LIC Anti Money Laundering Policy (Revised)

https://www.clic2cash.com/anti-money-laundering-policy-revised

BACKGROUND:

The Prevention of Money Laundering Act, 2002(hereinafter referred to as the Act) came into force with effect from 01.07.2005 and is applicable to all the financial institutions vide section
12 of the Act.
The Act was amended in 2005, 2009 & 2012.The IRDAI has issued guidelines as a part of Anti Money Laundering Programs for Life Insurance Sector. As per the guidelines issued by the IRDAI, the Life Insurers have statutory duty to disclose all suspicious transactions to the authorized officer. Such disclosures are protected by law. The Life Insurers need not fear breaching their duty of confidentiality owed to customers.

Application of additional measures like gathering information:

Review of the proposal/contract by a senior official, not below
Reasonable measures to know the customer`s source of funds
of the Corporation will be system driven, however the users shall ensure whether the identified proponent is the same person appearing in the UNSC list.
of identity of clients for a period of 5 years. as amended from time to time) to ensure overall implementation of the obligations imposed under chapter IV of the Act and the Rules shall be appointed.

Life Insurance Corporation of India (hereinafter referred to as Corporation) had adopted Anti Money Laundering Policy w.e.f. 01.08.2006 as a part of AML program for the Corporation in accordance to Para 3.1 of IRDAI circular ref: 043/IRDA/LIFE/AML/MAR-06 dated 31.03.2006.The AML Policy of the Corporation was amended/revised and approved by the Board on 05.08.2010, 28.01.2011 and 01.04.2011.
The latest guidelines were issued by IRDAI vide Circular ref: IRDAI/SDD/GDL/CIR/175/09/2015 dated 28.09.2015, termed as

`Master Circular on Anti Money Laundering/Counter Financing of Terrorism guidelines for Life Insurers’.

Accordingly, the revised AML policy of the Corporation is formulated with a special thrust on Know your Customer norms and AML/CFT measures.
This Policy represents the basic standards of Anti Money Laundering & Counter-Financing of Terrorism (hereinafter collectively referred to as AML) procedures within the Corporation.

Money Laundering is defined as moving illegally acquired cash through the financial system so that it appears to be legally acquired.
Corporation will implement the following revised policy in this regard with immediate effect:

Applicability
The AML Policy extends to all the offices of the Corporation situated within the jurisdiction of India. In respect of offices outside India, local laws of that country for AML will be followed.

AML Program
In order to discharge the statutory responsibility to detect possible attempts of money laundering or financing of terrorism, the AML program for the Corporation includes:

Internal policies, procedures, and controls;
Appointment of a Principal Compliance Officer;
Recruitment and training of employees/agents;
Internal Audit/Inspection;

Internal Policies, Procedures and Controls:

1 Customer Due Diligence and Know your Customer (KYC)
Know Your Customer (KYC) norms on the basis of risk profile of customer within the framework of IRDAI guidelines in conjunction with procedural and operational guidelines of the Corporation will be scrupulously followed.

i. Establishing Identity

For all types of proposals, documents for identity i.e. recent photograph and proof of residence as per list of officially valid documents given in Annexure II and for income proof (wherever required) as per Annexure III shall be procured. Customer information should be collected from all the relevant sources, including the agents.
All reasonable measures shall be taken for identification and verification of the beneficial owner and his/her beneficial ownership. Suitable instructions shall be issued for determination of Beneficial Ownership as prescribed in Annexure I .
(“Beneficial Owner” for this purpose means an individual who ultimately owns the insurance policy or controls a customer of the Corporation or the person on whose behalf a transaction is being conducted and includes a person who exercises ultimate effective control over a juridical person.)c. KYC requirement may be relaxed for a total annual premium of Rs.10,000/- on policies, especially micro insurance policies held by a single individual from the requirement of recent photograph and proof of residence.

d. No further documentation is necessary for proof of residence where the document of identity submitted also gives the proof of current residence.

