7. Regulatory Processes Flashcards
Definition: Laundering
Process by which criminals attempt to disguise the origin of cash or other assets that they earned from crime. It follows a 3 stage process:
- Placement (Converting cash into other financial assets)
- Layering (Create a series of complex transactions)
- Integration (Accessing the clean money)
An insurance example would be using illegal funds to pay for premiums and then requesting a return
Definition: Bribery
Also known as corruption, covering the four offences:
- Bribing another person
- Receiving a bribe
- Bribing a foreign public official
- Failing to prevent bribery (corporate offence)
Definition: Client verification
Must be a photographic form of ID.
Companies must provide their full name, registered number and office, and business address
What are the data protection principles?
Personal data must be processed in accordance with the following principles:
- Lawfulness, fairness and transparency
- Purpose limitation
- Data minimisation
- Accuracy
- Storage limitation
- Integrity and confidentiality
- Accountability
Definition: Export controls
Requires that a license must be obtained to:
- move arms or military goods between overseas countries.
- if there is involvement of any UK person or entities when insuring these goods
Definition: Financial crime
Fraud or misconduct relating to the financial market
Definition: Sanctions
A ban on something - such as financial or trade sanctions.
Definition: Money Laundering Reporting Officer (MLRO)
Must report annually on how the systems and controls operate as well as their effectiveness
Principal money laundering offences
- Concealing, transferring, converting or removing criminal property
- Facilitating the use of criminal property
- Acquiring, using or possessing criminal property
Definition: Solvency II
The name given to the EU’s solvency rules.
Solvency is the padding of an insurers assets to ensure the balance between assets and liabilities is sufficient to continue trading
Systems and controls
Internal management tools that are used in business to ensure you can prove compliance with regulatory requirements.
Examples include:
Training and education
Operating system controls
Peer review
System reports
Authority limits
US sanctions
Because the US have sanctions against certain countries, and much of the London Market have US corporate parentage, insurers must be careful with what they cover.
UK GDPR
Came into force in 2021 and acts alongside the DPA 2018 legislation, by replacing the EU GDPR scheme which came into force in 2018.
What information are overseas regulators interested in?
Location of risk
Location of broker
Whether the risk is direct or reinsurance
Definition: Office of Foreign Assets Control (OFAC)
Extensive information about US sanctions
