Insurance Leaders: Five Hidden AML Compliance Gaps You Can’t Afford to Ignore
- FinScan
- Jul 14
- 3 min read
Insurance companies today face growing regulatory pressure to bolster their anti-money laundering (AML) and sanctions compliance programs. But compliance isn’t just about ticking boxes—it’s about protecting your business from financial crime, safeguarding client trust, and preserving access to essential banking relationships.
Insurance premiums and cancellations offer easy access for laundering illicit funds, while trade finance presents a breeding ground for fraud and sanctions violations. Without a robust AML program, such risky activities can go undetected for weeks or months, causing significant financial losses.
This quick guide breaks down five key areas of your AML compliance program that deserve immediate attention, especially in light of evolving risks and expectations from regulators, auditors, and banking partners.
1. Data Quality: The Foundation of Effective Compliance
Bad customer data does more than trigger IT headaches; it can undermine your entire compliance program. Incomplete, inconsistent, or duplicated data can lead to false positives, missed matches, and poor decision-making.
Consider the following:
Are you screening data hidden in unexpected places, like address or joint-account fields?
Do you know which data issues are causing false alerts?
Are duplicate customers inflating your alert volume?
Improving data quality is a direct path to faster, more accurate AML compliance, and fewer wasted resources.
2. False Positives: Eliminate the Noise, Focus on the Risk
If your team is overwhelmed by meaningless alerts, you’re not alone. Most insurers struggle with excessive false positives, often caused by legacy systems and poor data quality.
Evaluate your current approach:
What’s your false positive rate today? What’s your target?
How large is your daily alert backlog?
Can your team explain why certain alerts are triggered?
Advanced AML screening technology can significantly reduce false positives, freeing your team to focus on what really matters: true hits and mitigating the risk they may impose.
3. Manual Processes: Streamline to Stay Ahead
Manual workarounds slow down your compliance team, creating risk and inconsistency. Whether reviewing alerts or building reports, inefficiency is the enemy of effectiveness.
Take stock of your workflows:
Which parts of your workflow are manual, repetitive, or prone to bottlenecks?
How long does it take to review and clear one potential hit?
What tasks could be automated or restructured?
Digitizing and optimizing your workflows can help your team do more with less and respond faster to red flags.
4. Risk & Coverage: Go Beyond the Bare Minimum
Don’t just check the regulatory boxes—get proactive about your risk exposure. Screening against basic watchlists isn’t enough. You need comprehensive, up-to-date coverage of politically exposed persons (PEPs), adverse media, internal blocklists, and sanctions from multiple jurisdictions to get a full picture of risk.
Ask these critical questions:
Do your lists adequately address what you need to screen against? Are they updated frequently enough?
Can you customize which lists different jurisdictions, business units, or departments screen against?
Are your lists automatically managed, maintained, updated, and integrated?
The more complete your coverage, the more control you’ll have over your exposure to reputational, regulatory, and financial risk.
5. Reporting: Prove Your Program’s Strength
A robust AML program isn’t just about execution; it’s also about documentation. Regulators expect accurate, timely reporting that demonstrates your program’s effectiveness and maturity.
Review your capabilities:
Can your system generate reports with ease, without manual formatting?
What types of reports do you need that you cannot get today?
Can you export data to various formats, or to BI systems for deeper analysis?
Investing in better reporting tools means you’re always audit-ready and able to showcase the value and effectiveness of your compliance team.
Proactive Compliance is Smart Business
Evaluating data quality, false positives, manual processes, risk coverage, and reporting is more than an exercise. It’s a strategy to reduce risk, streamline operations, and protect your organization’s future.
By leveraging advanced technology, partnering with industry experts, and implementing tailored solutions, you can better safeguard your business reputation, protect financial assets, and foster trust with your stakeholders.
