Anti-Money Laundering (AML)
in Insurance

Anti-money laundering (AML) compliance is a critical responsibility for insurers, brokers and MGAs operating within the UK insurance market.  
 
With increasing FCA scrutiny, evolving financial crime risks and rising compliance costs, firms are under growing pressure to strengthen their governance, due diligence and oversight processes.  
 
This guide explains how AML regulations apply to insurance businesses, the risks firms face, and how technology is helping firms improve operational efficiency and compliance oversight.
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What is Anti-Money Laundering (AML)?

Anti-Money Laundering (AML) refers to the laws, regulations and controls designed to prevent criminals from disguising illegally obtained money as legitimate income.

In the UK insurance industry, AML compliance involves identifying financial crime risks, carrying out due diligence on customers and counterparties, monitoring suspicious activity, and reporting potential money laundering offences.

AML regulations apply across insurers, brokers and MGAs, particularly where firms handle customer funds, policy transactions or complex financial relationships.

What is Anti-Money Laundering (AML)?

£37 billion
Estimated annual cost of serious and organised crime to the UK economy.

Find out more about AML

Why AML Matters in Insurance

Insurance firms can be exposed to money laundering risks through policy purchases, claims activity, ownership transfers and other financial transactions. The complexity of insurance products and distribution structures can make it difficult to identify suspicious behaviour without robust oversight processes.

Criminals may attempt to use insurance products to:

  • Conceal the origin of illicit funds
  • Move money between entities
  • Create apparently legitimate transactions
  • Recover “clean” funds through cancellations or claims

Certain products and activities may present higher levels of risk, including:

  • Single premium products
  • Policy surrenders
  • Ownership transfers
  • Top-ups
  • Arms-length onboarding
  • High-risk jurisdictions

For insurers, brokers and MGAs, effective AML controls are essential not only for regulatory compliance, but also for protecting operational integrity and reputational trust.

UK AML Regulations Explained

AML obligations within the UK insurance market are shaped by several major laws and regulatory frameworks.

Proceeds of Crime Act 2002 (POCA)

Proceeds of Crime Act 2002 (POCA)

POCA forms the foundation of the UK’s anti-money laundering framework and establishes offences related to concealing, transferring or facilitating criminal property.

Money Laundering Regulations 2017

Money Laundering Regulations 2017

The Money Laundering Regulations require firms to implement risk-based AML controls, including customer due diligence, ongoing monitoring and internal reporting procedures.

Terrorism Act 2000

Terrorism Act 2000

The legislation also places obligations on firms to prevent terrorist financing and report suspicious activity linked to terrorism-related offences.

FCA Oversight

FCA Oversight

The Financial Conduct Authority (FCA) is responsible for supervising AML systems and controls across regulated firms and has the power to impose significant penalties for failures in governance or oversight.

FATF Standards

FATF Standards

The UK is a member of the Financial Action Task Force (FATF), meaning UK AML legislation aligns with internationally recognised financial crime standards.

How Money Laundering Works

Money laundering typically follows a three-stage process designed to distance criminal funds from their illegal origins.

1

Placement

Criminal funds enter the financial system through transactions, payments or product purchases. Within insurance, this may involve premium payments, policy purchases or intermediary activity.

2

Layering

Funds are moved through multiple transactions to obscure their origin and make tracing more difficult. This can include transfers between accounts, ownership changes or policy amendments.

3

Integration

The funds re-enter the legitimate economy appearing to originate from lawful activity. In insurance, this may occur through claims payments, policy cancellations or surrendered products.

Improve AML Oversight Across Insurance Operations

REG Technologies helps insurers, brokers and MGAs streamline due diligence, monitor counterparties and strengthen governance processes through purpose-built RegTech solutions.

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AML risks in insurance

AML Risks in Insurance

Insurance firms face a range of operational and compliance risks associated with financial crime exposure.

Single Premium Policies

May be used to introduce large sums into the financial system.

Policy Surrenders

Can allow funds to be withdrawn after appearing legitimate.

Ownership Transfers

May obscure beneficial ownership relationships.

Employee Collusion

Weak internal controls can increase exposure to financial crime.

Non Face-to-Face Transactions

Remote onboarding may increase identity verification risks.

High-Risk Jurisdictions

Cross-border activity can create enhanced due diligence obligations.

AML Compliance Requirements for Insurance Firms

UK insurance firms are expected to implement proportionate, risk-based AML controls aligned with their operational exposure and regulatory obligations.

Customer Due Diligence (CDD)

Customer Due Diligence (CDD)

Firms should verify customer identities, understand ownership structures and assess risk exposure before entering business relationships.

KYC and KYB Processes

KYC and KYB Processes

Know Your Customer (KYC) and Know Your Business (KYB) procedures help firms validate counterparties, assess legitimacy and identify potential compliance risks.

