Insurance Institution Lacks Proper Standards in Prevention of Money Laundering and Terrorism Financing
Investigation Reveals Vulnerabilities in Kenyan Insurance Industry
A recent investigation conducted by the Financial Intelligence Unit (FIU) has uncovered serious shortcomings in the prevention of money laundering and terrorism financing among insurance institutions in Kenya. The investigation found that these institutions, which provide various types of insurance policies, including life, general, and health insurance, are failing to implement proper standards in this regard.
Lack of Proper Due Diligence Procedures
The FIU investigation identified several areas where the insurance institutions are falling short of required standards. One of the major concerns is the lack of thorough customer due diligence procedures. This makes it easy for criminals to use these institutions to launder or finance terrorist activities.
“The lack of proper customer due diligence procedures makes it easy for criminals to use these insurance institutions to launder or finance terrorist activities.”
Senior Official, FIU
Failure to Report Suspicious Transactions
The investigation also found that some insurance institutions are failing to report suspicious transactions as required by law. This lack of reporting makes it difficult for authorities to track and prevent these criminal activities.
“We urge all insurance institutions in Kenya to take immediate action to address these shortcomings and ensure that they are complying with the anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.”
Senior Official, FIU
Recommendations from the FIU
To address these vulnerabilities, the FIU has recommended that insurance institutions should:
- Establish the legitimacy of source of funds
- Conduct thorough customer due diligence
- Report suspicious transactions
- Have policies in place to set maximum cash transaction limits for customers
- Ensure that they are not providing anonymous accounts or accounts in obviously fictitious names
Monitoring and Enforcement
The FIU will be closely monitoring these insurance institutions to ensure that they comply with the regulations. The institution has emphasized the importance of taking AML/CFT obligations seriously and implementing proper standards to prevent money laundering and terrorism financing.
“We will be closely monitoring these insurance institutions to ensure that they are complying with the regulations.”
Senior Official, FIU
Conclusion
The investigation highlights the need for all financial institutions, including insurance companies, to take their AML/CFT obligations seriously and implement proper standards to prevent money laundering and terrorism financing. It is essential that insurance institutions in Kenya take immediate action to address these shortcomings and ensure compliance with regulations.