The China Insurance Regulatory Commission (CIRC) has issued guidelines aimed at helping insurance companies assess the risk of money laundering and terrorist financing taking place in their operations. This is because with the rapid development of the Chinese insurance industry and business innovations, the unscrupulous are turning to the insurance industry to launder money.
The guidelines distinguish between internal money laundering risk and external risk. Internal risk includes product risk with money launderers tending to prefer investment-linked insurance products, insurance with a savings component, high cash-value insurance products as well as products which has low surrender costs.
On the external risk front, online insurance has become the focus of anti-money laundering efforts because of the ease of effecting insurance transactions without the need for the customer to meet insurance company representatives. Most online insurance products have high cash values with short tenors, and are therefore attractive to money launderers.
To counter the illegal activity, insurance companies are told to limit the amount of insurance that can be bought online; establish a customer identification system; study the transaction profiles of customers such as frequency of insurance purchases, and checking the contact information of customers to ensure that the details are not similar in several different cases.
CIRC has been active in directing and carrying out anti-money laundering measures in the insurance industry. It has been conducting audits of insurance companies to look out for money laundering activities and has conducted training for senior insurance executives in anti-money laundering detection and action.
In 2011, CIRC issued guidelines relating to administrative measures for anti-money laundering efforts in the Insurance Industry.