When it comes to reliability assessments, insurers operate in a dual landscape of obligations: under supervisory law, § 24 (1) sentence 1 VAG (German Insurance Supervision Act) requires that all persons who effectively run the undertaking or hold other key functions be reliable and professionally qualified — a group of persons that extends considerably further than the KWG regime applicable to banks. Under anti-money-laundering law, life insurers additionally qualify as obliged entities under § 2 (1) no. 7 GwG (German Anti-Money Laundering Act) and must ensure the reliability of their employees under § 6 (2) no. 5 GwG. Those who map both regimes cleanly can translate them directly into a tiered screening concept.
The supervisory regime: § 24 VAG reaches further than the KWG
The scope of § 24 (1) sentence 1 VAG is deliberately functional: it covers not only the formally appointed management board but every person who effectively runs the undertaking or holds other key functions — typically, therefore, also those responsible for risk management, compliance, the actuarial function and internal audit. This is embedded in the requirement of an effective system of governance under § 23 (1) VAG: the fitness and reliability assessment is not an isolated HR act but part of governance.
In practical terms this means: insurers must be able to demonstrate, for a larger group of persons than banks, that reliability and professional qualification have been assessed — upon appointment and on an ongoing basis. Anyone who only initiates this assessment once the appointment has already been communicated risks delays and uncomfortable questions from the supervisory authority; the research belongs before the nomination, not after it. How to manage the evidence vis-à-vis BaFin is covered in depth in our article on fit and proper at BaFin.
The anti-money-laundering regime: the special role of life insurers
In parallel, the GwG applies to undertakings with life insurance business: as obliged entities under § 2 (1) no. 7 GwG, they must maintain internal safeguards — including, under § 6 (2) no. 5 GwG, the assessment of the reliability of their employees. This regime does not target key functions but the workforce in AML-relevant processes — such as application, payout and distribution functions — and it applies not only at hiring but on an ongoing basis. In many organisations this second vetting duty is overlooked because it sits organisationally with AML prevention, while the fit-and-proper processes are located with HR and corporate-body support. We have set out the fundamentals of this employee assessment in the article on the reliability assessment under the GwG.
Both regimes mapped
The two sets of obligations differ in four dimensions — and precisely these differences structure the screening concept:
- Group of persons: § 24 VAG covers management and key functions; the GwG covers employees in AML-relevant roles of the life insurance business.
- Trigger: Under supervisory law, the appointment or assumption of the function is paramount; under AML law, hiring and ongoing review are required.
- Standard of review: § 24 VAG asks for reliability and professional qualification; the GwG focuses on reliability in the sense of money-laundering prevention.
- Addressee of the evidence: In both cases the supervisory authority — but with different expectations regarding depth and documentation.
Key terms around reliability, key functions and screening are explained concisely in our glossary.
From catalogue of duties to screening concept
The mapping leads to a three-tier concept: key functions and senior management receive the deepest review (registers, press, conflicts of interest, career history), AML-relevant roles in life insurance a standardised reliability check on a defined cycle, and the remaining workforce a risk-appropriate basic check. Documentation is decisive: for every person, it must be demonstrable what was checked when and how it was assessed. Indicium delivers audit-proof reports for this purpose, with dated sources and human final review (Art. 22 GDPR) — tailored to the requirements of regulated industries.
Recommended course of action
First, create a function map: which persons fall under § 24 VAG, which roles are AML-relevant within the meaning of the GwG, where do the two circles overlap? Then assign a depth of review and a cycle to each group and set the concept down in writing as part of your system of governance. If you would like to see how this can be implemented operationally: book a demo.
This article provides general information and does not constitute legal advice.