International BusinessIRDA tightens anti-money laundering norms for insurance cos
Insurance regulator IRDA today tightened the anti-money laundering guidelines by asking the insurance companies to ensure that no policies are issued to persons with fictitious names.
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"While carrying out the KYC (know-your-customer) norms, special care has to be exercised to ensure that the contracts are not anonymous or under fictitious names," Insurance Regulatory and Development Authority (IRDA) said in its update on the anti-money laundering guidelines.
IRDA also asked the insurance companies to devise procedures to ensure that contracts with high risk customers are concluded only after approval of senior management staffs.
The insurance companies have been given time up to October 31, 2009 to comply with the new norms.
It also said proposals of politically-exposed persons should be approved by the insurance companies only after vetting of the contract by the senior management staffs, not below the rank of underwriting head or chief risk officer.
The insurance watchdog also said that any change in the customers’ recorded profile, which is inconsistent with the normal and expected activity of the customer, must be probed further by the insurance companies as part of the KYC process.
The review follows the recommendations of the Financial Action Task Force, an inter-governmental body developing and promoting policies to combat money laundering and terrorist financing.