Money launderers 'targeting insurance industry'

[FaGal]

Money launderers 'targeting insurance industry'
news.ft.com - By Robert Orr - February 8, 2005


International criminals are increasingly using the insurance industry as a way of laundering the proceeds of crime, a leading barrister has warned.

Jonathan Fisher QC, an expert in financial crime, warned insurers and brokers of a need to detect and report suspicious transactions, or face fines from the City regulator.

Mr Fisher will address the industry at a seminar organised by Littlejohn Frazer, the accountants, today.

An estimated $1,500bn (£800bn) is laundered by criminal networks every year, according to the International Monetary Fund.

Consultants Robson Rhodes has put the cost of financial crime on the UK financial services sector at £11bn a year.

While banks and building societies are a traditional target for money laundering gangs, the danger posed to insurers and brokers is a more recent development. "Insurance companies are not traditionally associated with this, but they are undoubtedly vulnerable," Mr Fisher said.

The International Association of Insurance Supervisors, which represents insurance supervisory authorities, published a consultation paper last year outlining the vulnerability of the insurance sector to money laundering, including case studies of various scams.

One scam is for criminal gangs to take out an insurance policy backing a bank loan for a bogus infrastructure project, often in the developing world. The policy is then cancelled, and the money returned "clean".

Mr Fisher warned insurers to be particularly wary of the potential for fraud related to the recent tsunami in Asia. "Insurers are beginning to wake up to this. They have to look at who they're dealing with and understand the projects they are funding," he said.

Nigel Moore, head of the Metropolitan Police's specialist and economic crime unit, said recent anti-money laundering initiatives had led criminals to seek new ways of laundering money.

London's position as a global financial hub made it particularly vulnerable to financial crime.