AML regulations for the Insurance sector

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.4.4″ background_enable_color=”off” custom_padding=”||||false|false” custom_padding_tablet=”30px||30px||false|false” custom_padding_phone=”0px||30px||false|false” da_disable_devices=”off|off|off” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.4.4″ width=”90%” max_width_tablet=”” max_width_phone=”” max_width_last_edited=”on|phone”][et_pb_column type=”4_4″ _builder_version=”4.4.4″][et_pb_text _builder_version=”4.9.2″ text_font=”Lato||||||||” text_text_color=”#000000″ text_font_size=”12px” header_3_font=”Lato||||||||” header_3_font_size=”24px” custom_margin=”||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”|0px||||” header_3_font_size_tablet=”22px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone”]

By Mariana Almeida Marques

[/et_pb_text][et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”24px” inline_fonts=”Lato”]

Money laundering is a widely discussed topic in the financial industry- and one of growing concern for insurers. In 2016, there were 125,000 fraudulant insurance claims valued at £1.3 billion, and a similar number is estimated to go undetected every year. As ML crimes continue to escalate globally, AML regulations become of upmost priority for insurers.

 

What is Insurance fraud?

Insurance fraud occurs when money launderers purchase insurance policies with criminal money,  then make a fraudulent claim and receive “clean” money back: money that has gone through the financial system and is given by the Insurer. This way, they avoid being caught or tracked down.

There can also be fraudsters who buy a policy with legal money, but then lie about themselves or exaggerate their conditions to make a fraudulent claim. Their purpose is to obtain compensation for accidents that they staged or never happened at all. One of the most popular types of Insurance scams is the “Crash for Cash”, when scammers purposefully collide with innocent drivers to make an insurance claim and receive financial aid.

 

How to report insurance fraud

Usually, each country has its own organisation focused on combating fraud and ML crimes, so you will need to double check this depending on where you are based. If you are based in the UK, you can fill out a form on the IFB (Insurance Fraud Bureau) website or contact the IFB Cheatline directly on 0800 422 0421. Reports are free and confidential.

If you are based in the EU, you can contact OLAF (European Anti-Fraud Office), the organisation responsible for investigating any kinds of fraud that concern EU public funds. You can make a report via a Fraud Notification System (FNS), via a webform or via post. In most cases, the national police can also take insurance fraud reports and direct them to the right team.

[/et_pb_text]Insurance fraud is growing abrupty.[et_pb_text _builder_version=”4.9.2″ text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_text_color=”#000000″ header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”24px” custom_margin=”||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”|0px||||” header_3_font_size_tablet=”22px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone”]

 

Anti-Money Laundering Authorities

In the UK, the Financial Conduct Authority (FCA) is the main authority responsible for setting ML regulations and supervising compliance. As mentioned above, OLAF is the institution responsible for combating Money laundering crimes in the EU. However, it is the European Union as a whole that establishes all ML directives, the most recent version being the 6th AMLD. The UK has opted out of this directive, but continues to follow the previous one- 5AMLD.

In the US, AML is regulated by the Financial Crimes Enforcement Network (FinCEN) and all financial companies must comply with the Bank Secrecy Act (BSA) legislation. However, each state may also have institutions focused on AML, particularly AML in Insurance. All countries have their own national authorities, with FATF operating on a global level. The Financial Action Task Forces (FATF) implements international AML policies and counts with 39 country members from all over the world.

If you are interested in knowing more about each specific authority and how they operate nationally, you can read our previous post on why your business needs an anti-money laundering policy.

 

What is automated AML Compliance?

Automated AML compliance is a type of software used by financial institutions to more easily detect fraudulent activities. Complying with AML regulations requires more than just an initial Customer Due Diligence screening: all transactions are monitored on an individual basis, which involved handling and reviewing gigantic amounts of data. Naturally, this dries up a lot of resources and money.

This type of software automates AML compliance by handling the data and analysing transactions to detect patterns of fraudulent transactions. This helps financial institutions to free up resources (as there is no manual work required), enables fraud to be detected in real-time and enhances the operational process of reviewing large databases. Overall, it eases the process of complying with national and international AML regulations.

[/et_pb_text]Fraud prevention[et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato|||||||#000000|” header_2_text_color=”#000000″ header_2_font_size=”24px” header_3_font=”Lato||||on|||#000000|” header_3_text_color=”#000000″ header_3_font_size=”18px” hover_enabled=”0″ inline_fonts=”Lato” sticky_enabled=”0″]

 

CFT & AML Insurance Regulations

Despite having a lower risk of financial crimes than banks, Insurance companies must also comply with the same Combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML) regulations. Most CFT and AML procedures such as CDD, record keeping and data monitoring are already common practice, particularly for life insurance policies. Insurers are regulated by the same national financial organisations that regulate banks. In case of the UK, for example, they are supervised by the Financial Conduct Authority (FCA) and HMRC.

 

AML risks with Life Insurance

Life insurance packages are at particular risk because they involve larger sums of money- exactly what money launderers are looking for. Some of the Life Insurance features that are more exposed to money laundering include:

Single-premium policies

Where money launderers can dump a large amount of money into a single transaction, merely to safeguard the money they obtained through illicit activity.

