Kathmandu: The insurance regulator, Nepal Insurance Authority, has issued a fresh circular to all the insurers for stricter implementation of AML/CFT compliance.
Insurers are required to set up a specialized department to monitor and implement AML/CFT compliance. The Anti-money Laundering Branch of the NIA on Sunday issued a 5-point directive circular to all insurers, directing them to form a specialized department or unit to serve for AML/CFT compliance.
The Authority has also ordered the insurers to ensure the appointment of an enforcement officer and the deployment of a sufficient number of human resources for AML/CFT department. The circular also directs insurers to appoint an employee as the enforcement officer at least for 2 years. Section 17 of the Prevention of Money Laundering and Financial Investment in Terrorist Activities Directive 2081 provides that management-level employees should be given the responsibility of enforcement officers.
To ensure effective implementation of the AML/CFT laws, the Authority has made efforts to empower the enforcement officer. The circular also directed the enforcement officer for the recommendation for departmental action against employees who do not abide by the AML/CFT compliance and provide the data or information for controlling and reporting such activities.
The circular directs insurers to form an Anti-Money Laundering Committee under the coordination of an independent director, with the Head of the Compliance Department, the Head of the Risk Management and Solvency Department as members and the Enforcement Officer as member-secretary. Such a committee will have to prepare policies, procedures, and plans for investment control and submit them to the Board of Directors.
The insurers are supposed to provide regular training to basic shareholders, directors, employees, and intermediaries to share knowledge about the severity of the AML/CFT. It has also directed to prepare and implement training and capacity development programs to train human resources according to the succession plan.
The instructions given through the circular are as follows:
1. All licensed insurers will form a separate specialized department/unit related to AML/CFT,
2. In accordance with Section (17) of the Anti-Money Laundering and Terrorist Financing Prevention Directive, 2081, a manager shall be appointed as Enforcement Officer. Enough man-power for the AML/CFT department should be ensured. Any changes in the role of HOD of AML/CFT or transfer will not be done at least for 2 years,
3. The Enforcement Officer shall recommend departmental action against the employees who do not provide the required information, documents, records or details requested by the AML/CFT department. The Authority shall be informed of the action taken in this manner,
4. While forming the Anti-Money Laundering Committee as per Section 10(e) of the Insurers’ Corporate Governance Directive, 2080, it shall be formed under the coordination of an independent director with the Departmental Head of the Compliance Department, the Departmental Head of the Risk Management and Financial Soundness (Solvency) Department as a member and the Implementation Officer appointed as per Section (17) of the Anti-Money Laundering and Terrorist Financing Prevention Directive, 2081 as a member secretary. The Committee shall prepare policies, procedures and plans to prevent money laundering and terrorist financing and, submit them to the board of directors.
5. In order to make compliance with effective and result oriented, the following arrangements shall be made to enhance institutional capacity by exchanging knowledge about the seriousness of money laundering prevention.
a. Conduct a knowledge sharing program for shareholders, directors and senior managers who own 1 percent or above of the paid-up capital of the institution,
b. Arrange regular training and knowledge sharing program for enforcement officers, employees and intermediaries.
c. Prepare and implement training and capacity building programs to train human resources in accordance with the objectives of the succession plan.
