Tom van der Lek is product manager UBO & Compliance at FRISS. He advocates the use of automated processes to search databases and lists for known fraudsters, money launderers or even terrorists so that they cannot take advantage of insurance companies.
No financial organization wants to consciously or deliberately cooperate in money laundering practices or even terrorism, and that certainly applies to insurance companies. For insurance applications and claims, it is necessary to check whether someone appears on international sanctions lists or on the PEP (Politically Exposed Persons) list.
The European Union has a list of 17,003 names of persons, organizations and countries with whom no business can be done. Many countries also publish their own sanctions list: the Dutch terrorist list contains 124 names, the Belgian list 251 and the United Kingdom list 9,308.
Unfortunately, new names are added to the sanctions lists after each terrorist attack or dismantled network. The PEP list is directly affected by political appointments and dismissals. Someone who sailed through screening effortlessly a year ago, may cause alarm bells to ring today. It is therefore important to keep the screenings as current as possible.
Many insurance companies carry out a periodic check every two or three months. This has two disadvantages: it generates a large number of hits all at one time, all of which need to be checked, and the following day you are already one step behind.
Within this framework, Continuous Compliance has been created: an organization’s complete relationship database is checked daily against the most current lists.
At FRISS, we check the databases of our customers every day based on the current lists that we generally retrieved on the same day from the issuing institutions, often governmental organizations. The daily check allows for the processing of compliance matches for our customers to be performed in small weekly batches. But the most important thing is that these insurance companies have the certainty that they are not facilitating unwanted criminal activities.
We perform this check for business insurances as well. For this, we screen all directors in order to determine the Ultimate Beneficial Owner (UBO). It is important to know precisely who is behind a business that wants to conclude insurance. The direct owner may have a clean slate, but what about the holding, sister companies or big investors?
Ultimately, it is incredibly important for all companies, but certainly for insurers, to have the best possible information on those with whom you do business. Check, check and continue to check!