Greenberg Traurig, LLP



GT Alert

USA Patriot Act - Proposed Regulations Affecting Insurance Companies

September 2002
By Alan B. Horn, Carl A. Fornaris, and Ileana Gomez, Greenberg Traurig

Click for information on Adobe Acrobat.  View or download the PDF version of this Alert here.

On September 18, 2002, the United States Department of the Treasury proposed new USA PATRIOT Act regulations that would require certain insurance companies such as providers of life insurance and annuities products to establish formal anti-money laundering ("AML") programs. Implementation of these programs will require such companies to devote substantial resources to achieve compliance.

Comments on these important proposed regulations must be received by the Treasury Department no later than 60 days after publication in the Federal Register.


Under the Bank Secrecy Act, as amended by the USA PATRIOT Act, every "financial institution" is required to establish an AML program. The statutory definition of "financial institution" includes an "insurance company." However, in an interim rule issued by the Treasury Department earlier this year, insurance companies were exempted from the AML program requirement contained in the PATRIOT Act. The proposed regulations – when issued in final form – would eliminate the AML program exemption.

Proposed Regulations

Specifically, the proposed regulations would define the term "insurance company" to include any person engaged within the United States as a business in:

  1. the issuing, underwriting, or reinsuring of a life insurance policy;
  2. the issuing, granting, purchasing, or disposing of any annuity contract; or
  3. the issuing, underwriting, or reinsuring of any insurance product with investment features similar to those of a life insurance policy or annuity contract, or which can be used to store value and transfer that value to another person.

The definition explicitly covers those sectors of the insurance industry offering life insurance and annuity products. Additionally, the third category covers any business offering currently, or in the future, any insurance product with an investment feature, and any insurance product possessing both stored value and transferability. The rationale for the third category is that such products allow a customer to place large amounts of funds into the financial system and seamlessly transfer such funds to disguise their true origin.

Any insurance company that falls within one of these three categories would be required to establish an AML program that includes, at a minimum:

  1. the development of internal policies, procedures, and controls;
  2. the designation of a compliance officer;
  3. an ongoing employee training program; and
  4. an independent audit function to test the program.

An insurance company’s written program also must be made available to the Treasury Department upon request.

Exceptions. The definition of "insurance company" does not include insurance agents or brokers as the Treasury Department believes the insurance company is in the best position to design an effective AML program for its products. The Treasury Department has, however, specifically invited comments on whether the final rule should also require insurance agents and brokers to establish and maintain an AML program because the insurance agents, in dealing directly with customers, are in a unique position to observe the kind of activity that may be indicative of money laundering.

* * *

The Treasury Department press release and proposed regulations are available on the Treasury Department website at


© 2002 Greenberg Traurig

Additional Information:

For more information, please review our Corporate & Securities Practice description, or feel free to contact one of our attorneys.

This GT ALERT is issued for general purposes only and is not intended to be construed or used as legal advice. Greenberg Traurig attorneys provide practical, result-oriented strategies and solutions tailored to meet our clients’ individual legal needs. The Firm’s responsive approach to client service often cuts across legal subject matter, applying the right experience and resources to provide cost-effective solutions.