NAIROBI, Kenya, Nov 25- Insurance firms have been directed to put in place mechanisms to detect and deter money laundering in their institutions.
Insurance Regulatory Authority (IRA) Chief Executive Officer Sammy Makove said on Thursday that the firms would be expected to develop stringent internal controls and monitor complex and unusually large cash transactions of over Sh800,000 and report any suspicious accounts to the authorities.
“Insurance companies are expected to perform necessary customer due diligence and take enhanced measures with respect to higher risk customers. This implies that they have to maintain full business and transaction records including Customer Due Diligence data for at least five years,” he said.
Each company will also be expected to have an anti-money laundering reporting officer to ensure that it is operating within the stipulated guidelines.
He spoke during a workshop to sensitise CEOs from insurance companies on the newly effected Proceeds of Crime and Anti-Money Laundering Act of 2009 which aims to seal loopholes through which criminals sanitise their dirty money in the country.
The law which became effective on June 28, 2010 provides for the freezing, seizure and confiscation of proceeds from crime.
Speculation has been rife that the laundering of ‘dirty’ money and particularly proceeds from piracy in the real estate sector is to blame for the skyrocketing property prices in many urban cities.
The vice also poses grave danger to the financial sector with the insurance sector’s life business touted as the most vulnerable. The size, easy availability and product diversity are also said to be some of the factors that are increasingly making the insurance industry an attractive avenue to launder money.
Mr Makove however pledged his commitment to implement the law to ensure that the regulator is able to combat the vice through verifying the sources of funds infused into the industry.
IRA is currently developing industry guidelines and an implementation plan for the same which upon completion would be issued soon.
“As a regulator, we are keen to ensure that no ‘dirty’ money finds its way in the insurance industry. In this regard, we have outlined a series of activities to enhance the players’ understanding of the law,” he vowed adding that sensitisation workshops will also be carried out.
He however called for the urgent establishment of the Financial Reporting Center as provided in the Act, saying it would go a long way in enabling industry players to comply with the law.
While acknowledging that money launderers can be cunning in devising new schemes to circumvent the counter measures, Mr Makove advised companies to train their directors and staff on the requirements of the Act to boost their compliance.
“Anti-money laundering training serves a dual purpose in terms of immediate and future prevention of money laundering. Through training, employees will learn how to spot the red flags of money laundering, follow proper reporting procedures and establish the knowledge and skills to protect their customers from risks,” he informed them.