"The European anti-money laundering rules will become more extensive, more complex and more detailed"

1. In 2021, the European Commission presented a comprehensive legislative package to combat money laundering (through Anti-Money Laundering Directives (AMLDs)) and counterterrorism financing (CTF). This legislation was introduced in response to abuses at the banks in particular, but now also applies to life insurers. Why are life insurers lumped together with banks? The risks of money laundering and terrorist financing are completely different, aren't they?

"Anti-money laundering legislation applies to a very broad group of financial and non-financial institutions. The new European regulations – the EU AML package – do not change this much, but they do bring new institutions within the scope of the regulations. Think of crowdfunding platforms and the football sector. The immediate reason for the EU AML package is indeed some money laundering scandals at banks. The European Commission's analysis in 2019 showed that there was a patchwork of anti-money laundering rules in Europe, as countries implemented European rules in national legislation in different ways. The report also showed that there were large differences in the effectiveness of supervision and enforcement by anti-money laundering supervisors. These root causes were not limited to the banking sector. That is why the European Commission has chosen to take a broader approach to these problems. In principle, none of the institutions that already fall within the scope of the anti-money laundering regulations will be exempted in the future."

2. There is a new anti-money laundering authority, the Anti-Money Laundering Authority (AMLA), which will supervise compliance with the legislation at 40 financial groups and entities operating cross-border. Do you expect Dutch insurers to come under the direct supervision of the AMLA?

"There are two criteria for eligibility for direct oversight by AMLA. The first criterion is that a financial institution must be active in six or more EU Member States – through physical presence and/or passporting activities. The European Banking Authority (EBA) is now proposing, in the consultation on the first technical standards, that an institution should be deemed to be active in a Member State when it has more than 20,000 customers. The second criterion is that the financial institution has a 'high risk profile'. The proposed method for assessing this is currently also available for consultation. Compared to other financial sector parties, I generally consider the insurance sector to be a sector with a relatively low risk of money laundering and terrorist financing. That is why I estimate the chance that insurers will be selected for direct supervision to be low. But at the same time, we should not forget that the future president of the AMLA, Bruna Szego, said in her first public interview with the Certified Anti-Money Laundering Specialist (ACAMS) last month that AMLA will not only select banks for direct supervision. But also other financial sector parties."

3. How does the supervision of this authority relate to the supervision of the AFM and DNB? Who do you have to deal with as an insurer?

"I expect that there will be no changes in terms of the responsible supervisor for supervising compliance with anti-money laundering regulations in the Netherlands. For life insurers, this will therefore be De Nederlandsche Bank (DNB). For life insurance brokers, that remains the Netherlands Authority for the Financial Markets."

4. What will we notice as a sector from the legislation and when? In other words: what is expected of insurers (both life and non-life)?

"In general, the obligations with the EU AML package become more extensive, more complex and more detailed. In the coming years, many rules – so-called technical standards – and guidelines will be issued; at KPMG, we have also called this the 'regulatory tsunami'. This makes it a challenge for institutions to prepare in detail now, but since these are far-reaching changes, they cannot avoid taking the first steps. Think, for example, of a gap and impact assessment, which allows you to map out which gaps there are and where the impact of changes is greatest. July 10, 2027 is the date on which the new regulations apply. By that date, the policy and procedures, governance, systems and tooling must be completely ready. The legislation applies to life insurers and not to non-life insurers. Non-life insurers may be affected by these new requirements to a greater or lesser extent. If they belong to the same group as life insurers, they must be included in the group-wide risk assessment. Based on its own risk appetite, the group can prescribe that certain requirements are still applied by non-life insurers. This does not follow from the legislation, but is an internal choice based on the own risk assessment. At KPMG, we are closely following regulatory developments. We regularly publish on the KPMG website and in publications of the KPMG AMLA Office about the new obligations and consultations on standards and guidelines."

5. Do you expect that AMLA and the single rulebook will also lead to more synergy between the Sanctions Regime and the AML, for example in the different UBO percentages or in other ways?

"I would very much like to answer this question in the affirmative, but I'm afraid that won't be the case. The scope of the anti-money laundering regime will be extended to EU-specific financial sanctions, the so-called obligation to freeze funds and the prohibition on making funds available, directly or indirectly, to persons on the sanctions list. But when applying these standards, the EU AML package will also continue to use the percentages that currently apply in sanctions law. I fear that it has become even more complicated, because the EU AML package in this context speaks of 'more than 50%', while under sanctions law the interpretation has changed to '50% or more' in the past year. Furthermore, other sanctions, such as sectoral sanctions or national sanctions implementing UN sanctions (e.g. the national terrorism list), remain outside the scope of these anti-money laundering regulations. Where there is a small improvement, however, is the new requirement that managers of UBO registers must verify whether the information in the register relates to persons or entities to which specific financial sanctions apply, and if this is the case, to indicate this in the register. This should be done immediately after the imposition of new sanctions and at regular intervals thereafter."