What is the AML Full Form in Insurance?
The AML full form in insurance is Anti-Money Laundering. The Government and the law enforcement agencies work against money-related frauds that can be summarized as anti-money laundering activities. It encompasses an international network of laws, procedures, and regulations to uncover money that has been covered up as legitimate income.
Purpose of AML activities in Insurance:
Money laundering in the insurance sector includes the exploitation of insurance products and its mechanisms to obtain illicit funds. AML activities help to uncover the practice of buying life insurance policies with black money. It helps to uncover criminals who overpay premiums and surrender policies prematurely to cycle the illicit funds into legitimate payouts. Many national and international authorities will impose stringent AML regulations for insurance companies to maintain their authenticity.
Advantages of AML activities in the financial sector:
The important purpose of AML activities in insurance is to identify the origin of unethical profits. It is also an important tool that discovers the origin and destination of money that is used for illegal activities including terrorism. The AML laws aim to reduce such activities and the financial institutions advocate anti-money laundering activities through KYC and customer due diligence measures.