Legal and Compliance Department Responsibilities Insurance - - PowerPoint PPT Presentation

Legal and Compliance Department

Responsibilities Insurance Companies and staff

1. Customers that pay insurance premiums from accounts kept in countries that don’t have the legal frame work to counter money-laundering. 2. Customers that usually conduct business associated with precious goods, such as jewelry, gold, cars, antiquities, real estate and leasing. 3. Customers that travel on regular basis to countries known for trading and farming drugs. 4. Customers that don’t show care regarding the amount of the insurance premium or commissions or any other matter pertaining to the insurance coverage.

In terms of harmonizing efforts and cooperation to counter money laundering and terrorist financing, the principle of due care and diligence was set when dealing with customers among which: Insurance companies and all persons working in the professions associated with the insurance business must maintain the documents and records pertaining to identifying their clients for a period not less than five years following the expiration date of the insurance policy and the reinsurance contract.

Why do we have to be concerned now?

 The main requirement supplied by the IA BOD No. (13) of 2015

concerning Instructions for Anti-money laundering and Countering Terrorist Financing, is the doctrine of Know Your Customer, which requires insurance companies to set the necessary procedures to acquire the relevant status and information about their customers, their assignees and the true beneficiaries of the natural and juridical persons.

 Insurance companies and all persons working in the professions

associated with the insurance business must maintain the documents and records pertaining to identifying their clients for a period not less than five years following the expiration date of the insurance policy and the reinsurance contract.

WHAT IS MONEY LAUNDERING ?

Illegal / Dirty Money Legal / white Money

Conversion

Definition: 'Money Laundering' is the process by which illegal funds and assets are converted into legitimate funds and assets.

Money Laundering generally refers to ‘washing’

• f the proceeds or profits generated from:

Criminal Activities Extortion Bribery & Corruption Gambling, Robbery, Cheating Counterfeiting & Forgery Terrorist Acts Smuggling (arms, people, goods)‏ Drug Trafficking

Money Laundering Cycle:

• 4. Integration
• The last stage in the laundering

process.

• Occurs when the laundered proceeds

are distributed back to the criminal.

• Creates appearance of legitimate

wealth.

• 1. Predicated Crimes
• Corruption and Bribery
• Fraud
• Organized crime
• Drug and human trafficking
• Environmental crime
• Terrorism
• Other serious crimes…
• 2. Placement
• Initial introduction of criminal

proceeds into the stream of commerce

• Most vulnerable stage of

money laundering process

• 3. Layering

Involves distancing the money from its criminal source of $:

• into different accounts
• movements of money to

different countries

• Increasingly difficult to detect.

How can Money be laundered through insurance companies? Examples 1

There are a number of ways that launderers can use insurance products. The following cases may indicate money laundering:

• Paying a large “top-up” into an existing life insurance policy.
• Purchasing a general insurance or motor policy, then making a claim

soon after.

• A customer who usually purchases small policies, suddenly requests a

large lump-sum contract.

• A customer who wishes to fund its policy using payments from a third

party.

• Purchasing one or more single-premium investment-linked policies,

then cashing them in a short time later.

• Premiums being paid into one policy, from different sources.

How can Money be laundered through insurance companies? Examples 2

• Making over-payment on a policy, then asking for a refund.
• Where the relationship between the policyholder and beneficiary seems

unusual.

• “Structuring” – i.e. purchasing several policies just under the reportable limit,

instead of purchasing one large policy (in some countries all transactions over a certain limit must be reported to the Government).

• Where the customer is more interested in learning about cancellation terms

than about the benefits of the policy.

• Unusually large payments using cash, money order or travelers cheques.
• Redemption of a policy which is unusually early or does not make good

economic sense.

• Channeling payments via offshore banks.

How can Money be laundered through insurance companies? Examples 3

• Customers that pay insurance premiums from accounts kept in countries

that don’t have the legal frame work to counter money-laundering.

• Customers that usually conduct business associated with precious goods,

such as jewelry, gold, cars, antiquities, real estate and leasing.

• Customers that travel on regular basis to countries known for trading and

farming drugs.

• Customers that don’t show care regarding the amount of the insurance

premium or commissions or any other matter pertaining to the insurance coverage.

Amounts of Cash

• <Aed25 000, no action required
• >Aed25 000< Aed40 000, browse the Sanctions report. Link on EIC Website

under Anti Money laundering Section. This link will take you to

Consolidated United Nations Security Council Sanctions List

• >Aed40 000 as above but also complete Suspicious Transaction Report,
• btainable from our website.

http://www.eminsco.com/stakeholders/anti-money-laundering-policy/

• Forward the report to Money Laundering Officer (Mazen Mahmood)

What happens if individual is on list? Reporting to the Unit on Suspicious Transactions

The relevant employees must freeze the transaction and the EIC Money Laundering Officer should be informed in case of the existence of an admissible doubt in any insurance operation used to launder money. When unable to identify the customer using a trustworthy source of information, the Employee in charge must:

• Immediately terminate any relationship with the client and report to the

reporting manager.

• The reporting manager will submit a Suspicious Transaction Report to the

Anti Money Laundering Officer (Legal & Compliance Department)

Money Laundering Flow Chart

Confidentiality All insurance companies and persons working in the professions associated with insurance must deal with the information they possess in confidentiality and must not reveal them except with the necessary portion of such for the use of investigations or lawsuits, taking into consideration the applicable laws in the state.