IC chief urges insurance firms to be vigilant in fight vs money laundering

The Insurance Commission (IC) is urging the life and non-life insurance industries to take extra steps in making sure that the customer is not laundering money through the acquisition of insurance policies.

IC Commissioner Eduardo T. Malinis said insurers are advised to report any suspicious transaction immediately to government authorities.

Malinis said particular attention should be given to anyone who acquires an insurance policy, life or non-life, then suddenly decides to terminate the policy after the payment of premium.

"After the payment of the premium which is usually in millions of pesos, they suddenly decide to cancel or terminate the policy. When the premium amount is returned, this is now ‘clean’ money minus minimal deductions for handling and the like," he pointed out.

Sometimes the money launderer connives with a building owner for property insurance coverage running in millions of pesos, Malinis said. When the premiums are paid which will take about month, they will suddenly have the policy terminated and demand a refund, he added.

Malinis admits that a money launderer can not be stopped from making such a transaction. "But the insurance company should immediately report to the commission so that the proper authorities could be alerted of the parties involved."

This will allow authorities to keep the suspected money launderer under close scrutiny or surveillance.

According to Malinis, a businessman sometimes buys an insurance policy then decides to terminate it later for one reason or another, Malinis said. A legitimate businessman will probably look for a similar policy from another insurer while a money launderer will most likely not seek a new policy since the "dirty money" had already been legitimized, he said.

Malinis said the commission will release the appropriate circulars shortly after the anti-money laundering bill has been passed into law. "We will also hold dialogues with the industry."

Aside from insurance policies, money laundering can be undertaken through bank deposits, acquisition of jewelry, expensive art works, real estate and stocks.

In the absence of an anti-money laundering law, the Bangko Sentral ng Pilipinas (BSP) has issued circulars calling for higher vigilance against laundering in the banking industry.

The BSP said banks could easily detect a possible money laundering activity if they are familiar with the banking habits of their clients.

The Philippines is rushing the passage of an anti-money laundering legislation to avoid being slapped with sanctions initiated by the influential Financial Advisory Task Force (FATF) which has imposed a Sept. 30 deadline.