Kathmandu. The Nepal Insurance Authority (NEA) issued a directive on the prevention of money laundering, terrorist activities and financing in the manufacture and expansion of weapons of mass destruction in August 2082.
According to the directive issued on August 19, all the insurers have to update the identity of the high-ranking insured by February 17. The Authority has issued directives for the implementation of the provisions of the Money Laundering Prevention Act, 2064.
Although the authority has issued directives to update only the guidelines, the insurers (especially life insurers) do not have a mechanism to classify the insured customers on the basis of risk. Most insurers have no option but to update their identity by searching their databases based on publicly available information.
For the first time, the directive has a provision to update the customer identity by obtaining the details of the national identity card of all high-ranking customers within 6 months. The insurer has not been able to start updating the details on the basis of the national identity card by analyzing the customer details.
In the case of old insurance policies, the details of whether the insured customer is in a high position or not are available in the life insurer’s software. In addition, a person with an ordinary job or business may have been appointed to a political or high government position within a period of 5 to 15 years. In such a situation, the insurer has not been able to update the changed identity of the concerned insured.
Except for a limited number of insurers, other insurers have not been able to use the mechanism to identify high-ranking people like banks and financial institutions. Although the Life Insurance Association has signed a memorandum of understanding (MoU) with Nepal Bankers Association for information exchange, it has not been fully implemented.
According to Section 7 B of the Act, the insurer should develop a mechanism to identify the senior officials while issuing insurance policies, issuing loans against insurance policies, surrendering insurance policies or making any other payment under the policy. Most insurers are not prepared for this.
In the event of a change or change of a high-ranking person, a mechanism to identify a high-ranking person or his family and a related person, the insurer should make arrangements to identify the risk according to the position and involvement of the high-ranking person.
The following procedure should be followed when identifying a high-ranking person:
}
a) To take information from the customer or to make a self-declaration,
b) To obtain information from publicly available information,
c) Analyzing the information available on social media,
d) To obtain information from commercially available data or other appropriate sources,
e) To take information from any record in accordance with the prevailing law and
(f) The insurer shall update the list annually on the basis of the details or accuracy available from the Government of Nepal or the designated authorized source, institution or agency.
Any insurance company should keep the records of the concerned person in the list of a high-ranking person or his/her family and associated person for ten years from the date of retirement of the concerned person or the expiry of his insurance period.
It is easier to use a non-life insurer than a life insurer:
Since non-life policies are issued for a short period (maximum 1 year), updating customer details is faster and more systematic than life insurers. Since most of the clients with non-life insurers are institutional customers, it is easy to update the details of the institutional customers and associated persons. The number of subscribers of non-life insurers is limited as compared to life insurers.
