Regulation for Life Insurance and Family Takaful Insurance Businesses on Prevention of Money Laundering and Financing of Terrorism

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Regulation No.: R2015/9
Volume: 44 | Number: 16 | Date: 24 Rabiul Awwal 1436 - 15 January 2015, Thursday

Maldives Monetary Authority
Malé, Republic of Maldives

Regulation for Life Insurance and Family Takaful Insurance Businesses on Prevention of Money Laundering and Financing of Terrorism

Chapter 1: Preliminary Provisions

This regulation is issued under Article 75(3)(h) of the Anti-Money Laundering and Counter-Financing of Terrorism Act No. 10/2014.

1. Definition
   This regulation shall be known as "Regulation for Life Insurance and Family Takaful Insurance Businesses on Prevention of Money Laundering and Financing of Terrorism".

2. Name
   (Identical to Definition)

3. Commencement
   This regulation shall take effect from 15 January 2015.

4. Scope
   Unless otherwise stated in this regulation, the following entities regulated and supervised by the Authority shall comply with this regulation:
   (a) Entities conducting life insurance business; (b) Entities conducting family takaful business; (c) Entities conducting insurance brokerage business related to life insurance; (d) Entities conducting insurance brokerage business related to family takaful; and (e) Other entities specified by the Authority.

Every licensed entity shall comply with this regulation. The board of directors of the licensed entity shall ensure that the entity's subsidiaries, branches, employees, agents, and any third parties entrusted with any work on behalf of the entity comply with the provisions of this regulation.

5. Responsibility for Compliance
   (a) Licensed entities may adopt a risk-based approach in complying with this regulation.
   (b)

Chapter 2: Customer Due Diligence Measures

No licensed entity shall sell an insurance policy in the name of an anonymous or fictitious person.

6. Prohibitions

Licensed entities shall implement the customer due diligence measures specified in this regulation in the following circumstances:

7. Circumstances Requiring Customer Due Diligence
   (a) When establishing a business relationship with a customer, regardless of the transaction amount, if there is suspicion of money laundering or terrorist financing activities; or (b) When there is suspicion that previously obtained information about the customer is incomplete or when doubts arise regarding the accuracy of such information.

8. Identifying Customers, Beneficial Owners, and Third Parties
   In the circumstances specified in this regulation requiring customer due diligence, every licensed entity shall:
   (a) Identify the customer and verify their identity; (1) Identify the customer's beneficial owner and the policy's beneficiaries, and verify their identity based on independent, reliable sources; and (2) Understand the purpose and nature of the transaction. (b) In cases where a customer has appointed a representative to establish a business relationship, every licensed entity shall:
   (1) Identify the representative and verify their identity based on independent, reliable sources; and (2) Verify that the representative has the authority to act on behalf of the customer, obtain a copy of the Power of Attorney or equivalent official document, verify that the copy matches the original, and retain it. (c) In addition to the information regarding the customer and beneficial owner specified in (a) and (b), licensed entities shall obtain and record the following information regarding third parties:
   (1) Full name and any other names used to address the person; (2) Identification document number (including citizen ID, passport, visa, company registration number, or business registration number); (3) Registered address, business address, or permanent address, as well as current address and contact information; and (4) Country of incorporation or registration. (d) If the customer is a legal entity or partnership, the licensed entity shall determine the type of business and the ownership structure. (e) If the customer is a legal entity, the licensed entity shall identify the directors. (f) If the customer is a partnership, the licensed entity shall identify the partners. (g) If the customer is a legal arrangement, the licensed entity shall determine the business type and ownership structure, and identify and verify the beneficial owners. (h) If the customer or beneficial owner is a government department, licensed entities are only required to verify that the person is a government department, except in cases where there is suspicion of money laundering or terrorist financing. (i) For business relationships and transactions considered low-risk for money laundering or terrorist financing, licensed entities may apply simplified measures. (j) Licensed entities shall continuously monitor the financial transactions of customers to detect unusual or suspicious financial activities, update the customer's identification information, and verify its accuracy. (k) For pension insurance contracts entered into under an employment agreement or in connection with the technical work of an insured person, if the policy is terminated before maturity without any payout specified under the policy, and the policy is not used as collateral for a loan, licensed entities are not required to obtain full information regarding the pension insurance contract parties. (l) When renewing a previously issued insurance policy (including beneficiary insurance) without material changes to its terms and conditions, or when deciding to continue a previously issued policy, licensed entities may rely on previously obtained customer identification information and exercise discretion to waive repeated due diligence measures. (m) Every licensed entity shall verify the identity of the customer and beneficial owner based on independent, reliable sources.

9. Verification of Identity
   Licensed entities shall identify and verify the identity of the customer or beneficial owner before establishing a business relationship or during its establishment.

10. Timing of Verification
    If the due diligence measures required by this regulation are not fully completed by the licensed entity, the business relationship shall not be established or maintained. In such cases, if the matter is considered a suspicious transaction, it shall be reported as such.

11. Non-compliance with Due Diligence Measures

12. Remote Business Relationships and Transactions
    To mitigate money laundering and terrorist financing risks arising from business relationships and transactions established without the customer's physical presence at the licensed entity's office, licensed entities shall implement appropriate policies and procedures.