e. In case of NRI proposals Passport along with employer’s certificate (if applicable) as identity proof and proof of residence for either of the residences i.e. in India or abroad is satisfactory.
f. Collection of officially valid documents (as indicated but not limited to in the Annexure II of AML policy of the Corporation) in respect of juridical persons to ensure identification & verification of their legal status. Additional documents pertaining to individuals shall be collected to establish identity and legal status through various documents to be collected in support of -

The name, legal form, proof of existence
Powers that regulate and bind the juridical persons
Address of the registered office/main place of business
All the documents collected in lieu of KYC (identification, residence, income proofs etc.) shall form part of the Proposal and Policy as KYC documents. The same shall be verified and certified by authorized official as well as by the proponent/s. The EDMS image of the respective Policy shall include all the KYC documents as submitted by the Policyholder.

h. Whenever e-KYC services of the Unique Identification Authority of India (UIDAI) are availed for KYC verification (which is acceptable subject to specific and express consent of the customer to access his/her data through UIDAI system), all the certification requirements shall be deemed to have been complied with. The e- KYC should be based on biometric (finger/iris) authentication as the primary mode and secondly with One Time Password (OTP).

ii. Customer Due Diligence KYC process shall be conducted as per the Procedural guidelines of the Corporation as revised/amended from time to time.

a. Politically Exposed Persons (PEP)

Laying down appropriate on-going risk management procedures for identifying and applying a high degree of due diligence measures to PEP’s (Politically Exposed Persons) (as specified in the AML/CFT Master Circular issued by Reserve Bank of India from time to time), close relatives of PEP, policies where PEP is the ultimate Beneficial Owner. The proposals of PEP shall be underwritten at Underwriting & Reinsurance Department, Central Office. Under ongoing KYC process suitable due diligence measures as per Procedural Guidelines of the Corporation shall be exercised in case policyholder or beneficial owner subsequently becomes PEP.

b. KYC norms as per procedural and operational guidelines of the Corporation will be applicable to Term Life Insurance Policies w.e.f. 01.01.2011 hitherto exempt from AML/CFT requirements.

(IRDAI Circular ref: IRDA/F&I/CIR/AML/180/11/2010 dated 12.11.2010)
c. Reliance on Third Party KYC

Third party KYC of the customer may be relied upon, if the third party is regulated, supervised or monitored for and has measures in place for compliance with customer due diligence and record keeping in line with the requirements and obligations under the Act.

Detailed instructions shall be laid down in the Procedural Guidelines of the Corporation.

d. Enhanced Due Diligence (EDD)
In cases which appear complex, unusually large, or have unusual patterns of transactions or do not have apparent or lawful purpose, enhanced due diligence should be carried out.

i) Enhanced Due Diligence measures e.g. documenting income proofs, review of proposal by a senior official of the Corporation (Moral Hazard Report), commensuration of customers` source of funds with the assessed risk of the customer, etc. should be carried out where the risks of money laundering and terrorist financing is higher.

ii) Conducting enhanced due diligence is not to be limited to merely documenting income proofs. It would mean having measures and procedures which are more rigorous and robust than normal KYC. These measures should be commensurate to the risk. The following enhanced due diligence measures are to be carried out in case of Higher Risk individuals.

More frequent review of the customers’ profile/transactions from publicly available sources or otherwise the rank of Divisional Manager.

commensurate with the assessed risk of customer and product profile which may include:
i) Conducting independent enquiries on the details collected/provided by the customer where required,
ii) Consulting a credible database, public or other, etc.

e. Simplified Due Diligence

Simplified or regular measures as per the procedural guidelines of the Corporation may be applied to cases of ‘Low Risk” customers taking into consideration overall risks of money laundering and terrorist financing.

