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The Bangladesh Financial Intelligence Unit (BFIU) has issued detailed guidelines for insurance companies to prevent money laundering and terrorist financing, prohibiting anonymous or pseudonymous insurance policies and restricting services to individuals and entities on government-designated lists.
The restrictions also apply to individuals and groups listed as terrorists by the United Nations Security Council and those involved in financing terrorist activities.
In a circular issued on Monday (October 19), the BFIU instructed managing directors and chief executive officers of all insurance companies operating in Bangladesh to take the necessary measures to comply with the guidelines.
Under the directive, insurance companies must closely scrutinise complex, unusual or apparently economically unjustified policies that may be linked to money laundering. They must take appropriate measures in line with international standards and relevant UN Security Council resolutions to prevent money laundering and terrorist financing.
Insurance companies must report cash transactions of Tk 1 million or more conducted by a suspicious customer in a single day to the BFIU. They must preserve the relevant records for at least five years after submitting the cash transaction report.
The guidelines emphasise customer due diligence (CDD), requiring insurers to verify customers’ identities using accurate information, data and documents obtained from reliable and independent sources. They must also verify the sources of funds of suspicious customers and regularly monitor insurance policies and related transactions.
Enhanced scrutiny is required during policy renewals and financial transactions if there are indications of money laundering or terrorist financing. Insurers must investigate whether customers have concealed information and report suspicious transactions or activities to the appropriate authorities.
Each insurance company must collect the necessary identification and other relevant information about its customers. If someone acts on behalf of a customer to operate a policy or establish a business relationship, the insurer must verify that the person is duly authorised and collect their complete and accurate information.
The BFIU clarified that government-listed individuals and prohibited entities refer to those designated through government gazette notifications under Section 18 of the Anti-Terrorism Act, 2009.
For insurance related to foreign trade, companies must verify the numbers, dates and values of import-export contracts or letters of credit (LCs), the countries of origin and destination, and descriptions of the goods. Shipping documents and other relevant papers must also be checked against bank records where necessary.
For insurance policies covering businesses or property, insurers must identify and retain information about the controlling shareholders or individual shareholders holding at least 20 per cent of the shares as beneficial owners.
Policies handled on behalf of customers through brokers, trustees or professional intermediaries must also undergo legal and authenticity checks, with insurers required to collect complete information.
For reinsurance, insurers must verify the identities of the original insured parties, where identifiable, and claimants. The measure aims to prevent funds belonging to sanctioned individuals or entities from entering the insurance system through reinsurance premiums and potentially being used to finance terrorism.
To verify policy applicants, insurers must collect information including names, occupations, dates of birth, full addresses, national identity card numbers, birth registration certificates, passport numbers, photo identification and mobile phone numbers.
The directive also requires insurance companies to review their internal policies based on risk and comply with existing laws, regulations and BFIU circulars and guidelines to keep the insurance sector free from terrorist financing.
To ensure implementation and compliance, each insurance company must establish a central compliance unit at its head office, headed by a senior official.