GFIA Annual Report 2021-2022

ANTI-MONEY LAUNDERING

Fighting talk

The war in Ukraine has increased the need for vigilance in combatting money laundering and terrorism and proliferation financing

By Fabrice Perrier, chair of the GFIA Anti-Money Laundering/Countering Terrorism Financing Working Group

The Russian invasion of Ukraine, which triggered the adoption of international, European and national sanctions, marked the year 2022 and prompted the Financial Action Task Force (FATF), the global standard-setting body for combatting money laundering and terrorism and proliferation financing1, to express “grave concern” about the invasion’s potential to exacerbate such risks.

Worldwide, companies — including insurers — have since faced an increased focus on compliance with anti-money laundering and anti-terrorism financing regulations to assess and mitigate any emerging risks, such as those in relation to virtual assets and other threats to the economic and financial system.

To prevent criminal activities and ensure the soundness and integrity of the economic and financial system, anti-money laundering and anti-terrorist financing regulations have proved their importance and they need to be updated as much as necessary to reflect an ever-evolving reality. This also implies constant adaptation efforts by insurance companies to implement regulatory changes, as well as sufficient time to do so. That is why it is also important to measure the effectiveness of a regulation before considering any changes to it.

Who owns what?

Since 2021, the FATF has been updating its Recommendation 24 and its Interpretative Note on the transparency and beneficial ownership of legal persons. It aims to strengthen the international standard on beneficial ownership to ensure greater transparency about the ultimate ownership and control of legal persons. It also aims to take more effective action to mitigate the risks of misuse.

The FATF was particularly interested in hearing the views of stakeholders such as financial institutions, companies and other legal persons, given that many of the potential changes may impact them in particular. In December 2021, GFIA submitted comments to the FATF consultation on revisions to Recommendation 24 and its Interpretative Note. In its feedback, GFIA highlighted that it is essential for both companies and governments to hold beneficial ownership information in an official registry. Such data must be adequate, accurate, up-to-date and easy to access for authorities and companies that have a legitimate interest in obtaining beneficial ownership information for the purposes of fighting money laundering and terrorism and proliferation financing.

The FATF updated the Recommendation and Note in March 2022 and organised a consultation session with the private sector, including GFIA, in July 2022 to develop comprehensive guidance to assist stakeholders in implementing the standards.

“It is important to measure the effectiveness of a regulation before considering any changes to it.”

Exchanging views, deepening understanding

GFIA promotes an international dialogue on issues of common interest between national and regional insurance associations. Thus, the AML/CTF Working Group members have had the opportunity to discuss specific topics such as customer due diligence or identification of politically exposed persons.

As part of its work, the GFIA Working Group also engages with the IAIS to better understand regulators’ priorities and explore opportunities for future cooperation. Thus, the Working Group will take into consideration the future roadmap of the IAIS Financial Crime Forum, which recently replaced its Financial Crime Task Force.

1. Proliferation financing relates to providing funds or financial services in relation to nuclear, chemical or biological weapons and related materials in contravention of national laws or international obligations

Fabrice Perrier

France Assureurs

Fabrice Perrier

France Assureurs

Awareness-raising campaigns

Insurers across Europe are involved in a broad range of awareness-raising campaigns. For instance, in Germany, risk-awareness campaigns are implemented jointly by state authorities, consumer protection organisations, the insurance industry, architects and other stakeholders. Their collaboration is built around a common goal: to raise awareness of the effects of climate change and natural hazards, of the benefits of loss prevention, and of best practices as regards natural catastrophe-resilient buildings. The high level of risk awareness in Germany is one of the reasons for the relatively low protection gap; indeed, the insurance penetration rate for natural perils such as storm or hail is more than 90%.
Most European insurance associations have initiatives to raise risk awareness, such as dedicated workshops, events and educational seminars, as well as frequent in-depth articles, themed newsletters, presentations and other publications.
Many French insurers have launched prevention campaigns and also support the campaigns of “Assurance Prévention”, an association founded by the French insurance association (France Assureurs). Assurance Prévention has produced numerous leaflets, infographics, quizzes, etc. to raise awareness of natural risks. Through its initiatives, it aims to develop a “culture of risk prevention” among students and teachers.

