Recent Financial Crime Compliance Trends Among Insurers
In the last few years, both regulators and insurers have placed significant emphasis on developing a robust Financial Crime Compliance (FCC) framework. This has naturally led to an increased focus on FCC initiatives among insurers not only to ensure compliance, but also in adopting proactive FCC strategies that are based on good risk management practices.
We work with institutions with diverse global footprints, and in this article, we capture the recent trends in the FCC space in insurance companies:
Focus on ‘Compliance Culture’ and Governance
Regulatory bodies globally are emphasising the need to build a strong compliance culture and are pushing organisations towards creating a sense of accountability across all lines of defence. There is, therefore, an increased focus on strengthening the tone at the top and ensuring that compliance is an organisation-wide accountability, and not restricted to the second/third lines of defence. Organisations are also increasingly focusing on improving their overall governance framework to ensure adequate procedures are defined from an oversight perspective.
Robust Customer Identification Procedures
The Customer Due Diligence (CDD) framework is being enhanced to make it more inclusive i.e., focused expansion of CDD procedures to include related parties and ultimate beneficial owners (UBOs) within the definition of ‘customer’. To that extent, organisations are updating their CDD framework to include procedures around identification, verification, screening and ongoing monitoring of UBO information.
Customer Risk Rating (CRR) Framework
One of the key challenges faced by insurers across the board is the accurate assessment of customer risk. Given that this is one of the key components of an effective FCC programme, organisations are adopting a risk based approach to develop a holistic CRR framework that allows them to obtain a fair measure of the financial crime risk associated with each customer along with corresponding due diligence measures.