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UAE: Central bank issues new guidance on anti-money laundering for insurers

Source: Middle East Insurance Review | Feb 2023

The Central Bank of the UAE (CBUAE) has issued new guidance on anti-money laundering and combatting the financing of terrorism (AML/CFT) for the insurance sector comprising insurance and reinsurance companies, agents and brokers.
 
The guidance, which entered into effect in December 2022, will assist insurance entities in understanding the risks and effective implementation of their statutory AML/CFT obligations. It takes Financial Action Task Force standards into account.
 
The guidance discusses the money laundering and financing of terrorism risks (ML/TF) relevant to life insurance and other investment-related insurance products, and how insurance operators can apply preventive measures to identify, assess, manage and mitigate them.
 
The guidance also discusses product, service and transaction, distribution channel and intermediary, customer and geographic risk factors.
 
Insurance operators are required to perform, document and keep up to date an enterprise risk assessment. They must perform customer due diligence, understand the nature of the customer’s business and the nature and purpose of the operator’s relationship with the customer, including the expected uses to which the customer will put the operator’s products or services, and subject all customers to ongoing monitoring throughout the business relationship.
 
Moreover, the operators must apply enhanced due diligence measure if they identify a customer or relationship presenting higher ML/TF risks. In addition, insurance operators should maintain transaction monitoring systems equipped to identify patterns of activity that appear unusual and potentially suspicious and must report any behaviour that they reasonably suspect may be linked to ML/TF or a criminal offence by submitting suspicious activity or transaction reports directly to the UAE’s Financial Intelligence Unit.
 
All of these preventive measures should be integrated into their AML/CFT compliance programme and supported with appropriate governance, training and independent audit.
 
The guidance also said that life and other investment-related products are generally considered to present higher ML/FT risk, particularly where they have high cash values upon surrender. M 
 
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