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IIABA Applauds Agent/Broker Exemption From Patriot Act Money-Laundering Regulations

Treasury-Proposed Rule to be Published Next Week in the Federal Register

WASHINGTON, D.C., September 20—A Treasury Department decision to exempt the property-casualty and health operations of independent agents and brokers from the USA Patriot Act's anti-money laundering regulations is the right decision and removes an unnecessary reporting requirement from agents, says Independent Insurance Agents & Brokers of America (IIABA) CEO Robert A. Rusbuldt.

Under the proposed regulations released by Treasury yesterday, property-casualty and health insurance agents and companies are excluded from the USA Patriot Act’s provisions. The reporting and compliance requirements apply to life insurance companies, but not directly to life insurance agents. However, the Treasury Department contemplates life companies integrating their agents into their compliance programs and is requesting public comment on whether the regulations should directly apply to life insurance agents.

"We applaud Treasury Secretary Paul O’Neill and the Bush Administration for agreeing with IIABA that property-casualty independent agents do not pose a money-laundering threat,” says Rusbuldt. “We have said from day one that we support the intent and purpose of the Patriot Act, but since agents and brokers do not pay actual loss claims that it would be virtually impossible for them to engage in money laundering due to the nature of the products they offer and the business practices of agencies.”

IIABA Senior Vice President of Government Affairs Maria L. Berthoud says that from the decision it is clear that the Treasury Department agreed with the logic of IIABA’s position. IIABA representatives met four times with Treasury officials to discuss its members’ concerns with the proposed rules.

While supporting the intent of the USA Patriot Act, IIABA expressed concern that the new law would impose a tremendous reporting burden on independent agencies and brokerage firms, especially when considering that they pose no threat for money laundering.

In addition to meeting with Treasury Department officials, the Big “I” worked with several influential members of Congress, including House Financial Service Committee Chairman Mike Oxley (R-Ohio), to ensure that agents and brokers were not burdened with unnecessary federal compliance requirements under the USA Patriot Act (Public Law 107-56).

“In our meetings with the Treasury Department, we impressed upon the officials that property-casualty insurance products cannot be easily converted into cash because the policies require a demonstration of a loss to recover claim proceeds,” says Berthoud. “We are gratified Treasury saw the merits of this position.”

  The USA Patriot Act, enacted following the Sept. 11 terrorist attacks, makes it harder for terrorists, other criminal entities and individuals to engage in money-laundering activities. The law requires financial institutions to establish anti-money laundering programs by assigning a compliance officer, training employees to detect money laundering, conducting annual independent audits and establishing policies and procedures to identify money-laundering risks and minimize opportunities for abuse.

Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address:

​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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