Insurers to report cash transactions above Ksh.1M

Insurance companies in the country will now be obligated to report all cash transactions above Ksh.1 million ($10,000) with the Financial Reporting Centre (FRC) as the industry moves to comply with anti-money laundering rules.

The regulations published by the Insurance Regulatory Authority (IRA) published as part of legislative supplements to the Insurance Act seeks to align the industry with laws on anti-money laundering and combating financing of terrorism (AML/CFT).

“A regulated entity shall report to the Centre any cash transaction equivalent to or exceeding ten thousand United States dollars or its equivalent in any other currency carried out by the entity whether or not the transaction appears to be suspicious,” notes part of the rules.

Insurers are further expected to conduct due diligence processes on all its existing and future clients including the establishment of Know Your Customer (KYC) provisions.

Firms are expected to keep an audit trail on all individual transactions and ensure their traceability for a period of seven years after the end of business with respective parties.

Further, underwriters are required to create the position of a Money Laundering Reporting Officer whose role will include the coordination and development of an AML/CFT program, receive and vet suspicious transactions.

Similarly, entities are required to develop a compliance policy statement committing senior managers to the implementation of measures to deter the use of its products and services for money laundering and financing of terrorism.

The move by the insurance industry regulator aligns to that of other players in the financial sector including banks which are also obligated to report all transactions surpassing the Ksh.1 million threshold and establish KYC protocols.

Insurance companies are additionally obligated to ascertain the true identity of parties seeking to enter into a business relationship to include information on partnerships, trusts and ultimate beneficiaries.

Further due diligence procedures are required for higher risk customers including politically exposed persons.

According to the IRA, indicators on suspicious transactions range from unclear source of funds to the transfer of the benefit of a product to an unrelated third party.

The new guidelines align the profession with the country’s proceeds of crime and an anti-money laundering covenant.



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