The Greek insurance association (HAIC) launched a digital awareness campaign — “Better to know than to think you know” — to provide consumers with useful information about private insurance and to set the record straight on some misperceptions. The campaign consists of six videos to educate the public about how private insurance works. Most of the videos emphasise the need for resilience in the face of natcat risks and the role of insurers in protecting private property. The videos are hosted on the interactive iknow-insurance.gr platform, which allows visitors to do a short quiz to test their knowledge of private insurance and then obtain additional information.
Insurance Sweden is currently working with its members on a common methodology for calculating carbon dioxide emissions during building repairs. The aim is to raise awareness of the impact on CO2 emissions of rebuilding after fire or water damage, and thus of the importance, from that perspective as well, of preventing such damages.
Insurance Sweden published a statistical report in October 2021 on how different municipalities and regions have been affected by damage caused by flooding, storm and fire.
Spotlighting the central role of municipalities in climate-change adaptation, Insurance Sweden ranks Swedish municipalities according to their adaptation work. The methodology is based on the European Commission’s Adaption Support Tool (2013). The ranking is released every other year, the June 2021 version is available here.
UNESPA, the Spanish insurance association, launched a dedicated website in October 2021 — “Naturalmente Protegidos” (Naturally protected) to explain how natcat insurance works in Spain. It focuses on 10 different risks (rain, flood, wind, drought, frost, hail, snow, earthquake, volcanic eruption and lightning) and details for each how insurance covers property, life, harvests and livestock. The website illustrates the success of the Spanish public-private natcat insurance model. It was jointly developed by private insurers (UNESPA), the Consorcio de Compensación de Seguros (CCS) government scheme and Agroseguro, Spain’s agricultural insurance system, and was launched within the framework of Estamos Seguros, UNESPA’s financial education campaign (running since 2016).
In collaboration with CEPYME, the Spanish confederation of SMEs, UNESPA launched in October 2020 “Prevenir para crecer” (Prevent to grow), a website with information on insurance for SMEs. The website highlights potential risks to which SMEs are exposed, including natcat-related risks, and provides advice on how to prevent them.
Insurance Ireland, the Irish insurance association, and a number of Irish insurers have launched consumer blogs and information repositories on their websites to share useful information with consumers about responsible and ESG investing.

Education

The European insurance industry works to increase financial literacy in relation to risk awareness, insurance protection and long-term savings:

The Croatian Insurance Bureau (HUO) launched a first educational project in 2009, “Financial literacy in the Republic of Croatia”, which was followed by a range of educational activities, often implemented jointly with independent insurers. One of these activities, “Safer Tomorrow”, was initiated in 2021, and aims to raise citizens’ awareness of the benefits of insurance. Within the framework of the project, HUO launched several videos and infographics, some of which specifically target young people.
The HUO organises a yearly competition for the best scientific paper, the best graduate thesis and the best undergraduate thesis in the field of insurance. HUO also publishes the “Croatian magazine for INSURANCE”, a scientific journal for professionals to advance good practice in the sector. Finally, some insurers in Croatia created a colouring book for children to promote financial literacy at a young age in a fun and simple way.
In Italy, the ANIA Academy, together with CeTIF (Research Centre on Technologies, Innovation and Finance of the Università Cattolica del Sacro Cuore), launched the second edition (2022) of the 2nd level master’s in insurance management to train professionals and enable them to respond to the challenges of the “new normal”.
ANIA is also collaborating with LUISS Business School to develop a major course in insurance management as part of its Executive Master in Financial Management.
Insurance Europe produces information for consumers as part of its “InsureWisely” financial education initiative. This includes one-pagers on different insurance topics, including how to limit the effects of natural catastrophes.
The French insurance association (France Assureurs) developed a series of educational booklets within the framework of EDUCFI (the French national strategy for economic, budgetary, and financial education), an initiative launched by the French Central Bank. These booklets help users to better understand how insurance works and what insurance products do and do not cover.
The Spanish insurance association (UNESPA) set up a financial education programme for schools, “El Riesgo y Yo” (“The Risk and I”). It involves 40 insurance undertakings and 164 volunteers and aims to give 2 500 teenage school students basic financial knowledge and insights into risk management.