Money Laundering and the Insurance industry

Money laundering is the activity of channeling proceeds of crime through the financial system with the objective of disguising the illegal source of the funds.  The perpetrators of such activity often provide little information about themselves and their earnings.  To conceal their identity they sometimes operate through other organisations or individuals whom they use as fronts.  For this reason members of the public must be careful not to be used by individuals or companies that they are not well acquainted with.  This could land one in trouble with the law.  Handling large funds, in your name, without a clear understanding of the source places one in a position where he may be suspected of laundering funds.

Insurance companies have been instructed to carefully consider the business that is placed with them to avoid facilitating money laundering.   In this regard all insurers are required to appoint an officer specifically dedicated to monitoring suspicious transactions.  These transactions are reported to the Anti-money Laundering Unit which may undertake investigations on the matter.  In order to avoid suspicion any entity dealing with an insurance company must be transparent and be willing to avail information concerning its identity and nature of its business.  Individuals are sometimes required to avail copies of utility bills to demonstrate that they are of fixed abode and are therefore traceable.

Suspicious transactions include instances were individuals attempt to insure items in which they do not have an insurable interest.  Other examples include fraudulent claims involving huge sums of money.  Money launderers always aim to get back their money after placing it in the legitimate financial system.  Usually they will carry out all types of schemes to ensure that they extract the money they had placed in the insurance business.  When the money is paid as a claim, they can then use it with less suspicion as insurance claims are a legitimate source of income.  The public should be aware that money laundering is a scourge that allows individuals with criminal minds to destabilise the economy and social fabric of society by evading detection using the financial system.  It is therefore imperative that all law abiding citizens cooperate with law enforcement agencies in identifying individuals who are seemingly or actually living on proceeds of crime.

It is worth noting that insurance business is carried out in utmost good faith.  All parties to the insurance contract are obliged to act honestly and with integrity.  This is vital because the contract is based on a promise and not on the supply of tangible goods.  In the circumstances all parties must be wiling to fully disclose all information that may be reasonably required by the other party.  It must be emphasised that disclosure is a key element in the fight against money laundering.  This fight will be enhanced when members of the public resolve to avoid being agents of individuals or companies which they have reason to believe may be carrying out illegal trade.  It is such entities that would want to use an innocent person to place business on their behalf in the financial system.  They will usually avail very enticing commissions for those willing to assist them.  We must be warned that should such transactions be proved to be money laundering stiff penalties including imprisonment may visit the defaulting entity and even the agent.

Let all be fully aware that the Zambian insurance market is very open to ‘clean’ players.  “Integrity” and “honesty” will continue to be the watchwords.

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