International financial authorities are intensifying their supervision of the world’s insurance companies amid rising concern that insurers could be involved in money laundering.

Financial authorities in the U.S. and Europe in recent years have become more demanding towards banks that fail to monitor transactions to protect them against potential money-laundering. Now, they are focused on the insurance sector that can also be used to launder criminal profits.

"Banking establishments were the first to be subjected to tight and regular controls, [but now] money launderers have broadened their activity to the rest of the financial-services industry" including insurers, said Jean-Louis Fort, president of the 31-nation body charged with overseeing attempts to stop money related to drugs, prostitution or terrorism flowing through the world’s financial system.

The Paris-based Financial Action Task Force, together with the U.S. Treasury Department’s Financial Crimes Enforcement Network, France’s Tracfin, and the U.K.’s National Criminal Intelligence Service is working on a report, to be issued in mid-June, intended to determine the extent to which criminals and terrorists use the world’s insurance companies to process their money, he said.

With respect to money-laundering control, the French insurance commission earlier this month imposed a €300,000 ($390,840) fine on French life insurer Federation Continentale, a subsidiary of Italy’s Generali SpA. "This is a signal that we are stepping up the fight," said Benoit Courmont, a spokesman for the regulatory body known by its French acronym Ccamip.

Federation Continentale was not indicted of any specific case of money-laundering, but in September 2003 spot checks by the investigators showed that the insurer had failed to complete the necessary identity clearance from people depositing sums of more than €150,000.

A statement issued by Federation Continentale acknowledged the fine imposed by the Ccamip and noted that since September 2003 the company has tightened controls. Federation Continentale officials refused to comment further on the case. A Generali spokesman said that the case emphasized the importance of insurers’ strengthening oversight of their distribution networks.