BFIU issues anti-money laundering rules for insurers

The Bangladesh Financial Intelligence Unit (BFIU) issued a set of guidelines for insurance companies operating in Bangladesh to prevent money laundering and the financing of terrorism.

The guidelines require stringent compliance frameworks, mandatory customer due diligence and rigorous transaction monitoring across all life and non-life insurance operations.

In a circular issued on Monday, the financial intelligence agency outlined the measures insurers must follow to comply with the Money Laundering Prevention Act 2012, the Anti-Terrorism Act 2009 and the rules issued under the two laws.

The guidelines require each insurance company to formulate its own policies to prevent money laundering and terrorist financing, taking into account international standards, existing laws and regulations, and instructions issued by the BFIU.

The policies must be approved by the company’s board of directors or, where applicable, its highest policy-making or management committee. Insurers must communicate the policies to relevant stakeholders, take steps to implement them and review them periodically based on their risk exposure and operational realities.

The circular also places responsibility on the boards, chief executives and senior management of insurance companies to ensure compliance with the relevant laws, regulations and BFIU instructions.

Each insurer’s chief executive must issue an annual commitment to all officers, employees and agents to prevent money laundering and terrorist financing.

Under the guidelines, insurance companies must establish a central compliance unit at their head offices, led by a senior official designated as the chief anti-money laundering compliance officer (CAMLCO). The officer must be no more than two levels below the managing director or chief executive officer.

The unit must formulate institutional strategies and programmes to address money laundering and terrorist financing risks and ensure their implementation.

The circular also requires insurers to appoint an adequate number of officers and employees to the central compliance unit, considering the size of the business, the scope of operations and the number of customers.

The compliance unit must submit an annual report covering the company’s measures, implementation progress and recommendations to the managing director or chief executive and, where applicable, the board of directors.

The report must be presented to the board or the highest management committee, along with the chief executive’s observations and instructions. A copy must be sent to the BFIU by February each year.

Insurance companies must also issue compliance instructions for their branches, agencies, business units, underwriters, claims settlement agents and commission agents. These instructions must cover customer identification, transaction monitoring, internal controls and other relevant compliance procedures.

The circular further requires insurers to designate branch- or unit-level anti-money laundering compliance officers. Such officers must be senior officials with at least three years of experience. Insurance agents must also have designated anti-money laundering compliance officers.

The BFIU issued the guidelines under the authority granted by the Money Laundering Prevention Act 2012 and the Anti-Terrorism Act 2009.

Insurance providers must collect complete and accurate customer identification data and use modern electronic know your customer (KYC) technology introduced by the BFIU, ensuring zero tolerance for anonymous or pseudonymous policy accounts.

Detailed customer due diligence must be conducted when establishing a relationship, renewing a policy and whenever suspicious transactions arise. For high-risk jurisdictions, politically exposed persons and influential persons, enhanced due diligence procedures are compulsory.

Insurance companies must report cash transactions amounting to Tk 10 lakh or more in a single day, conducted without banking or mobile financial services channels, to the BFIU via a dedicated web portal within the first seven working days of the following month.

Staff members are required to remain vigilant for unusual or complex transactions lacking an economic or apparent lawful purpose and promptly report them through internal channels to the CAMLCO for onward submission to the BFIU.

Insurers must regularly screen policyholders and beneficiaries against lists provided under United Nations Security Council (UNSC) resolutions and lists of entities proscribed by the Government of Bangladesh to prevent the proliferation and financing of terrorism.

All KYC documents, transaction records, audit reports and training logs must be securely preserved for a minimum of five years after a policy is closed or a claim is settled.