f. KYC on Ongoing Basis:
Besides verification of identity of the customers at the proposal stage, KYC should be carried out at the claims payout stage and at top up remittances and ensured that they are consistent with the customer`s known profile.
Any change in the customer’s recorded profile that comes to the notice of officials/staff and which is inconsistent with the normal and expected activity of the customer should be noted for further ongoing KYC processes. If it is found suspicious the same should be notified to the higher office for further action.
iii. New Business Practices/Developments:
Special attention is to be paid to money laundering threats arising from-

Development of new products
New business practices including new delivery mechanisms
Use of new or developing technologies for both new and pre-
existing products
In case of non face to face business introduced through the above methods, precautionary measures as per the procedural guidelines of the Corporation and enhanced due diligence is to be exercised, based on risk profile of the customer and products to prevent their misuse from money laundering perspective. Risk Profiling and Risk Assessment of the Customer

For proper risk assessment of the customers and to evolve suitable monitoring mechanism, a risk matrix has to be applied as per procedural and operational guidelines of the Corporation along with the relevant Circulars issued from time to time.

a. Customer profile shall be segmented into low and high risk categories.

(i) Individuals and entities whose identities and sources of income can be easily identified and transactions in whose policies by and large conform to the known profile may be categorized as low Risk. For example, salaried employees,

Govt. Deptts./Bodies, Govt. Companies/Regulators/Statutory Authorities, people belonging to lower economic strata.

(ii) High Risks groups would include Non-Residents, HNIs, Trusts, Charities, NGOs and Organizations who receive donations, Companies with close family share holding or beneficial ownership, firms with sleeping partners, PEPs and persons with dubious reputations will be subject to Enhanced Due Diligence.
b. Products shall be segmented into risk categories (Annexure V )

c. The high risk proposals shall be applied stringent underwriting procedures to ensure appropriate level of due diligence keeping in view proposer’s sources of income.

d. Risk categorization and assessment shall not be disclosed to the customers.

e. The Corporation shall carry out assessment to identify, assess and take effective measures to mitigate its money laundering and terrorist financing risk, severally and together for customers, countries or geographic areas and products, services, transactions or delivery channels that are consistent with the national risk assessment duly notified by the Central Government. ( to be informed by IRDAI soon after such notification ).

f.The risk assessment shall be documented and kept up to date. All the relevant risk factors shall be considered before determining the level of overall risk and appropriate level and the type of mitigation measures to be applied as laid down in Underwriting Procedures, Rules and Instructions of the Corporation as revised from time to time. The risk assessment shall be made available to the Competent Authorities and self regulating bodies as and when required.

Unlawful Activities (Prevention) Act, 1967 Legislation in India to deal with the implementation of the United Nations Security Council (UNSC) Resolutions, takes form of the Unlawful Activities (Prevention) Act (UAPA), 1967. UAPA, amended in 2008 now covers various UNSC Resolutions, including UNSC 1267 and UNSC 1373 which require member countries inter alia, to take action against certain terrorists and terrorist organizations; take measures to combat international terrorism; etc.

Corporation will incorporate the list of individuals and entities subject to UN sanction measures under UNSC Resolutions (hereinafter referred to as ‘designated individuals/entities’) as updated from time to time in the eFront End Application Package (eFEAP) as circulated by the Life Insurance Council.

a. Identification of such designated individuals/entities as policyholder

b. In case any matching records are identified and verified by the concerned office, it is imperative that all such information should reach Central Office (Internal Audit) without any delay. All the previous policies held by the designated individuals/ entities must beidentified with help of the CADW for consolidation. The match shall be reported to the concerned authorities as laid down in the Circular Ref: IRDAI/SDD/GDL/CIR/175/09/2015 dated 28.09.2015.

c. In case of “freezing of an Insurance Contract/Policy” no further transactions shall be permitted (financial or otherwise) against the specific policy/policies in question as detailed in Annexure IV.

d. Contract will not be entered into with a customer whose identity matches with any person with known criminal background or with banned entities and those reported to have links with terrorists or terrorist organizations; which is in confirmation with Clause 3.1.5 (iii) of IRDAI Circular ref: IRDAI/SDD/GDL/CIR/175/09/2015 dated 28.09.2015

e. It is required to conduct enhanced due diligence while taking insurance risk exposure to individuals/entities connected with the countries identified by Financial Action Task Force (FATF) having deficiencies in their Anti Money Laundering/ Counter Financing of Terrorism (AML/CFT) regime.

