Banks have long borne the brunt of regulatory scrutiny over anti-money laundering (AML) controls, but life insurers handling large premiums are increasingly attracting the attention of criminals and watchdogs alike. In South Africa, the sector’s perceived complacency is fast becoming a liability.

Long-term insurers have been classed as accountable institutions under the Financial Intelligence Centre Act (FICA) for years, South African RegTech RelyComply detailed.

Yet many have failed to modernise their monitoring to keep pace with increasingly sophisticated launderers. The industry’s challenge is to stop treating AML as a periodic box-ticking exercise and start treating it as a continuous, proactive defence.

Life insurance appeals to launderers for structural reasons. Policies are socially normal, long-term financial planning tools, which makes them better camouflage than a large one-off cash deposit. Extended policy durations also let criminals stretch the placement and integration stages over years, muddying the audit trail. Hybrid products such as universal life insurance, which can be tax-deferred or linked to funds, bonds or equities, open further channels for illicit money.

The core weakness is timing. While banks typically monitor customers continuously, many insurers have concentrated verification at two moments: when a policy is issued and when a claim is made. That can leave years of activity largely unchecked.

Regulatory pressure has intensified. South Africa was placed on the Financial Action Task Force (FATF) greylist in February 2023 and, after 32 months of reform, exited in October 2025. However, the scrutiny has not eased. Life insurers remain overseen by the Financial Intelligence Centre (FIC), the Prudential Authority and the Financial Sector Conduct Authority (FSCA).

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