Thank you, Mr. Chair.
As you mentioned, my name is Ethan Kohn. I'm Counsel at the CLHIA. My colleague Jane Birnie from Manulife Financial is here. She is the Assistant Vice-President, compliance.
We'll begin with an opening statement, and then we'd be pleased to address any questions the committee might have.
The Canadian Life and Health Insurance Association is a voluntary association with member companies that account for 99% of Canada's life and health insurance business. The life and health insurance industry is a significant economic and social contributor in Canada. It protects over 28 million Canadians and makes $88 billion a year in benefit payments to residents in Canada. In addition, the industry has over $810 billion invested in Canada's economy. In total, 99 life and health insurance providers are licensed to operate in Canada, and three Canadian life companies rank among the 15 largest life insurers in the world.
Our industry is proud to do its share in fighting money laundering and terrorist financing. When proceeds of crime are introduced, layered, and integrated into the financial system, public confidence is eroded. Companies with weak controls risk having significant administrative penalties imposed, and they also risk considerable damage to their reputation.
This committee has heard from a number of witnesses, including FINTRAC, that a risk-based approach to compliance and to enforcement is an objective of Canada's AML regime. Because neither reporting entities nor government agencies enjoy unlimited resources, it is important that they focus on the areas of greatest potential exposure. In this regard, I would note that the insurance industry is relatively low risk. We offer long-term protection products for which a significant majority have a clear source of funds, which makes it unlikely that bad actors will exploit the insurance sector. To illustrate this point, in 2016 over three-quarters of premiums received were in regard to products that carry a low risk for money laundering and terrorist financing. These products include term life, group life, registered annuities, disability insurance, and uninsured health contracts.
I would also note that the personal insurance industry is unique among all reporting entity sectors—not only are insurers subject to the act, but so too are their primary distribution network, life insurance advisors.
Each individual advisor must have controls in place similar to those required of insurers.
For our industry, there really are belts and suspenders in place.
I will turn now to the question at hand, this committee's examination of the PCMLTFA as part of the five-year review. You've heard from previous witnesses that the FATF assessed Canada's regime as being largely effective in containing ML-TF threats, and that Canadian financial institutions have a good understanding of their risks and obligations, and generally apply adequate mitigation measures. We agree with that, though there is always room for improvement.
With that, I'll turn the floor over to Ms. Birnie.