The Insurance Division carried out thematic review of the implementation of SRO 20(I)/2012 dated January 11, 2012, requiring insurers to develop detailed procedures to counter the potential threat of use of their services for money laundering.
The directive requires insurance companies to have customer-due-diligence/know-your-customer policy guidelines for conducting enhanced due diligence by making policies and launching programs for training its employees regarding compliance of the directive and other AML obligations and internal procedures. This has to done to ensure compliance of the directive and procedure for audit of compliance of the directive and other money laundering obligations.
Moreover, Circular No 8 dated April 7, 2017, requires all life insurers to provide information to the SECP on a monthly basis with respect to single premium life insurance policies having annual premium of Rs. 5 million or above.
The review of the internal procedures and controls adopted by insurers has disclosed existence of certain gaps in the implementation of the directive.
Furthermore, the analysis of information provided on a monthly basis under the ‘Compliance Report on AML Directive on Insurers’ also disclosed non-compliance of the directive by some life insurance companies. This non-compliance includes not carrying out CDD/KYC effectively and skipping out on risk profiling of the customers.
Consequently, such life insurance companies have been warned to ensure effective implementation of the directive and submit compliance report on implementation to the SECP by December 31, 2017.