Enhanced Due Diligence (EDD)

Enhanced Due Diligence (EDD)

Higher-risk relationships may require additional scrutiny, particularly where high-risk jurisdictions, complex ownership structures or politically exposed persons are involved.

Ongoing Monitoring

Ongoing Monitoring

AML compliance is not a one-time exercise. Firms should regularly review counterparties, monitor risk indicators and identify suspicious activity.

Suspicious Activity Reporting (SARs)

Suspicious Activity Reporting (SARs)

Where suspicious behaviour is identified, firms may be required to submit Suspicious Activity Reports (SARs) to the National Crime Agency (NCA).

MLRO Responsibilities

MLRO Responsibilities

Insurance firms must appoint a Money Laundering Reporting Officer (MLRO) responsible for overseeing AML governance, reporting and internal controls.

Anti-Money Laundering (AML) in Insurance

FCA Expectations and Enforcement

The FCA has repeatedly reinforced the importance of proportionate and effective AML systems and controls across regulated firms.

Firms are expected to:

  • Adopt a risk-based approach
  • Maintain effective governance structures
  • Monitor counterparties appropriately
  • Identify suspicious activity promptly
  • Ensure staff receive ongoing compliance training

Failures in AML oversight can result in:

  • Financial penalties
  • Reputational damage
  • Regulatory intervention
  • Criminal prosecution in serious cases

Anti-Money Laundering (AML) in Insurance

AML Technology and Automation

As AML obligations continue to evolve, many insurance firms are turning to RegTech solutions to improve efficiency, strengthen oversight and reduce operational burden.

Manual compliance processes can make it difficult to:

  • Maintain consistent reviews
  • Manage large counterparty networks
  • Identify changing risk exposure
  • Evidence governance activity
  • Scale compliance operations efficiently

Technology-driven AML solutions can support:

  • Automated due diligence
  • Ongoing monitoring
  • Risk assessments
  • Governance workflows
  • Counterparty oversight
  • Audit readiness

According to REG Technologies research, many firms still rely on limited or infrequent due diligence reviews, highlighting the growing need for more consistent and automated compliance processes.

AML Resources and Guidance

Read our detailed overview of AML responsibilities, financial crime risks and compliance considerations for UK insurance firms.

Your Complete AML Compliance Checklist (Risks and Best Practices)

Anti Money Laundering (AML) checks are a fundamental regulatory requirement of every single insurance firm, and making use of the right systems and technology ensures that businesses are always compliant with regulators’ laws. Failing to carry appropriate checks can significantly jeopardise a business’s operations, leading to expensive fines, reputational damage and loss of trust from both customers and the market...

Learn more
Picture of Victoria Slade, head of sales at REG Technologies

Your Complete AML Compliance Checklist (Risks and Best Practices)

Anti Money Laundering (AML) checks are a fundamental regulatory requirement of every single insurance firm, and making use of the right systems and technology ensures that businesses are always compliant with regulators’ laws. Failing to carry appropriate checks can significantly jeopardise a business’s operations, leading to expensive fines, reputational damage and loss of trust from both customers and the market...

Learn more
Picture of Victoria Slade, head of sales at REG Technologies
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How AI and Machine Learning are Revolutionising AML

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Frequently Asked Questions

What is AML in insurance?

AML in insurance refers to the controls and processes used to prevent insurance products or transactions from being used to conceal criminal funds or facilitate financial crime.

Why is AML important for insurers and brokers?

AML controls help insurers, brokers and MGAs reduce financial crime exposure, comply with FCA regulations and protect operational integrity across their insurance operations.

What is a Suspicious Activity Report (SAR)?

A Suspicious Activity Report (SAR) is a report submitted to the National Crime Agency when a firm suspects potential money laundering, terrorist financing or other financial crime activity.

What does the FCA require from insurance firms?

The FCA expects firms to maintain proportionate AML systems and controls, adopt a risk-based approach, monitor counterparties appropriately and ensure staff receive ongoing compliance training.

What is enhanced due diligence (EDD)?

Enhanced due diligence (EDD) involves additional checks and monitoring for higher-risk customers, transactions or jurisdictions where there may be increased exposure to money laundering or financial crime risks.

Who is responsible for AML compliance within an insurance firm?

Insurance firms are expected to appoint a Money Laundering Reporting Officer (MLRO) responsible for overseeing AML governance, reporting suspicious activity and maintaining effective compliance controls.

How can RegTech support AML compliance?

RegTech solutions can automate due diligence, improve monitoring processes, support governance workflows and help insurers, brokers and MGAs maintain more consistent compliance oversight.


Strengthen AML Oversight Across Your Insurance Operations

Discover how REG Technologies helps insurers, MGAs and brokers improve governance, streamline due diligence and strengthen compliance oversight.

Book a Demo