Russia sanctions add to insurance financial crime issues

Financial watchdog continues to see 'problems'

Russia sanctions add to insurance financial crime issues

Insurance News

By Jen Frost

The Financial Conduct Authority (FCA) has continued to see financial crime issues across the wholesale insurance market, buoyed by Russia sanctions, the regulator said on Wednesday.

In a letter to wholesale insurance CEOs, Matt Brewis, FCA director of insurance supervision, policy & competition – consumers & competition, said: “We continue to see financial crime problems across the wholesale insurance market, particularly due to the rapid imposition of sanctions from the war in Ukraine.

“Wholesale insurance firms have an increased risk of financial crime due to the international nature of business and increased exposure to politically exposed persons.”

The regulator zoned in on intermediaries with “poor anti-bribery and corruption controls” and insurers with “poor sanction controls”, which increase the risk of financial crime.

“We expect firms to have robust and effectively implemented policies, procedures, systems and controls to detect, prevent and combat financial crime,” Brewis said. “We will act where we receive data or intelligence of incidents of suspected financial crime, or of firms without appropriate financial crime controls.”

Russia’s ongoing February 2022 invasion of Ukraine led to a barrage of sanctions from within Europe and further afield.

European insurers, including Zurich and Swiss Re, last year moved to exit business in the country. 

A ream of UK sanctions are in place, with the regime aimed at “encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine,” according to the UK government.

Insurers have worked with government to cancel cover for Russian businesses, and in June of 2022 the UK and European Union (EU), with Lloyd’s buy in, agreed to a coordinated ban on insurance for ships carrying Russian oil.

FCA sets out 2023 to 2025 priorities

Brewis’ letter set out priorities for the insurance market from 2023 to 2025, with additional correspondence distributed to chief executives at life insurance and personal and commercial insurance firms. 

Other topics on the agenda included cyber policy wordings, non-financial misconduct and consumer duty implementation.

What are your thoughts financial crime in the wholesale insurance market? Please feel free to share your comments below.

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