Cooling-off periods

The cooling-off period allows customers to cancel their insurance policy within 14 to 30 days after buying it. This gives money launderers the chance to protect their money for 30 days, then get a refund and place the money somewhere else.

Annuity policies

Money launderers can pay for premium policies with their funds and receive regular fixed cash flows.

Top-ups

Criminals can pay a small lump sum for their premium to avoid being suspicious, and then regularly deposit a sum of money.

Policy surrender

By surrendering their policies, criminals can withdraw their money at surrender value determined by the insurer and stated in their contract.

Transferring ownerships

Money launderers can transfer the ownership of their policies to a third-party who then withdraws the money sum to make it less suspicious.

 

Know Your Customer for insurance firms

Know your customer (KYC) is a crucial onboarding step for insurance firms to mitigate fraud risks. It represents a process of verification and risk assessment, where Insurers verify all the data from a customer, including name, address, birthday and social security number, before any contract is signed. These details can help companies determine if a potential customer has been involved in financial crimes.  In case there is any false information, insurers must prevent these customers from opening accounts or purchasing insurance policies with them.

If the KYC verification process is done internally, it can be a complex manual process that is subject to loopholes. It also requires a lot of human resources and time, as customer need to be verified on an individual basis. Some Insurance companies are outsourcing this process and automating it to reduce costs and improve efficiency. They partner with third-parties to use their latest software and technology, including AI and machine learning. Imburse can connect you to all the payment providers and technologies so you can automate your KYC and better detect fraud. 

Aside from the KYC onboarding process, insurers may look into performing financial sanction checks to confirm whether or not an individual has been excluded from certain industries or activities. This enables insurers to further reinforce their onboarding strategy and to prevent financial crime. 

[/et_pb_text]Life insurance [et_pb_text _builder_version=”4.9.2″ text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”18px” custom_margin=”||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”|0px||||” header_3_font_size_tablet=”22px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone”]

 

Customer due diligence for insurance companies

AML regulations enforce Customer Due Diligence policies to all financial firms, because it is an essential framework to prevent ML crimes. Whilst KYC is only an onboarding process, CDD continues throughout the customer relationship, meaning that all customer information is verified regularly. CDD is a bigger framework that includes KYC as one of the measures and can be fully automated.

Compliance with Money Laundering crimes and other types of fraud, whether purposefully or accidentally, has serious repercussions not only for the company’s reputation but also for the whole economy and society. A 2018 PwC Survey found that 62% of global insurers had been subject to fraud or financial crime over the previous 24 months. This growing threat is prompting insurers to invest millions every year to identify fraud, and consider automating their processes for more accurate monitoring.

Imburse offers integration-free connectivity to all payment providers and technologies around the world. This gives you the freedom to deploy the latest technologies and ensure that you are complying with all AML regulations. If you would like to know more about Imburse or how to be AML compliant, do reach out to us below.

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”4.4.4″ max_width=”500px”][et_pb_column type=”4_4″ _builder_version=”4.4.4″][et_pb_button button_text=”Contact Us” button_alignment=”center” module_class=”sg-popup-id-612″ _builder_version=”4.4.4″ custom_button=”on” button_text_size=”16px” button_text_color=”#ffffff” button_bg_color=”#0937f2″ button_border_radius=”8px” button_font=”Lato|300|||||||” button_use_icon=”off” custom_padding=”8px|15px|8px|15px|true|false”][/et_pb_button][/et_pb_column][/et_pb_row][/et_pb_section]

EFT payments: meaning and types of EFT

[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.4.4″ background_enable_color=”off” custom_padding=”||||false|false” custom_padding_tablet=”30px||30px||false|false” custom_padding_phone=”0px||30px||false|false” da_disable_devices=”off|off|off” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.4.4″ width=”90%” max_width_tablet=”” max_width_phone=”” max_width_last_edited=”on|phone”][et_pb_column type=”4_4″ _builder_version=”4.4.4″][et_pb_text _builder_version=”4.9.2″ text_font=”Lato||||||||” text_text_color=”#000000″ text_font_size=”12px” header_3_font=”Lato||||||||” header_3_font_size=”24px” custom_margin=”||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”|0px||||” header_3_font_size_tablet=”22px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone”]

By Mariana Almeida Marques

[/et_pb_text][et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_text_color=”#000000″ header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”24px” inline_fonts=”Lato”]

If you run a business or work in the payments side of your company, you probably deal with EFTs on a daily basis. Electronic payments have become a commodity that is present in our day-to-day lives. They are used by companies and individuals to process a wide range of payments, from e-cheques to ATM transfers.

 

What does EFT mean?

EFT stands for Electronic Fund Transfer, and represents the electronic movement of funds from one bank account to another. This transfer can happen within the same financial institution or across different institutions, always without direct intervention of bank personnel. As opposed to paper checks or cash, EFTs are fully processed through an electronic network.

Note that EFT is a term and not a type of technology. Thus, it is only used to characterise types of payments and it isn’t actually comparable to any national or cross-border payment technology. Each country has its national payment technologies used to process EFT payments.

