Collected PhotoInsurers must strengthen customer verification, monitor transactions more closely and report suspicious activities under new anti-money laundering rules.
The Bangladesh Financial Intelligence Unit (BFIU) has classified insurance policies with terms of five years or less as high-risk, requiring insurance companies to tighten customer verification and strengthen monitoring to prevent money laundering and terrorist financing.
In a circular issued on Monday, the BFIU directed all insurance companies to strengthen customer identification procedures, verify beneficial owners and beneficiaries, screen transactions against sanctions lists and report suspicious activities.
Under the directive, insurers must report cash transactions worth Tk 10 lakh or more conducted by a customer in a single day, excluding transactions carried out through banking and mobile financial service channels.
Cash transaction reports must be submitted to the BFIU monthly, within seven working days after the end of each month.
Stricter Checks for High-Risk Customers
Politically exposed persons, influential individuals, senior officials of international organisations and their family members and close associates will require approval from the chief anti-money laundering compliance officer (CAMLCO) to establish or maintain customer relationships, according to the circular.
These customers must undergo enhanced due diligence, including additional checks on the source of funds, the purpose of the insurance policy and ongoing transactions.
Insurers must not issue policies if they cannot complete the required verification because customers refuse to cooperate or provide unreliable information.
The circular was issued under the Money Laundering Prevention Act 2012 and the Anti-Terrorism Act 2009.
The directive also requires insurers to review the know-your-customer (KYC) records of high-risk customers annually, compared with once every five years for low-risk customers.
As policies with terms of five years or less are classified as high-risk, their holders will be subject to annual reviews under the circular, regardless of their individual risk profiles.
Beneficial Ownership Verification Tightened
The BFIU has strengthened requirements for identifying the individuals who ultimately own, control or benefit from insurance policies.
Insurers must record the identities of individuals who pay premiums on behalf of policyholders and reverify beneficial owners when settling claims or issuing refunds.
For company-owned property, controlling shareholders and shareholders holding at least 20% of the company's shares will be treated as beneficial owners, according to the circular.
For marine and trade-related insurance, insurers must verify import and export contracts, letters of credit, transaction values, countries involved and descriptions of goods against bank records.
Reinsurers must also verify the identities of the original insured parties and claimants.
Compliance Units and Record-Keeping
The circular requires every insurance company to establish a central compliance unit at its head office under a chief anti-money laundering compliance officer.
Branches, units and agents must appoint compliance officers with at least three years of relevant experience.
Insurers must assess their compliance arrangements annually, provide staff training and retain relevant policy, transaction, customer and audit records for at least five years after policy closure or claim settlement.
The BFIU has also instructed insurers to monitor transactions for links to individuals and entities designated under United Nations Security Council resolutions or prohibited by the Bangladesh government.
When a match is identified, insurers must freeze the relevant policy or transaction and notify the BFIU by the next working day, as stipulated in the circular.
Insurers are prohibited from opening or maintaining policies under anonymous or fictitious names or for sanctioned individuals.
The directive further requires insurers to assess money laundering risks before introducing new products or technologies.
Insurance companies must also provide relevant information to the BFIU when media reports link policyholders to suspected money laundering or terrorist financing offences.
FP/MIB
