The European Commission’s legislative package on anti-money laundering (AML) must avoid placing unnecessary burdens on very low-risk sectors such as life insurance, according to Insurance Europe.
The legislative framework was presented to the European Parliament’s Committee on Economic and Monetary Affairs and Committee on Civil Liberties, Justice and Home Affairs last week.
It includes the launch of an Anti-Money Laundering Authority (AMLA) to co-ordinate national supervisory authorities and ensure EU rules are applied consistently by the private sector.
Insurance Europe said the move is “particularly understandable given the nature of recent AML scandals in the banking sector”, in a new position paper, but also warned that the authority’s powers should be better defined from the outset.
It stressed the importance of having a risk-based approach to ensure the framework works in practice and reflects the low risk of money laundering and terrorism financing in the life insurance sector, and the almost non-existent risk for ‘pure risk’ life insurance products.
The body for European insurers also recommended that non-life insurance should remain outside the scope of the EU legislation, and called for more detail to be added to the regulation, rather than leaving so many key issues to be decided by the Commission or the AMLA.
National supervisory authorities should remain the main point of reference for all obliged entities, it added, because they are bound to have a better understanding of their home market – and their authority should therefore not be undermined in any way by the AMLA.
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Author: Huw Morris