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Chapter 9 Insurance regulation 9/11

Non-life insurance money laundering or terrorist financing can be seen through inflated or totally bogus
claims, e.g. by arson or other means causing a bogus claim to be made to recover part of the invested
illegitimate funds. Other examples include cancellation of policies for the return of premium and the
overpayment of premiums with a request for a refund of the amount overpaid. Money laundering can
also occur through under-insurance, where a criminal can say that they received compensation for the
full amount of the damage, when, in fact, they did not.
Money laundering and the financing of terrorism using reinsurance could occur either by establishing
fictitious (re)insurance companies or reinsurance intermediaries, fronting arrangements and captives, or
by the misuse of normal reinsurance transactions. Examples include:
• the deliberate placement via the insurer of the proceeds of crime or terrorist funds with reinsurers in
order to disguise the source of funds;
• the establishment of bogus reinsurers, which may be used to launder the proceeds of crime or to
facilitate terrorist funding; and
• the establishment of bogus insurers, which may be used to place the proceeds of crime or terrorist
funds with legitimate reinsurers.

D2 Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental policy-making body whose purpose is to
establish international standards, and develop and promote policies, both at national and international
levels, to combat money laundering, terrorist financing and other related threats to the international
financial system.

To achieve global implementation of the FATF Recommendations, the FATF relies on a strong global
network of FATF-Style Regional Bodies (FSRBs), in addition to its own 37 members. The nine FSRBs have
an essential role in promoting the effective implementation of the FATF Recommendations by their
membership and in providing expertise and input in FATF policy-making. Over 190 jurisdictions around
the world have committed to the FATF Recommendations through the global network of FSRBs and FATF
memberships. Reference copy for CII Face to Face Training
The four essential objectives of the FATF under its current mandate (2012 to 2020) are to:

• set global standards for combating money laundering, terrorist financing and other related threats to
the integrity of the international financial system;
• promote global implementation of the standards;
• monitor countries’ progress in implementing the FATF Recommendations; and
• review money laundering and terrorist financing techniques and counter-measures.
The FATF Recommendations set out a comprehensive framework of measures which countries should See sections D2A
and D2B
implement in order to combat money laundering and terrorist financing, as well as the financing of
proliferation of weapons of mass destruction. Countries have diverse legal, administrative and
operational frameworks and different financial systems, and so cannot all take identical measures to
counter these threats. The FATF Recommendations, therefore, set an international standard, which
countries should implement through measures adapted to their particular circumstances. The FATF
Recommendations set out the essential measures that countries should have in place to:
• identify the risks, and develop policies and domestic coordination;
• pursue money laundering, terrorist financing and the financing of proliferation;
• apply preventive measures for the financial sector and other designated sectors; Chapter
• establish powers and responsibilities for the competent authorities (e.g., investigative, law
enforcement and supervisory authorities) and other institutional measures; 9
• enhance the transparency and availability of beneficial ownership information of legal persons and
arrangements; and
• facilitate international cooperation.