Irdai extends the deadline for comments and suggestions on draft guidelines issued on new processes to be followed by insurers for anti-money laundering (AML) and counter-financing of terrorism (CFT) processes
Soon, you will have to make additional declarations while buying insurance policies. The insurance regulator is inching towards finalising draft guidelines regarding better anti-money laundering and counter-financing of terrorism (AML-CFT) processes.
Earlier this month, the Insurance Regulatory and Development Authority of India (Irdai) recently came up with draft guidelines for insurance companies regarding AML-CFT practices they need to follow while selling policies and operating their businesses. The regulator has asked for suggestions and comments to the guidelines by June 17. Recently, it extended the deadline to June 30. Irdai will finalise the regulations in keeping with suggestions and the guidelines would be effective three months from the date of notification.
According to the draft guidelines, customers buying insurance policies would have to adhere to new processes and would have to submit additional documentation and information to ensure their declaration meets the know-you-customer (KYC) rules regarding AML-CFT.
These guidelines will be applicable to all businesses run by life, general and health insurance companies operating in India. Reinsurers, whether Indian or foreign, are not covered under the proposed guidelines as of now.
“The obligation to establish an anti-money laundering program applies to insurers as per provisions of Rule 9(14) (ii)& (iii) of the PML Rules. They have the responsibility for guarding against insurance products and services being used to launder unlawfully derived funds or to finance terrorist acts,” said the draft issued on June 1.
The Prevention of Money Laundering Act (PMLA), 2002 provides for confiscation of property derived from money-laundering.
The draft further says that insurers should do periodic risk management reviews at least once in a year to ensure strict adherence to the process and to create a strong ethical environment. “The concept of AML/CFT should be part of in-house training curriculum for employees/agents,” of the insurers, says the draft.
Irdai further suggests insurers to have adequate screening procedures while hiring or engaging employees, agents and personnel at other key positions.