IRDAI vide Circular bearing number IRDAI/IID/CIR/MISC/177/10/2023 dated October 10, 2023 has notified about the amendment to Master Guidelines on Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT), 2022.
The amendments are as follows:
- After para 2.2, the following para is inserted:
“2.2A In case there is a variance in Client Due Diligence or AML/CFT standards specified by IRDAI and the standards specified by regulators of the host country, foreign branches/majority-owned subsidiaries of the regulated entities shall adopt the more stringent requirements of the two. If the host country does not permit the proper implementation of AML/CFT measures consistent with the home country requirements, financial groups shall apply appropriate additional measures to manage the Money Laundering /Terrorist Financing risks, and inform IRDAI.”
- After para 4.4, the following para is inserted:
“ 4.6 Financial groups shall implement group-wide programmes against ML/TF, which should be applicable, and appropriate to, all branches and majority-owned subsidiaries of the financial group. The same shall include:
- policies and procedures for sharing information required for the purposes of CDD and ML/TF risk management; the provision, at group-level compliance, audit, and/or AML/CFT functions, of customer, account, and transaction information from branches and subsidiaries when necessary for AML/CFT purposes. This should include information and analysis of transactions or activities which appear unusual (if such analysis was done). Similarly, branches and subsidiaries should receive such information from these group-level functions when relevant and appropriate to risk management; and adequate safeguards on the confidentiality and use of information exchanged, including safeguards to prevent tipping-off.”
- In sub-para of para 8.2.2, the following shall be inserted after the words “previously obtained”:
“8.2.2. Knowing Existing Customer/Client The AML/ CFT requirements are applicable for all the existing customers/clients. Hence, necessary Client due diligence with KYC (as per extant PML Rules) shall be done for the existing customers from time-to-time basis the adequacy of the data previously obtained such that the information or data collected under client due diligence is kept up-to-date and relevant, particularly for high risk clients ”
- The para 8.2.4.2 shall be substituted with the following:
Old- “Necessary due diligence should be carried out of the policyholders/beneficiaries/legal heirs/assignees before making the pay-outs”
New- “Necessary client due diligence, if required, should be carried out of the policyholders/beneficiaries/legal heirs/assignees including beneficial owner, if any, before making the pay-outs. Insurers shall take reasonable measures to identify and verify the identity of the beneficial owner of the beneficiary including Enhanced Due Diligence, if required, in case the Insurers determine that a beneficiary presents a higher risk, at the time of payout.
In insurance business, Insurers shall, in addition to the CDD measures required for the client and the beneficial owner, conduct the following CDD measures on the beneficiary of Life insurance policies, as soon as the beneficiary is identified/designated:
- Insurer shall, as soon as a beneficiary of a life policy is identified as a specifically named natural person, legal person or legal arrangement, obtain the full name, including any aliases, of such beneficiary; For beneficiary that is designated by characteristics or by class or by other means, the Insurer shall obtain sufficient information concerning the beneficiary to satisfy itself that it will be able to establish the identity of the beneficiary at the time of the payout for both the above cases – the verification of the identity of the beneficiary should occur at the time of the payout.”
- After para 8.2.5, the following para shall be inserted:
“8.2.6 Where Insurer forms a suspicion of money laundering or terrorist financing, and it reasonably believes that performing the CDD process will tip-off the customer, it shall not pursue the CDD process, and instead file an STR with FIU-IND.”
- The following sub-para shall be deleted from para 13:
“Where Insurer relies upon third party that is part of the same financial group, they should obtain KYC documents or the information of the client due diligence within 15 days.”
- The para 14.2 shall be substituted with the following para:
Old- “Insurers are directed to lay down appropriate on-going risk management procedures for identifying and applying enhanced due diligence measures on an on-going basis to PEPs and customers who are close relatives of PEPs. These measures are also to be applied to insurance contracts of which a PEP is the ultimate beneficial owner (s).”
New- “Insurers are directed to lay down appropriate on-going risk management procedures for identifying and applying enhanced due diligence measures on an on-going basis to PEPs and customers who are family members, close relatives/associates of PEPs. These measures are also to be applied to insurance contracts of which a PEP is the ultimate beneficial owner(s).”
- After para 14.3, the following para shall be inserted:
“14.4 Insurers shall take reasonable measures to establish the source of wealth and the source of funds of customers and beneficial owners identified as PEPs.”
- In para 15.1, after the para 15.1.3, the following sub-paragraph shall be inserted:
“Insurers shall undertake ML/TF risk assessment prior to the launch or use of such products, practices and technologies and take appropriate measures to manage and mitigate the risks.”
- The para 17.1 shall be substituted with the following:
Old- “Conduct enhanced due diligence while taking insurance risk exposure to individuals/entities connected with countries identified by FATF as having deficiencies in their AML/CFT regime.”
New- “Specifically apply EDD measures, proportionate to the risks, to business relationships and transactions with natural and legal persons (including financial institutions) from countries for which this is called for by the FATF.”
- The following sentence shall be inserted in para 18.4 after “customer at any level.”:
“18.4. While furnishing information to the Director, FIU-IND, delay of each day in not reporting a transaction or delay of each day in rectifying a mis- represented transaction beyond the time limit as specified in the Rule shall be constituted as a separate violation. Insurers shall not put any restriction on operations in the accounts where an STR has been filed. Insurers shall keep the fact of furnishing of STR strictly confidential. It shall be ensured that there is no tipping off to the customer at any level . Confidentiality requirement does not inhibit information sharing among entities in the group ”
Source category: IRDAI
Attachments
- /2023/275_Master_Guidelines_on_Anti-Money_Laundering_2022.pdf
- /2023/275_Circular_on_amendment_to_Master_Guidelines_on_AMLCFT_20231010.pdf
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