Baloise Group to automate financial crime prevention

The software, from Norkom, will be used to monitor the insurer's existing and new customers against 'watch lists' established by the regulatory authorities to prevent money laundering and terrorist financing.

Monitoring each of the insurer's transactions, it will immediately identify any that involve individuals, organisations or countries viewed by the authorities as 'high risk'. The 2005 3rd EU Directive, plus guidelines issued by the Financial Action Task Force (FATF), oblige insurance companies to harden their defences against money laundering and terrorist financing. Companies are required to have - and be able to demonstrate that they have - adequate internal policies, procedures and controls in place to detect and prevent money laundering. If found to be transacting business with listed individuals, companies or countries, insurers face considerable fines and the possibility of criminal charges being brought against their directors. Whilst, to date, regulators have focused their attention on banking institutions, there is clear evidence that the regulation will be enforced with increased vigour in the insurance industry.

"These regulatory demands, coupled with a strong desire to protect our business and our customers, gave us the impetus we needed to invest in technology," says Baloise's anti-money laundering Group Compliance Officer, Peter Kalberer. "With more than 2 million policies and transactions a week, we knew that automation was the only practical way to be sure that each customer and policy was consistently checked against industry lists and any suspicious incidents reported to the regulator."

The technology, which has been operational in Baloise's corporate headquarters in Basel Switzerland since June and will be rolled out to the company's subsidiaries in Belgium, Luxembourg, Germany and Austria by year end, monitors each of Baloise's policies. When a listed name, address, organisation or country is found, automatic alerts are sent to the insurer's team of investigators. Each alert is pre-populated with all of the information the investigator needs to begin an immediate high speed investigation.

"It was the international capability of Norkom's technology that most attracted us," says Kalberer "Regulatory requirements differ in each of the countries in which we operate and we were able to find no other product that could accommodate all of those differences. Norkom allows us to manage our risk internationally, yet it can be easily configured for specific in-country requirements. This allows us to fight crime and satisfy the regulator in an efficient, cost effective manner."

Kalberer also believes that Norkom will be able to help Baloise keep pace with future changes in the regulatory environment. "We expect the regulatory environment for insurance companies to become more complex, following a similar pattern to that already established in the banking industry, where regulation has been introduced with speed and rigour in recent years," he explains. "The fact that Norkom has extensive international experience in the banking area and that its suite of software has been designed to tackle all aspects of financial crime, from money laundering to fraud, means we'll be able to respond quickly to new legislation as it's introduced."

All of Norkom's software products are underpinned by a common technology platform. This allows companies to progressively increase their use of the software, keeping pace with new regulatory demands and changes in criminal behaviour with the certainty that they are protected from the needs for future large scale technology investments. With determined thoroughness Baloise is using Norkom software to comply with the regulators demands. "In addition to the policy holders we are monitoring all business relationship with external partners," says Kalberer. Norkom achieves this by monitoring a centralised database of Baloise's customers, agents, brokers and other business partners.

Baloise reports good results with the software so far. "Though it's still early days we've seen a considerable increase in the efficiency of our investigations," says Kalberer. "But, most importantly, we can be sure that we have a system in place that demonstrably meets the regulator's requirements. We're confident that we're now able to capture and report any suspicious activity and provide an investigatory audit trail that will satisfy any third party investigation."