SECP warns life insurance companies to ensure effective implementation the anti-money laundering directive

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 required insurers to have customer due diligence/know your customer policy, guidelines for conducting enhanced due diligence, policy and program for training of its employees regarding compliance of the directive and other AML obligations, and internal procedures 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 the single premium life insurance policies having annual premium of 5 million or above.

The review of the internal procedures and controls adopted by insurers 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 with the directive by the few life insurers including not effectively carrying out CDD/KYC and 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.