Page 31 - Insurance Times March 2023

start with depositing funds, then gradually moving them into
what appear to be legitimate assets.
Placement refers to how and where illegally obtained
funds are placed. Money is often placed via: Payments
to cash-based businesses; payments for false invoices;
"smurfing," which means putting small amounts of
money (below the AML threshold) into bank accounts or
credit cards; moving money into trusts and offshore
companies that hide beneficial owners' identities; using
foreign bank accounts; and aborting transactions shortly
prevention of ML and TF and ensuring their effectiveness and
after funds are lodged with a lawyer or accountant.
compliance with all relevant legal and regulatory
Layering refers to separating criminal funds from their
requirements. The guidelines place the responsibility of a
source. It involves converting the illicit proceeds into
robust AML/CFT program on the insurers. Nonetheless, it is
another form and creating complex layers of financial
necessary that the required steps are taken to strengthen
transactions to disguise the funds' origin and ownership.
the level of control on the intermediaries/representative of
Criminals do this to obfuscate the trail of their illicit funds
insurer engaged by the insurers.
so it will be hard for AML investigators to trace the
transactions.
Internal audit/inspection department of insurers shall
Integration refers to re-entry of the laundered funds into periodically verify compliance with the extant policies,
the economy in what appears to be normal, legitimate procedures and controls related to money laundering
business or personal transactions. This is sometimes done activities on the basis of overall risk assessment. Insurers shall
by investing in real estate or luxury assets. It gives also upgrade its questionnaire and system from time-to-time
launderers and criminals an opportunity to increase their in accordance with the extant PMLA and PML Rules. The
wealth. reports should specifically comment on the robustness of the
internal policies and
processes in this regard
and make constructive
suggestions where
necessary, to strengthen
the policy and
implementation aspects.

A "Designated Director",
who has to ensure overall
compliance with the
obligations imposed under
chapter IV of the PML Act
and the PML Rules, shall
be appointed or
designated by the insurers.
A Principal Officer (PO) at
a senior level has to be
appointed to ensure compliance with the obligations imposed
Policy to impede Money Laundering under chapter IV of the Act and the Rules. In terms of Section
Every Insurer has to establish and implement policies, 13 of the PMLA, the Director, FIU-IND can take appropriate
procedures, and internal controls that effectively serve to action, including imposing a monetary penalty on insurers or
prevent and impede Money Laundering (ML) and Terrorist its Designated Director or any of its employees for failure to
Financing (TF).To be in compliance with these obligations, comply with any of its AML/CFT obligations. Adequate
the senior management of insurers has to be fully committed screening mechanism as an integral part of their personnel
to establishing appropriate policies and procedures for the recruitment/hiring process shall be put in place.

26 March 2023 The Insurance Times