SECP Issues SRO Binding Registered Companies to Declare Their Stakeholders Clear of Financial Crimes

The eligible insurance companies and insurance intermediaries intended to be registered with the Securities and Exchange Commission of Pakistan (SECP) are now bound to declare that their sponsors, promoters and ultimate beneficial owners have not been convicted in criminal frauds/offences of terrorism financing or money laundering including predicate offences under Anti-Money Laundering Act, 2010.

According to the S.R.O. 933 (I)/2020 issued by the SECP, the new conditions would be applicable on the ultimate beneficial owners and ‘Insurance Intermediary’ including insurance agent, corporate insurance agent, insurance surveyor, insurance broker and third-party administrator (for health insurance).

The SECP has prescribed the Insurance Companies (Sound and Prudent Management) Regulations with respect to fitness and propriety requirements imposed upon the Chief Executives, directors and key officers of the insurance companies in order to prepare and establish the insurance sector to meet the challenges of globalization and to avoid maladministration and that the insurance companies must be run by competent persons with adequate know-how of the insurance business without any involvement in financial crimes.

Now, the eligible person who has made application under Section 6 of the Insurance Ordinance, 2000 (the Ordinance) and insurance intermediaries who have applied for the license under the applicable provisions of the Ordinance, shall submit with the Commission, at the time of registration as insurer or insurance intermediary, as the case may be, undertaking(s) (on the prescribed format attached as Annexure A) duly signed by the sponsors, promoters and ultimate beneficial owners of the insurer that they have not been convicted in criminal breach of trust, fraud, offences of terrorism financing or money laundering including predicate offences as provided in the AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission, and are not proscribed persons either convicted or not “as mentioned in the notifications issued by the Ministry of Foreign Affairs on United Nations Security Council Resolutions or intimation from National Counter Page 2 of 5 Terrorism Authority/ Law Enforcement Agencies/ Home Departments of Provinces/Ministry of Interior”.

The insurer at the time of seeking approval in terms of the Insurance Companies (Sound and Prudent Management) Regulations, 2012, shall submit to the Commission, undertaking(s) duly signed by the proposed directors or chief executive or principal officer of the insurer that they have not been convicted in criminal breach of trust, fraud, offences of money laundering including predicate offences as provided in the AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission.

The insurer shall submit an affidavit annually to the Commission that its key officers, as defined in the Insurance Companies (Sound and Prudent Management) Regulations, 2012, have not been convicted in criminal breach of trust, fraud, offences of money laundering including predicate offences as provided in the AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission.

The applicant at the time of seeking approval for issuance of licence as insurance broker in terms of the Insurance Rules, 2017 and third party administrator (for health insurance) under the TPA Regulations, 2014 , shall submit to the Commission, undertaking(s) (on the prescribed format attached as Annexure (A) duly signed by the proposed directors or chief executive, principal officer and key officers of the insurance broker that they have not been convicted in criminal breach of trust, fraud, offences of money laundering including predicated offences as provided in the AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission.

The insurer during the execution of various processes relating to insurance policies, including but not limited to underwriting, issuance, endorsement, withdrawal, claim, or maturity, shall ensure that there does not exist any conflict of interest of the insurance intermediaries, particularly, in terms of AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission; At the time of change in ultimate beneficial owner of insurer and also at the time of acquisition of shareholding of an insurance company of more than ten per cent (10%) in terms of Section 67 of the Ordinance, the acquirer(s) or the authorized person in case of corporate entity shall submit undertaking (on the prescribed Page 3 of 5 format attached as Annexure A) that the acquirer and the ultimate beneficial owners, as the case may be, have not been convicted in criminal breach of trust, fraud, offences of money laundering including predicated offences as provided in the AML Act, 2010, laws made thereunder, or any other AML/CFT requirements notified by the Commission, SECP added.



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