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ScotProv slams FSA on new laundering rules

Scottish Provident is taking a stand against the FSA over new money-laundering requirements on protection providers, calling them a waste of time and money.

Head of product development Nick Kirwan says there is no way that term insurance could be used to launder money and it is nonsense to compel providers to take preventive steps.

Under the new rules, which become statutory after N2, anyone buying a protection policy with a premium of more than £50 a month would be required to supply proof of identity and residence.

Kirwan says the requirements simply mean more barriers to sales and he has yet to see any explanation from the FSA on why they are in place.

He says it is an unlikely scenario that someone would use a protection policy to disguise money as most premiums are through direct debits, meaning the person would have already complied with money-laundering procedures when opening their bank account.

But Skandia Life says that while the risk of term insurance being used to launder money is remote, it is often attached to purchases such as property. For this reason, it says protection products are an innocent party to laundering and there should be preventive measures.

However, Kirwan says: “How can term insurance be used to launder money? This is just an extra burden on providers which will be passed back to the consumer. It is a complete piece of nonsense.”

Skandia life marketing manager Lynda Cox says: “When people are trying to launder money, they often use innocuous means to do it. Term insurance is simply an innocent party to the bigger attempt.”

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