Insurance companies ‘must’ provide info about suspicious transactions

In keeping with CB directive:

By Surekha GALAGODA

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The Central Bank of Sri Lanka has made it mandatory for all insurance companies in Sri Lanka to provide information about suspicious transactions and submit monthly reports of transactions above the threshold in compliance with the Financial Transactions Reporting Act which covers Insurance companies as well.

The directive has been issued but we are yet to decide on the date where reporting of transactions to the Central Bank becomes mandatory, said a spokesman for the Financial Intelligence Unit (FIU).

He said that they have already held a few discussions with stakeholders to decide on the date and it will be announced soon.

He said that the threshold for Financial and non Financial institutions is Rs. one million. The threshold is necessary because if insurance companies report all transactions on a monthly basis it will be a tedious task for insurance companies as well as the FIU.

Suspicious transactions will not have a threshold and those transactions can be submitted at any time and it is the duty of insurance company to report a suspicious transaction as and when it occurs.

The spokesman said that although the FIU is yet to issue the reporting date insurance companies are already filing the monthly reports on a voluntary basis which is a positive sign. The FIU conducted several awareness programs while two more will be held in Gampaha and Kalutara in the near future. As before we will also issue a press notification as well.

A spokesman for an insurance company said that insurance companies have already sent the first statement and they are about to send the second statement as well according to the guidelines given by the FIU of the Central Bank.

According to the spokesman, the thresholds stipulated by the FIU are life insurance policies where the annual premium/single premium is over Rs. 250,000 or if a single premium of life insurance exceeding Rs. 500,000 is paid in cash or cheque payment over Rs. one mln should be reported to the Central Bank.

Also refunds of more than Rs. 500,000 and claims exceeding Rs. 1 mln should be reported to the Central Bank on a monthly basis. In addition all suspicious transactions as well as policy requests and claims by the customer have to be reported to the Central Bank.

Insurance companies will ensure that the customers pay their premia using cheques as companies don’t accept third party cheques as premium payments.

The companies have appointed compliance officers and the number of officers to be appointed to each company has to be decided on by the company. Normally, depending on the size of the business either one or more compliance officers can be appointed. The companies have already trained their staff on Know Your Customer and Customer due diligence procedures.

A spokesman for the Insurance Association said that that this is most welcome as it will make them extra careful and vigilant and it has been implemented at an appropriate time where acts of terrorism are increasing internationally.