Insurance companies will soon have to give details of large premium sums received to the Financial Intelligence unit, a section of Ministry of Finance. This is being done to track Money Laundering and identifying HNIs who are evading taxes. For example, if a premium of more than Rs. 1 lakh is paid by a non-taxpayer, it would be termed as mistrustful transaction.

IRDA is working out on a regulation to restrain money laundering; it is expected to be released within a fortnight. Under this regulation, reporting of such “large payments” will be made mandatory. Unlike other FIs, insurance companies were so far not covered by any anti-money laundering regulation. Insurance companies are likely to be given an illustrative list of the kind of “suspicious transactions” that would have to be reported to the Financial Intelligence Unit.

Principally, large-volume transactions exceeding the financial profile of a person would now come under the lens, as would policies in the name of fake beneficiaries. The regulator sees life insurance policies as a more susceptible method of money laundering compared to non-life insurance. Policyholders can be asked to provide PAN numbers and there income details. All regulated entities under the Reserve Bank of India and the SEBI have already been reporting “suspicious transactions” to the Financial Intelligence Unit.

The Regulation is said to contain detailed guidelines with respect to know your customer (KYC), detailed risk profiling, and reporting of transactions. Regulation on similar lines is already prevailing in the Banking Sector. The intention is to help insurance companies, which might otherwise unwittingly support money laundering activities.

The IRDA is framing the anti-money laundering regulation in accordance to the code prescribed by the International Association of Insurance Supervisors, which represents the regulators and supervisors of 180 jurisdictions in more than 130 countries.

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