Time to Update Property & Casualty Exemption from Money Laundering Rules

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FinCEN’s BSA Exemption should Modernize and Reflect Captive Insurance Risks

Treasury’s Financial Crime Enforcement Network (FinCEN) recently sought information and comment on how to improve existing Bank Secrecy Act regulations and guidance.

Bank Secrecy Act regulations provide that “each insurance company shall develop and implement a written anti-money laundering program applicable to its covered products.”

CBI’s Comments to FinCEN are available here.

In response to this request for information and comment, CBI draws FinCEN’s attention to a few “rough edges” in the exemption afforded property and casualty insurance products under current Bank Secrecy Act (BSA) guidance.

Specifically, FinCEN’s current guidance on the exemption for property and casualty insurance:

• Muddles whether the exemption is absolute for all P&C products or conditioned on the product not including a cash value feature;
• Falls short of defining “cash value” with the clarity later developed for the Foreign Account Tax Compliance Act (FATCA) and OECD’s Common Reporting Standard (CRS); and
• Fails to consider the unique financial crime risks presented by captive insurance arrangements.