Irda asks Birla Sun Life to tighten anti-money laundering norm

Authority advises company to lay adequate emphasis on effective procedures for strengthening the compliance norms of the AML master circular

Insurance regulator Irda has asked Birla Sun Life Insurance Company to strengthen procedures for complying with the anti-money laundering norms.

"Authority advises Birla Sun Life Insurance Company to lay adequate emphasis on effective procedures for strengthening the compliance norms of the AML master circular and all subsequent regulatory instructions issued on this matter from time to time," Irda said in a recent order.

The order assumes significance as a news portal last year had accused 23 leading banks and insurance companies including Birla Sun Life of "running a nationwide money-laundering racket, blatantly violating laws of the land".

The portal had alleged that the financial entities offered to open bank accounts and lockers without following Know Your Customer (KYC) norms, convert black money into white and obtain fictitious PAN cards.

On examining the charges and submissions, it is noticed that the life insurer has relied on the declared income of the life assured or policyholder along with the bank statements submitted in the specific instances, the order said.

However, AML master circular of 2010 envisages the life insurers not limiting to mere documentation of income proofs but take appropriate measures which may include conducting independent enquires where required and consulting a credible database, as part of their due diligence measures to establish source of funds, it added.

In a separate order, Irda directed Future Generali India Life Insurance to put in place fair compliance system while submitting information to the Authority.

The order pertains to issue of inconsistency in information submitted with regard to referral business to the Authority.

The company during the hearing acknowledged the fact that there was a procedural lapse while exercising the due diligence when forwarding the referral application to the Authority, the order said.