New York Child Abuse Identification and Reporting Practice Exam

What does the USA Patriot Act require from insurance companies?

1. Install a fraud detection system

2. Establish an anti-money laundering program

3. Improve customer service protocols

4. Implement stricter underwriting guidelines

The correct answer is: Establish an anti-money laundering program

The USA Patriot Act primarily aims to deter and punish terrorism in the United States and around the world, and one of the key components of the legislation involves enhancing the ability to combat money laundering and terrorist financing. Therefore, it requires financial institutions, including insurance companies, to establish an anti-money laundering (AML) program. This AML program must include a set of policies and procedures designed to detect and prevent money laundering activities. Furthermore, these programs require institutions to monitor customer transactions, report suspicious activities, and maintain records that can assist law enforcement agencies in investigations. The necessity for an anti-money laundering program reflects the broader obligation of financial institutions to contribute to national security efforts by ensuring they do not inadvertently facilitate illegal activities through their services. This is fundamental in the context of creating a financial environment that supports law enforcement in the fight against money laundering and terrorism.