Both companies were found not adhering to AML guidelines.
IRDA has warned LIC and ICICI Prudential Life Insurance for violation of Anti Money Laundering (AML) norms and directed them to strictly comply with these norms while issuing insurance policies to their customers.
IRDA found that LIC failed to check multiple cash transactions aggregating more than Rs 50,000 made by a single person. The insurance regulator has asked state owned company to put in place a system to detect and monitor multiple cash transactions by a single person. It said, “The life insurer is advised to put in place specific systems and controls to ensure avoidance of possible attempts by customers to circumvent the requirement of submission of PAN/Form 60/61."
IRDA has also found some instances where LIC used declaration of their Development Officers (DO) as a valid proof of address while issuing the policy documents to customers. The regulator has advised the insurer to avoid such practice as it has potential conflict of interest.
In another circular, IRDA found that despite having a better system in place, the sales staff of ICICI Prudential didn’t intimate the company about suspicious customers who insist on anonymity and are reluctance to provide proper information. It said, “The good system seemed to have been rendered ineffective due to lack of appreciation and seriousness on the part of frontline employees and salespersons involved. However, it is taken into account that no transactions have actually taken place and the life insurer is hereby cautioned to sensitize all its employees, agents and corporate agents etc. on scrupulously following the provisions of the internal instruction manual and the requirements of AML compliance with respect to reporting of Suspicious Transaction Reports (STRs).”
The insurance regulator also found that the ICICI Prudential had not conducted training for their corporate agents. It has asked ICICI Prudential to put in place a training system for their corporate agents.
IRDA has asked the company to closely monitor their operations in various branches and directed them to strengthen its internal control over operational procedures of its branches. It asked the company to put in place an effective internal control over branch operations as the employees of the insurer collected forged documents of identity proof, address proof, income proof from policyholders.
Earlier this month, IRDA had directed Birla Sun Life and Max Life Insurance to comply with AML guidelines.