Insurers that fail to implement adequate
anti-money laundering (AML) processes and systems leave themselves
open to substantial damage, both financial and reputational, warns
Jonathan Pell, CEO of UK data quality management specialist
Pell’s warning comes against the background of
what he views as the UK insurance industry’s weak corruption and
Pell continued that the UK’s Financial
Services Authority (FSA) is starting to “show its teeth” by
imposing hefty fines against companies that fail to implement
proper AML screening systems and controls.
The FSA did indeed bare its teeth in January
when it imposed a £5.25 million ($7.4 million) fine – the largest
ever financial crime-related fine it has handed down – on Aon UK, a
specialist in risk management, reinsurance and human resources.
Aon had, according to the FSA, “failed to take
reasonable care to establish and maintain effective systems and
controls to counter the risks of bribery and corruption associated
with making payments to overseas firms and individuals”.
“It [the fine] sends a clear message to the UK
financial services industry that it is completely unacceptable for
firms to conduct business overseas without having in place
appropriate anti-bribery and corruption systems and controls,” said
FSA director of enforcement Margaret Cole.
According to the FSA, between 14 January 2005
and 30 September 2007, Aon failed to properly assess risks involved
in its dealings with overseas firms and individuals who helped it
win business and failed to implement effective controls to mitigate
As a result of Aon’s “weak control
environment” the company made various “suspicious payments”,
totalling about $7 million, to a number of overseas firms and
Unsurprisingly, Aon has taken decisive steps
to correct weaknesses in its systems and controls which are now,
said the FSA, “a model of best practice that other firms may wish
Datanomic believes that over the next three
years standard practice for insurers will move towards systematic
screening of employees and internal contractors, external partners,
agents, third parties and distributors.