Treasury Issues Final Rules Under Sec. 326 of the USA Patriot Act – No Change for P/C Industry

May 2, 2003

Under section 326 of the USA Patriot Act, the property/casualty industry remained unaffected in the latest round of proposed rules.

This week, Treasury, the Financial Crimes Enforcement Network, and the seven federal financial regulators issued final rules requiring certain institutions to establish procedures to verify the identity of new accountholders. The institutions that were affected applied mostly to banks and various types of investment institutions.

“We are very pleased that Treasury has kept the property/casualty insurance industry out of these final rules,” Monte Ward, NAMIC’s federal affairs vice president, remarked.

The new regulations are reportedly specific to the kinds of businesses they name. They each set out the definition of financial institution, which they note includes insurers. Treasury has defined insurance companies for the purposes of this final rule as life insurance companies and any other insurance companies that offer products with investment features or features of stored
value and transferability.

“The P/C industry does not lend itself to these types of situations,” said Ward.

The regulations are part of the Administration’s continuing work to implement the USA Patriot Act and prevent money laundering, terrorist financing, identity theft, and other forms of fraud while also providing financial institutions the flexibility they need to effectively implement the rules.

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