Page 30 - Insurance Times March 2023

India, the Insurance Regulatory and Development Authority rule (14) of Rule 9 of the PML Rules. Insurers have responsibility
(IRDAI) on August 01, 2022, issued Master Guidelines on AML/ for guarding against insurance products and services being
CFT for General insurers and Life insurers in 2013 and 2015 used to launder unlawfully derived funds or to finance terrorist
respectively. Subsequently, multiple circulars had been issued acts. These guidelines shall be called as Master Guidelines on
on the subject. In order to consolidate and update guidelines Anti-Money Laundering/Counter Financing of Terrorism
on AML/CFT, a single Master Guidelines covering provisions (AML/CFT) for all the insurers. These guidelines have been
of the PML Act, Rules, and other applicable norms (as issued by exercising the power enshrined under Section 34 of
amended from time to time) is issued. The guidelines are Insurance Act, 1938, Section 14(1) of Insurance Regulatory
applicable to all classes of Life, General, or Health insurance and Development Authority Act 1999 and provisions 4,5,7,9,
business and will come into force from 1st November 2022. 9A & 10 of the PML Rules.

Money Laundering Activity Every Insurer has to establish and implement policies,
procedures, and internal controls that effectively serve to
Money Laundering is a process or activity of moving illegally
prevent and impede Money Laundering (ML) and Terrorist
acquired money through financial systems so that it appears
Financing (TF).The guidelines place the responsibility of a
to be legally acquired. Section 3 of PMLA specifies the
robust AML/CFT program on the insurers. As most part of the
Offence of Money Laundering. In terms of the provisions of
insurance business is through intermediaries /representative
Prevention of Money Laundering Act, 2002 (PMLA/PML Act/
of insurers, the selection process of intermediaries /
Act and the Prevention of Money- Laundering (Maintenance
representative of insurer should be monitored scrupulously
of records) Rules, 2005 (PML Rule as amended from time to
in view of set AML/CFT measures.
time), insurers are required to follow Customer Identification
Procedures while undertaking a transaction at the time
Process of Money Laundering
of establishing an account based relationship/ client
based relationship and monitor their transactions on-going To identify and report potential money laundering and
basis. address compliance requirements, financial institutions must
have a deep understanding of how the crime works. Money
The obligation to establish an anti-money laundering program laundering involves three stages: placement, layering and
applies to insurers as per provisions of clause (ii) and (iii) sub integration. These are a complex series of transactions that

Legal bodies governing Anti Money Laundering

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