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Money Laundering and Multinationals

Sunday, April 18th, 2010

As all the world makes attempts to fight money laundering, many countries are now requiring insurers to get additional information from their customers with a view to screen out possible launderers. For multinationals who are interested to do business in these countries, this means providing their insurers with a variety of documents obtaining the insurance they need.

It goes without saying that most multinationals are legitimate businesses and they are unlikely to use their insurer to launder money. Still, the insurance industry is vulnerable. In its National Money Laundering Strategy for 2007 report, the US government noted that the insurance industry has undergone a transformation and that it may appear increasingly attractive to money launderers. A range of investment services featuring financial products that can be purchased and subsequently transferred, redeemed, or sold, are now offered by agents and broker, which, according to the report, provides new opportunities for money laundering. The report says that numerous money laundering methods have been used to exploit insurance products, primarily life insurance and annuities.

To remind, some countries have been taking measures to crack down on the problem and improve their reputation in the international community. So, the governments of these countries are requiring insurers to obtain documents and take other actions to ensure not being used by criminal organizations to help launder illicit funds. Imposing these requirements on insurers is carried out by Mexico, Brazil, Argentina, Colombia and Malaysia.

For example, before getting insurance, multinationals with operations in Mexico must provide a number of documents including the following: a certified copy of the act of incorporation, federal taxpayer’s registry, a document that proves the address of the company in Mexico, a certified copy of the document showing the legal authority of the company’s representatives; a copy of the official identification of the legal representative, such as passport or card of military service. If the parent company in the US or Canada is included on the Mexican policy as a named insured or beneficiary, each non-Mexican company that is included under the admitted policy also will have to provide the insurer with similar documentation.