The Insurance Commission (IC) has raised the possibility that motor vehicle and marine insurance could be used for money laundering and terrorist financing in the country.
The IC recently conducted an analysis of 30 of its regulated entities in line with the Philippine government’s goal to be removed from the Financial Action Task Force’s (FATF) “grey list” of countries found lacking in their fight against money laundering, terrorist financing and proliferation financing. The latter, according to the FATF, is the development or acquisition of nuclear, chemical or biological weapons.
The IC review, concluded in May, covered 15 life insurers, 11 nonlife players and three insurance and reinsurance brokers.
In its report, the IC flagged some risks emanating from the nonlife sector.
“Although the level of risk for motor car insurance is considered low, we should take into account that the majority of their portfolio comes from this insurance product, hence, the vulnerability of the sector to money laundering, terrorist financing and proliferation financing risks should not be taken lightly as there may still be possibilities of violations if there are no adequate controls established in its place,” the IC said.
“For marine insurance, the level of risk is likewise considered low, but due to the potential linkage to international marine piracy, sanctioned marine vessels, embargo and high risk ports, the potential risk on these products will likely increase,” the IC added.
The IC did not find any issue with the life insurance and brokerage sectors.
It said that across the insurance industry, companies were on guard against money laundering and terrorist financing, although firms needed to improve their conduct of institutional risk assessment, customer due diligence, as well as monitoring against such risks. INQ