InsurTechs: Here's Why Screening Services Are Crucial
AML screening services should be a no-brainer for InsurTech companies. Why? Because failure to comply with regulatory compliance obligations can lead to substantial reputational damage and financial penalties.
In this post, sanctions.io reveals five reasons why InsurTech companies should use anti-money laundering (AML) screening services as part of their risk management strategy. Here is what the article will cover:
- What is AML Screening for InsurTechs?
- Number 1: Helps Avoid Hefty Penalties
- Number 2: Protects Company Reputation
- Number 3: Helps Comply With AML Regulations
- Number 4: Stay Compliant 24/7
- Number 5: Helps Prevent Other Financial Crime
What is AML Screening for InsurTechs?
Here is a reality that all InsurTechs understand: AML compliance is a headache. It gets in the way of the exciting elements of building a new business and may become a hurdle to the frictionless experience that InsurTechs create USPs around.
But there is no avoiding the fact that InsurTechs have regulatory obligations they must follow as businesses operating in the insurance sector. In this sanctions.io AML Compliance For InsurTech: The Ultimate Guide, we break it into easy-to-understand sections.
AML screening can be daunting for InsurTechs - especially those that are start-ups without a certified full-time AML professional acting as their compliance officer.
Now for the good news.
With the incredible developments of the RegTech industry, it's becoming much more straightforward, streamlined, and cost-effective for InsurTechs to partner with AML screening services that mitigate the risk of dirty money flowing through a company.
And there is further good news. Because AML screening services, like sanctions.io, make it easy to screen customer data through developer-friendly APIs - for example, transaction and batch screening. If manual batch screening with CSV files is preferred, that's simple too.
Another fact is this: AML screening software was once a large financial outlay. Only the big fish with vast budgets to match could afford it. Today, with the power of AI and other technological advancements, even bootstrapped start-ups can afford pay-as-you-go AML screening solutions.
Types of AML Screening for InsurTechs
Three elements predominantly make up AML screening:
All InsurTech AML programs should screen their customers through all the above lists. We already know how easy and cost-effective it is to do this.
But here are five reasons why AML screening services are a must-use for InsurTechs.
1. Helps Avoid Hefty Penalties
InsurTechs can greatly reduce the risk of being financially punished by regulatory bodies for money laundering failings by using AML screening services.
Penalties are a real threat. And well-known insurance brands do receive multi-million dollar fines for AML failings. In 2022, AML fines rocketed 50% globally, according to the Financial Times. Only last month, the US Department of Justice (DOJ) announced a hiring spree for prosecutors to go after companies involved, even unknowingly, in sanctions evasion (often part of a money laundering process).
So what does this all tell us?
It tells us that the global momentum is toward punishing companies that fail to implement adequate compliance processes. For InsurTechs, professional AML screening services should be fundamental to doing business.
2. Protects Company Reputation
The desire to launder money comes from the profits generated by deplorable crimes, such as human trafficking and high-value kidnapping for ransom. This alone should be sufficient for InsurTechs to implement a robust AML program.
But if that wasn't enough, numerous companies, such as Wise (formerly TransferWise), have suffered PR disasters for AML failings. As Wise found out, these events don't just cause reputational damage - they also severely hit the company, and its shareholders, in the pocket.
InsurTech companies can mitigate this enormous reputational and financial risk by embracing AML screening services as part of a robust compliance program.
3. Helps Comply With AML Regulations
InsurTechs operate in a heavily regulated sector with numerous AML compliance requirements. We provide a helpful overview in sanctions.io's AML Compliance For InsurTech Guide, where we also talk about InsurTechs' USP to rapidly onboard new customers.
But how can AML and Know Your Customer (KYC) compliance requirements be met when the customer expects approvals in a matter of clicks? This is a challenge for all InsurTech companies.
Here is where companies like sanctions.io come into play. And why InsurTech and AML screening companies are becoming fantastic partners.
RegTech screening companies can provide InsurTech firms APIs allowing for real-time AML screening throughout the customer onboarding process - and in all transaction checks. For example, sanctions.io is proud to have a RESTful API with ~200ms response time and an SLA guaranteed uptime of more than 99.99%.
The bottom line is that AML screening services help InsurTechs comply with compliance regulations - without compromising their business model of rapid, frictionless customer onboarding.
4. Stay Compliant 24/7
Another clear benefit to using RegTech AML screening providers is that you can access the most up-to-date lists, meaning potential money launderers and other financial criminals don't slip through the net.
The world of money laundering moves fast. And so are the screening lists InsurTechs must access to stay compliant. For example, sanctions.io's smart AI-powered database covers sanctions lists from organizations globally - and updates at best-in-class 60-minute intervals.
5. Helps Prevent Other Financial Crime
Some companies treat AML compliance as a box-ticking exercise. And there are numerous examples of complacency within AML programs. Money laundering compliance officers can also struggle to get their voices heard because they drain money from the business - not make it.
On the other hand, anti-fraud departments (that adopt KYC measures) often have more attention from the boardroom. Why? Because fraud directly hits the bottom line of the business. Less fraud, means more profit.
But here is something to think about. AML and KYC work side by side and are intertwined. In fact, KYC is part of the broader AML umbrella that also includes counter-terrorist financing (CTF). All KYC compliance regulations must meet AML requirements because they are complementary measures in the fight against all financial crime.
And here is the reality: A more robust KYC measure, such as facial biometric technology, doesn't just help prevent fraud. It may also weed out potential money launderers. Likewise, a traditional AML solution, such as sanctions screening, may identify criminal groups committing fraud.
AML screening doesn't only help Insurtechs meet their AML compliance requirements. It can also save the company money by contributing to fraud prevention and other financial crimes that impact the bottom line.
How Can sanctions.io Help InsurTechs with AML Screening?
We deliver a comprehensive anti-money laundering (AML) solution with a simple-to-integrate API that the InsurTech sector can use to continuously scan their clients and business partners against the most critical Sanctions & Crime Lists.
To find out more about ways to detect and prevent money laundering within your organization, contact sanctions.io for an obligation-free discussion.
