BFIU asks insurance cos to strengthen AML-CFT compliance

The Bangladesh Financial Intelligence Unit (BFIU) has asked all life and non-life insurance companies in the country to strengthen their anti-money laundering and counter-terrorist financing (AML/CFT) compliance through regular self-assessments at their head offices, branches, agencies and other operational units.

Insurance companies are required to conduct annual Branch Self-Assessment (BSS) exercises to identify compliance gaps, assess financial crime risks and take corrective measures to prevent money laundering, terrorist financing and proliferation financing, according to a Bangladesh Bank circular issued on Monday.

Each branch, agency or unit require to designate a Branch Anti-Money Laundering Compliance Officer (BAMLCO) or an appropriate unit-level compliance officer.
 
The designated official should be a senior and experienced employee with at least three years of relevant professional experience, with duties and responsibilities specified in the appointment letter.

The designated compliance officer must conduct an annual self-assessment covering January to December using the prescribed checklist in Annexure D of the circular.

Before finalising the assessment report, the head of the respective branch, agency or unit must hold a meeting with relevant officials to review the findings, identify operational weaknesses and recommend corrective measures for issues requiring intervention by the head office.

The report must be jointly signed by the compliance officer and the respective unit head and submitted to the Central Compliance Unit (CCU) and the Internal Audit or Branch Control Division by January 31.

The Internal Audit or Branch Control Division is responsible for reviewing the submitted reports and verifying their accuracy. If significant compliance weaknesses or high-risk findings are identified, the division must arrange targeted inspections and inform the CCU.

The CCU, under the supervision of the Chief Anti-Money Laundering Compliance Officer (CAMLCO), must consolidate the self-assessment findings and internal audit reports into a comprehensive institutional assessment.

The consolidated report should include the total number of branches, agencies and units, the number of self-assessment reports received, the overall compliance status, recurring irregularities and corrective measures taken to address identified deficiencies.

The managing director or chief executive officer must provide written comments and directives before the consolidated report is presented to the Board of Directors or Management Committee. The final report must be submitted to the BFIU in February.

The self-assessment framework covers employee training, compliance officers' qualifications, knowledge of relevant laws and regulations, periodic AML/CFT meetings, customer due diligence, electronic know-your-customer (e-KYC) procedures, transaction monitoring and record retention.

It also requires insurance companies to maintain effective sanctions-screening mechanisms, identify suspicious transactions and activities, apply enhanced due diligence to high-risk customers, politically exposed persons and influential persons, and address deficiencies identified in previous inspections by the BFIU, the Insurance Development and Regulatory Authority (IDRA) and internal auditors.

The framework classifies insurance policies with a term of five years or less as high-risk. KYC profiles and risk assessments for high-risk customers must be updated at least annually, while those for low-risk customers must be updated at least once every five years. Customer profiles must also be updated when material changes in customer information become known.

Insurance companies must preserve customer identification records, KYC documentation, policy files, transaction records, claim-processing documents and relevant inspection reports for at least five years after policy closure or final claim settlement, in accordance with the applicable requirements.�"BSS