The Electronic Fund Transfer Act (EFTA) was passed by the US Congress in 1978, following the growth of ATMs and electronic banking. It was aimed at protecting customers from errors derived from electronic payments. After this legislation was enacted, EFTs started to grow globally and at full speed.

[/et_pb_text]electronic payments are also called ETF.[et_pb_text _builder_version=”4.9.2″ text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_text_color=”#000000″ header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”18px” custom_margin=”||||false|false” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|desktop” custom_padding=”|0px||||” header_3_font_size_tablet=”22px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone”]

 

What are the types of EFT payments?

EFT is an umbrella term that englobes an extensive range of electronic payments, including:

Direct debit

A type of Recurring Payment set up by the payee (usually a company), in which the monthly payment is automatically transferred to the payee’s account. Most often used for paying bills or subscriptions.

Direct deposit

A type of Recurring Payment set up directly by the payer, in which the monthly payment is automatically transferred to the payee’s account on a recurring basis. Direct deposits can be set up by companies to pay salaries, for example.

Automated Teller Machine (ATM) transfers

Used to make deposits and withdrawals, but also to transfer funds or simply to check your bank account balance.

Mail Order/Telephone Order (MoTo)

Functions just like a regular one-off electronic transfer, except that this one is initiated on the phone or via email. The payer provides their bank details over the phone or via email, and the payee initiates the payment.

E-checks

Digital version of a traditional paper check. The payer writes the e-cheque electronically and sends it to the payee, who then deposits it in his account. This all happens via a computer or smartphone.

Wire transfers

Often used to send larger sums of money to payees overseas. The payment is processed via a global network of banks who support this wire system.

Debit or Credit Card

Debit or credit card payments are typically the most common and most used by the general population. Can include any purchase made online via a company’s website.

 

How is an EFT processed?

Electronic Fund Transfers are processed via Automated Clearing House (ACH). Each country has their own type of automated clearing house. They are responsible for clearing and settling electronic payments. The first ACH system was Bacs, set up in the UK in 1968. In the United States, ACH Network is the national Automated Clearing House used to process electronic payments. Other countries have their own clearing and settling scheme, and they also use different names to designate them. In Portugal, for example, the ACH system is called SIBS.

[/et_pb_text]Online payments considered ETFs [et_pb_text _builder_version=”4.9.2″ _module_preset=”default” text_font=”Lato||||||||” text_text_color=”#000000″ header_font=”Lato||||||||” header_text_color=”#000000″ header_font_size=”24px” header_2_font=”Lato||||||||” header_2_text_color=”#000000″ header_2_font_size=”24px” header_3_font=”Lato||||||||” header_3_text_color=”#000000″ header_3_font_size=”24px” inline_fonts=”Lato”]

 

What is the EFT processing time?

The processing times for EFT payments depend on the type of payment that is actually in question. Usually it can take anywhere from one to four days for a EFT payment to clear. Wire transfers take up to two days only, whilst Bacs payments take three working days.

EFT payments can typically only be processed on business days, and there are cut-off hours as well. If you make a payment after 10pm, for example, it might take a day longer for it to clear.

 

Can you cancel a EFT payment?

You are unable to stop a payment after you initiate it, and must contact the payee should you want a refund. If a payment is scheduled for later, you can stop it three working days before the process date by calling or notifying your bank. You can contact your bank if the payment was sent to the wrong account, as they should be able to reverse the transaction.

Imburse connects you to the entire payment ecosystem, so you can process any type of payment you want, using payment schemes from anywhere in the world. Whether you are a business that is looking to scale, or an established financial company looking to improve your operations and enlarge your customer base, Imburse allows you to fully enhance your payments system with no complications. Reach out to our team below to know more or request a free demo.

 

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”4.4.4″ max_width=”500px”][et_pb_column type=”4_4″ _builder_version=”4.4.4″][et_pb_button button_text=”Contact Us” button_alignment=”center” module_class=”sg-popup-id-612″ _builder_version=”4.4.4″ custom_button=”on” button_text_size=”16px” button_text_color=”#ffffff” button_bg_color=”#0937f2″ button_border_radius=”8px” button_font=”Lato|300|||||||” button_use_icon=”off” custom_padding=”8px|15px|8px|15px|true|false”][/et_pb_button][/et_pb_column][/et_pb_row][/et_pb_section]

Imburse introduces MicroSavings

Zurich-based payments platform Imburse has launched a new product called MicroSavings, an integrated savings feature for insurance companies and financial institutions to automate incremental consumer savings. It allows organizations to enhance their products with flexible savings functionality, where customers can automatically round up every card purchase to the nearest euro or set a daily or weekly percentage savings target.

Universal payment marketplace Imburse launches MicroSavings

Global payment marketplace Imburse has launched MicroSavings, an integrated savings feature which will allow insurance companies and financial institutions to automate incremental consumer savings. This new digital offering will allow organisations to enhance their products with flexible savings functionality, where customers can automatically round up every card purchase to the nearest euro or set a daily or weekly percentage savings target.