Patriot Act Delay Makes Sense
That sigh you heard was the collective expression of relief by the insurance industry, which has been given as much as a six-month reprieve before having regulations imposed to prevent potential money-laundering.
The issue was raised by passage of the USA Patriot Act, approved last year by Congress in response to the Sept. 11 terrorist attacks. Under the law, the U.S. Treasury Department was ordered to develop regulations to discourage and detect money laundering.
The law mandated all industries defined as financial institutions to have anti-money laundering programs in place by April 24. But the day before the deadline, Treasury announced that it would defer applying any standards for up to six months while they studied the rules to be imposed and their potential implications.
This was a welcome development, because insurers were concerned about facing overly restrictive and expensive regulations. This delay will give the industry time to air its grievances, and will allow the Feds to come up with sound, industry-specific rules that satisfy the law's intention without unnecessarily adding to insurer costs.
There is also some confusion about where insurance agencies might fit into this new regulatory scheme, or whether they should be exempt altogether. The delay will give the government time to proceed thoughtfully on this important measure, which was hastily passed in the aftermath of Sept. 11.
The Treasury Department announced that it had formed a working group to draft regulations specifically tailored to the insurance industry. That is a wise move. A one-size-fits-all approach could end up doing more harm than good for an industry that has done more than most to help the country recover financially from the Sept. 11 attacks.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, April 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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