NOTICE - Sector-Specific AML/ATF Guidance Notes for Long-Term Insurance Business (2016-04-27)

Summary

This is a BMA consultation notice attaching draft sector-specific AML/ATF Guidance Notes for Long-Term Insurance Business (Annex II). It supplements, but does not replace, the Authority's main AML/ATF Guidance Notes, and is intended to tailor those main notes to the risk profile of long-term insurance business. The Authority invited stakeholder comments on the draft for a 30-day consultation period.

• Who it covers: AML/ATF regulated financial institutions (RFIs) that are insurers (not reinsurers) registered under Section 4 of the Insurance Act 1978, or insurance managers or brokers registered under Section 10, carrying on long-term business under section 1(1)(a) or (c) of the Insurance Act 1978.
• Content areas: The draft guidance covers senior management responsibilities and internal controls, the risk-based approach for insurance business, ML/TF risks specific to long-term insurance, customer due diligence, international sanctions screening, ongoing monitoring, suspicious activity reporting, employee training, record-keeping, and sector-specific risk factors (customer, product, delivery channel, third party and geographic).
• Legal basis: The guidance is issued under Section 5(2) of the Proceeds of Crime (AML/ATF Supervision and Enforcement) Act 2008, Section 49A of the Proceeds of Crime Act 1997, and Section 12B of the Anti-Terrorism (Financial and Other Measures) Act 2004, and must be approved by the Minister of Justice.
• Consultation mechanics: Comments were to be emailed to policy@bma.bm with 'AML/ATF Long-Term insurance business' in the subject line during the 30-day comment window.

Because this is a consultation draft, its status as finalised guidance is not confirmed by this document; the underlying AML/ATF obligations it describes stem from existing Bermuda legislation (POCA 1997, SEA Act 2008, ATFA 2004 and the 2008 Regulations) rather than from this notice itself.

Key obligations

• RFIs must appoint a Compliance Officer at senior management level to oversee AML/ATF policies, procedures and controls.
• RFIs must appoint a Reporting Officer to process disclosures to the Financial Intelligence Agency (FIA).
• RFIs must identify, assess and effectively mitigate ML/TF risks across customers, products, services, transactions, delivery channels, outsourcing arrangements and geographic connections, and keep risk assessments up to date.
• RFIs must establish and maintain detailed AML/ATF policies, procedures and controls adequate to prevent ML/TF.
• Where an RFI has overseas branches, subsidiaries or representative offices, it must communicate its AML/ATF policies to them and ensure they apply measures at least equivalent to Bermuda's requirements.
• RFIs must apply a risk-based approach to determine CDD levels, risk-mitigation measures, reliance on intermediaries, scope of ongoing monitoring, and suspicious activity detection/reporting measures.
• Decisions to enter into business relationships with high-risk customers such as foreign PEPs must be taken exclusively at senior management level.
• RFIs must report knowledge, suspicion or reasonable grounds to suspect proceeds of crime or ML/TF involvement to the FIA.
• Insurers must apply appropriate reliance and outsourcing measures when using intermediaries or third-party service providers to ensure they meet AML/ATF standards.
• Stakeholders wishing to comment on the draft guidance must submit comments to policy@bma.bm within the stated consultation period.

Applies to

Insurers (not reinsurers) registered under the Insurance Act 1978, Insurance managers registered under Section 10 of the Insurance Act 1978, Insurance brokers registered under Section 10 of the Insurance Act 1978, AML/ATF regulated financial institutions conducting long-term insurance business

Deadlines

• 27th May 2016: End of the 30-day consultation period for comments on the draft Sector-Specific AML/ATF Guidance Notes for Long-Term Insurance Business.
• 30 days from 27th April 2016: Consultation period during which stakeholders may submit comments to policy@bma.bm.