in the BSA statutory definition of financial institution since the BSA was enacted, Treasury had not sought to exercise its BSA authority with respect to insurance companies until the Congressional impetus of Section 352 of the USA PATRIOT Act, 31 U.S.C. [section] 5318(n)(1). Section 352 requires all financial institutions under the BSA statute, 31 U.S.C. [section] 5312(a)(2), to have AML programs that include certain minimum elements by April 24, 2002. Section 352 also authorizes Treasury to exempt categories of financial institutions not designated as financial institutions under the BSA regulations from the AML program requirement. On April 23, 2002, Treasury announced that it was temporarily deferring the AML program requirement for insurance companies and other categories of financial institutions listed in the BSA statute, but not designated as financial institutions under the BSA regulations, pending further study.

Definition of Insurance Company

One of the issues that Treasury has been studying over the last several months has been whether the AML program requirement for insurance companies should cover all types of insurance or just those types of insurance that pose significant money laundering risks. After much debate and discussions with the insurance industry, Treasury determined that the greatest money laundering...