A little while ago, Guernsey followed the lead of various other countries and removed general insurance from its AML regime. As explained on the FAQ page of the Guernsey Financial Services Commission’s website: “Intelligence and information in the jurisdiction identified that there was a very low risk of general insurance products being used to launder the proceeds of crime or terrorism. As a result, amendments were made to the relevant legislation so that the AML/CFT requirements in the [AML] Regulations and the Handbook would no longer apply to general insurers.”
As someone who is always campaigning for the extension of the AML regime rather than its contraction, I find this disappointing. As I see it, this change will result in the creation of an unnecessary risk (that criminals will return in droves to using general insurance products for their laundering) in return for very little reduction in effort. For, as the GFSC FAQs further elaborate: “Despite the above amendments, general insurers must still comply with the requirements in other financial crime legislation [including] the disclosure requirements of the Disclosure (Bailiwick of Guernsey) Law, the Terrorism and Crime (Bailiwick of Guernsey) Law and the Drug Trafficking (Bailiwick of Guernsey) Law. General insurers must also continue to comply with the requirements, reporting and restrictions imposed by the UN, EU and other bodies concerning sanctions [and with] the Prevention of Corruption (Bailiwick of Guernsey) Law.” I might be being dense here, but if general insurers are required to report suspicions, check their client lists for sanctions matches and look out for corruption, won’t this mean that they will have to do the same CDD, record-keeping, reporting and staff training as with AML? It might be called something else but it’s pretty much the same process, so why not get a double win and use it for AML as well, thus reducing that risk of criminals returning to general insurance? Plus, of course, those providing general insurance would be able to continue doing what they could do until recently, and that everyone else in the regulated sector is still doing, and – when their customers complain about having to answer questions and supply documents – blame the whole lot on AML.