The Financial Regulatory Authority (FRA) has identified several indicators to identify suspected money laundering and terrorist financing transactions in the insurance sector.
These indicators include customers who show indifference to the insurance premium, commissions, or other insurance coverage costs; in addition to a lack of interest in the coverage included in the policy while showing keen interest in the early cancellation date, according to a report carried by Amwal Alghad.
The FRA points out that these indicators also include purchasing insurance policies or requesting to increase their value by large amounts that are not commensurate with the client’s activity, or repeatedly purchasing insurance policies for amounts the sum of which over a specific period of time is not commensurate with the client’s activity; as well as requesting insurance coverage outside the scope of the customer’s usual activity. In addition, there may be available information indicating that the insurance applicant has obtained insurance policies from several companies for the same insurance coverage.
The FRA also says that the indicators include purchasing a single-premium policy of a large amount that is not in line with the client’s previous dealings, in addition to the client’s request to increase the value of the insurance policy by a large amount to be paid in one instalment, as well as contracting for large-amount policies and requesting the refund of the premium, or requesting to borrow the maximum value on a single-premium policy shortly after contracting. The client could also wish to change the beneficiary shortly after contracting without clear justification or include people who have no clear connection to the customer.
Other indicators of possible money laundering and terrorist financing operations in the insurance sector include paying the premium through transfers from foreign parties, requesting a refund and transferring it to foreign parties, or changing the maturity date of the policy, especially when this leads to the customer incurring significant losses without a clear justification.
The FRA says that insurers must take the guidance on the indicators into account at the minimum when they try to identify transactions that are suspected of involving money laundering or terrorism financing.
The general indicators for all financial activities, including banking, include customers who refrain from providing sufficient information, or offer incorrect information, about their activities, or about the real beneficiaries of the transaction, or refrain from filling or signing the Know Your Customer form in addition to providing identification documents that are suspected of being forged.
These indicators also included customers who have difficulty describing the nature of their activities or lack general information regarding those activities, in addition to customers who are unusually interested in inquiring about the systems in place to identify unusual transactions, the criteria for suspicion, or the notification procedures for suspicious transactions, and a sudden change in the standard of living of an employee of the institution without a clear reason.
The indicators include operations carried out by local or foreign non-profit entities that are not consistent in terms of style or size with the purpose and activity of those entities, especially if these entities are in countries known to support terrorism, in addition to operations carried out by agents belonging to countries known to support terrorism.