The Insurance Regulatory and Development Authority of India on 26th October 2022, extended the deadline for implementation of Master Guidelines on Anti-Money Laundering/ Counter Financing of Terrorism (AML/CFT), 2022 to 1st January 2023. The guidelines are applicable to all classes of Life, General or Health insurance business carried out by the „Insurers‟ except Re-insurance business carried out by the „Indian Insurance company‟ or „foreign company‟ in India.
Through these guidelines, every Insurer has to establish and implement policies, procedures, and internal controls that effectively serve to prevent and impede Money Laundering (ML) and Terrorist Financing (TF). To be in compliance with these obligations, the senior management of insurers shall be fully committed to establishing appropriate policies and procedures for the prevention of ML and TF and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements
The insurers shall:
- Develop an AML/CFT program comprising of policies and procedures, for dealing with ML and TF reflecting the current statutory and regulatory requirements.
- Ensure that the content of these guidelines are understood by all staff members/agents. Develop staff members‟/agents‟ awareness and vigilance to guard against ML and TF.
- The AML/CFT program should have the approval of the insurer‟s board. The program should be reviewed periodically on the basis of risk exposure and suitable changes (if any) be effected based on experience and to comply with the extant Act / Rules / Regulations and other applicable norms. Adopt client acceptance policies and procedures which are sensitive to the risk of ML and TF
- Undertake CDD measures to an extent that is sensitive to the risk of ML and TF depending on the type of client, business relationship or transaction.
- Have in place a system for identifying, monitoring and reporting suspected ML or TF transactions to FIU-IND and the law enforcement authorities (if so required).
Internal audit/inspection department of insurers shall periodically verify compliance with the extant policies, procedures and controls related to money laundering activities on the basis of overall risk assessment. Insurers shall also upgrade its questionnaire and system from time-to-time in accordance with the extant PMLA and PML Rules. The reports should specifically comment on the robustness of the internal policies and processes in this regard and make constructive suggestions where necessary, to strengthen the policy and implementation aspects. Insurers shall submit audit notes and compliance to the Audit Committee.