13. Additional Due Diligence Measures
    (a) In addition to the due diligence measures specified in this regulation, licensed entities shall implement additional due diligence measures when conducting transactions considered high-risk for money laundering and terrorist financing. (b) Every licensed entity shall identify and determine the following as high-risk customers and transactions:
    (1) Politically Exposed Persons;
    (2) Persons from countries that do not have adequate measures to prevent money laundering and terrorist financing; (3) Business relationships and transactions established without the customer's physical presence at the licensed entity's office; and (4) Other customers and transactions specified by the Authority. (c) In circumstances considered high-risk for money laundering and terrorist financing, licensed entities shall implement additional due diligence measures. These measures may include, but are not limited to:
    (1) Obtaining additional information regarding the customer and beneficial owner; (2) Verifying the customer's source of wealth and funds based on appropriate, reliable sources; (3) Obtaining approval from senior management before establishing a business relationship or while maintaining an existing one; (4) Specifically monitoring the business relationship and updating the information obtained to identify the customer and beneficial owner as required by regulation; and (5) Monitoring transactions to ensure they align with the customer's previously obtained information, risk profile, and business activities.

14. Maintaining Due Diligence Measures
    Licensed entities shall implement due diligence measures proportionate to the customer's risk profile, the type of transaction conducted, and the level of money laundering and terrorist financing risk.

15. Monitoring Transactions
    (a) Licensed entities shall pay special attention to transactions conducted with persons residing in countries that do not cooperate with international standards to prevent money laundering and terrorist financing. This includes legal entities. The Financial Intelligence Unit shall notify licensed entities of information regarding such countries. (b)

Chapter 3: Record Keeping

All licensed entities shall retain business-related documents and records, specifically records and documents obtained during customer due diligence, including information to identify customers, beneficial owners, and third parties as determined under this regulation.

16. Record Keeping
    (a) In addition to the information specified in (a), licensed entities shall retain the following information and records:
    (1) Copies of documents and information obtained to identify and verify identity; (2) Documents and records obtained from internal investigations related to suspicious transactions; (3) Records related to suspicious transactions reported to the Financial Intelligence Unit; and (b) Records retained under this article shall be kept for the following periods:
    (1) Documents and records obtained for a single transaction shall be retained for 5 (five) years from the date the transaction is completed. This includes customer identification information and other information obtained related to the single transaction. (2) Documents and records obtained for a business relationship shall be retained for 5 (five) years from the date the relationship is terminated. This includes customer identification information, transaction history, and other information related to the business relationship. (3) Reports on suspicious transactions submitted to the Financial Intelligence Unit shall be retained for 5 (five) years from the date of submission, unless otherwise directed by the Financial Intelligence Unit.

Chapter 4: Reporting and Monitoring

Licensed entities shall submit information requested by the Financial Intelligence Unit to fulfill its duties and tasks under the Act.

17. Sending Information to the Financial Intelligence Unit

If a licensed entity suspects that specific funds or assets are proceeds of crime, or are linked to money laundering or terrorist financing activities, or has reasonable grounds for suspicion, it shall report the matter to the Financial Intelligence Unit as soon as possible, and no later than 3 (three) working days.

18. Reporting Suspicious Transactions
    (a) If a licensed entity suspects that specific funds or assets belong to persons specified under Chapter 7 of the United Nations Charter, or are linked to such persons, or has reasonable grounds for suspicion, it shall report the matter to the Financial Intelligence Unit as soon as possible, and no later than 3 (three) working days. (1) Persons specified by the United Nations Security Council under Chapter 7 of the UN Charter; and (2) Other persons specified by the Financial Intelligence Unit. (b) If a licensed entity suspects that any transaction is linked to money laundering or terrorist financing activities, or to proceeds of crime, it shall not execute the transaction after providing information to the Financial Intelligence Unit, unless directed otherwise by the Financial Intelligence Unit.

19. Suspension of Transactions
    (a) If the Financial Intelligence Unit considers a transaction submitted under (a) to involve a serious or urgent matter, it may order the licensed entity to suspend the transaction for a period not exceeding 72 (seventy-two) hours. (b) If executing the transaction specified in (a) is impossible, or if suspending it hinders efforts to identify the beneficial owner, the licensed entity shall execute the transaction and immediately notify the Financial Intelligence Unit.

20. Reporting Cash Transactions
    Every licensed entity shall report cash transactions, and transactions of equivalent or higher amounts in foreign currency, or other amounts specified by the Authority, to the Financial Intelligence Unit once a week. Aggregated transactions that meet or exceed this threshold shall also be reported. For the purposes of this article, cash transactions refer to transactions conducted with cash, checks, bank drafts, traveler's checks, and other bearer negotiable instruments.

21. Prohibition of Tipping Off
    Under no circumstances shall a licensed entity, director, officer, or employee disclose to the customer or any third party that customer information has been or will be submitted to the Financial Intelligence Unit, that a report on money laundering or terrorist financing has been or will be filed, or that an investigation into money laundering or terrorist financing is being or will be conducted.

Chapter 5: Privileges for Reporting Entities

No criminal or civil action for breach of banking secrecy, professional secrecy, or contract shall be brought against a licensed entity, director, officer, or employee who submits reports and information in good faith in accordance with this regulation. No administrative or disciplinary measures shall be taken against such persons.

22. Privileges for Good Faith Reporting

No money laundering or terrorist financing prosecution shall be brought against a licensed entity, director, officer, or employee who executes a transaction reported in good faith under this regulation.

23. Privileges for Executing Suspicious Transactions
    (a) Privileges under this article shall be granted to any person executing a transaction upon request by the enforcing authority, as specified in Article 27(3)(1) and Article 44 of the Act.
    (b)

Chapter 6: Programs to Prevent Money Laundering and Financing of Terrorism