Requirement that Insurance Companies Report Suspicious Transactions

1Language expanding the scope of the Bank Secrecy Act to intelligence or counter-intelligence activities, including analysis, to protect against international terrorism was added by section 358 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), Public Law 107–56. 2 31 U.S.C. 5318(g) was added to the Bank Secrecy Act by section 1517 of the Annunzio-Wylie Anti-Money Laundering Act, Title XV of the Housing and Community Development Act of 1992, Public Law 102–550; it was expanded by section 403 of the Money Laundering Suppression Act of 1994 (the Money Laundering Suppression Act), Title IV of the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103–325, to require designation of a single government recipient for reports of suspicious transactions. (c) Minimum requirements. At a minimum, the program required by paragraph (b) of this section shall:
(1) Incorporate policies, procedures, and internal controls based upon the insurance company’s assessment of the money laundering and terrorist financing risks associated with its covered products. Policies, procedures, and internal controls developed and implemented by an insurance company under this section shall include provisions for complying with the applicable requirements of subchapter II of chapter 53 of title 31, United States Code and this part, integrating the company’s insurance agents and insurance brokers into its anti-money laundering program, and obtaining all relevant customer-related information necessary for an effective anti-money laundering program. (2) Designate a compliance officer who will be responsible for ensuring that:
(i) The anti-money laundering program is implemented effectively, including monitoring compliance by the company’s insurance agents and insurance brokers with their obligations under the program; (ii) The anti-money laundering program is updated as necessary; and (iii) Appropriate persons are educated and trained in accordance with paragraph (c)(3) of this section. (3) Provide for on-going training of appropriate persons concerning their responsibilities under the program. An insurance company may satisfy this requirement with respect to its employees, insurance agents, and insurance brokers by directly training such persons or verifying that persons have received training by another insurance company or by a competent third party with respect to the covered products offered by the insurance company. (4) Provide for independent testing to monitor and maintain an adequate program, including testing to determine compliance of the company’s insurance agents and insurance brokers with their obligations under the program. The scope and frequency of the testing shall be commensurate with the risks posed by the insurance company’s covered products. Such testing may be conducted by a third party or by any officer or employee of the insurance company, other than the person designated in paragraph (c)(2) of this
section.
(d) Anti-money laundering program requirements for insurance companies registered or required to register with the Securities and Exchange Commission as broker-dealers in securities. An insurance company that is registered or required to register with the Securities and Exchange Commission as a broker￾dealer in securities shall be deemed to have satisfied the requirements of this
section for its broker-dealer activities to
the extent that the company is required to establish and has established an anti￾money laundering program pursuant to § 103.120 and complies with such program. (e) Compliance. Compliance with this
section shall be examined by the
Department of the Treasury, through the Financial Crimes Enforcement Network or its delegees, under the terms of the Bank Secrecy Act. Failure to comply with the requirements of this section may constitute a violation of the Bank Secrecy Act and of this part. Dated: October 28, 2005. William J. Fox, Director, Financial Crimes Enforcement Network. [FR Doc. 05–21917 Filed 11–2–05; 8:45 am] BILLING CODE 4810–02–P DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA36 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations— Requirement That Insurance Companies Report Suspicious Transactions AGENCY: Financial Crimes Enforcement Network, Treasury. ACTION: Final rule. SUMMARY: This document contains an amendment to the regulations implementing the statute generally referred to as the Bank Secrecy Act. The amendment requires insurance companies to report suspicious transactions to the Financial Crimes Enforcement Network. The amendment constitutes a further step in the creation of a comprehensive system for the reporting of suspicious transactions by the major categories of financial institutions operating in the United States. DATES: Effective Date: December 5, 2005. Applicability Date: This rule applies to transactions occurring after May 2,
2006. See 31 CFR 103.16(h) of the final
rule contained in this document. FOR FURTHER INFORMATION CONTACT:
Financial Crimes Enforcement Network, Office of Regulatory Programs on (202) 354–6400 (not a toll-free number). SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Provisions The Bank Secrecy Act, Public Law 91–508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311–14, 5316–5332, authorizes the Secretary of the Treasury to issue regulations requiring financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters, or in the conduct of intelligence or counter￾intelligence activities, including analysis, to protect against international terrorism, and to implement anti-money laundering programs and compliance procedures.1 Regulations implementing Title II of the Bank Secrecy Act appear at 31 CFR Part 103. The authority of the Secretary to administer the Bank Secrecy Act has been delegated to the Director of the Financial Crimes Enforcement Network. With the enactment of 31 U.S.C. 5318(g) in 1992,2 Congress authorized the Secretary of the Treasury to require financial institutions to report suspicious transactions. As amended by the USA PATRIOT Act, subsection (g)(1) states generally:
The Secretary may require any financial institution, and any director, officer, employee, or agent of any financial institution, to report any suspicious transaction relevant to a possible violation of law or regulation. Subsection (g)(2)(A) provides further that:
[i]f a financial institution or any director, officer, employee, or agent of any financial institution, voluntarily or pursuant to this
section or any other authority, reports a
suspicious transaction to a government agency— (i) The financial institution, director, officer, employee, or agent may not notify any person involved in the transaction that the transaction has been reported; and (ii) No officer or employee of the Federal Government or of any State, local, tribal, or territorial government within the United