Policies emanating from countries identified as deficient in AML/CFT regime

(i) Enhanced Due Diligence shall be conducted while taking insurance risk exposure to individuals/entities connected with countries identified by FATF as having deficiencies in their AML/CFT regime.
(ii) Enhanced Due Diligence shall be applied on countries considered as high risk from terrorist financing or money laundering perspective based on Corporation’s applicable Underwriting rules as issued from time to time, prior experience, transaction history or any other factors.

Sources of Funds

Customer’s source of funds, his estimated net worth etc., shall be documented properly; income proofs as in Annexure II shall be obtained, to establish his need for insurance cover.
Proposal form should be accompanied by Questionnaires /declarations on sources of fund, and details of bank accounts as per Corporation’s financial underwriting norms. Large single premiums and cash transactions above Rs. 50000/- should be backed by appropriate documentation, to establish source of funds. (Documentation for source of fund is not required in revival/remittance of more than one instalment after commencement of policy.)

Monitoring and Reporting of Cash Transactions:
AML guidelines envisage that the premiums are paid out of clearly identifiable sources of funds. Collecting Units should pay special attention to all unusually large transactions which have no apparent reason. In cash transactions following guidelines are to be strictly complied with:

a. Remittances towards Premium/Proposal/policy deposits/policy loan repayments / interest beyond Rs 50000/- per transaction are permitted subject to customer quoting PAN. If the customer does not have PAN, Form 60 shall be obtained as prescribed under the provisions of Income tax Rules and as laid down under Circular EDA/ZDB/1000 dated 18.01.2016.

b. For integrally related transactions, premium amount greater than Rs. 50,000 in a calendar month shall be examined more closely for possible angles of money laundering. This limit will apply at an aggregate level considering all the roles of a single person/entity as a proposer or life assured or assignee.

c. All cash transactions of value more than Rs. 10 lakhs; all series of internally connected cash transactions aggregating to Rs 10 lakhs in a calendar month shall be reported to Financial Intelligence Unit-IND by 15th of next succeeding month in prescribed Cash Transaction Report (CTR) format.

d. Splitting of insurance policies or issuing multiple policies to one or more entities facilitating individuals to defeat the spirit of the AML/CFT guidelines shall be avoided.

Reporting of Counterfeit Currency/Forged Bank Notes (CCR)

Rule 3(1) (C) of PMLA Rules (hereinafter referred to as Rules)obligates reporting of all cash transaction where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security or a document has taken place facilitating the transactions. Such transactions shall be reported to FIU-India by the 15th day of the succeeding month.

Suspicious Transactions

The suspicious transactions which do not look reasonable will be reported to FIU - IND (Financial Intelligence Unit - India) set up by the Government of India within 7 days of identification of transactions. Such reports and supporting documents are to be preserved for 5 years.
Bottom up reporting shall be an essential part of suspicious transactions reporting process. Moreover, attempted transactions if found suspicious, (whether or not made in cash) irrespective of the monetary value involved should be promptly reported to the Principal Compliance Officer.
Higher due diligence and vigilance shall be employed in cases where there is suspicion of money laundering or terrorist financing or where any factors indicated high risk; AML checks as laid down under Red Flag indicators shall be carried out to ensure no vulnerable cases go undetected. An illustrative list of Suspicious Transactions/Red Flag indicators is mentioned in Annexure VI. Suspicious Transaction Report shall be filed with FIU-India in case of reservations.

All the concerned officers and staff (permanent or temporary) are prohibited from disclosing the fact that a Suspicious Transaction report or related information of a policy holder/prospect is being reported or provided to FIU-IND.
Verification at the time of Payouts

a. All payments to policyholders or the nominee or bonafide beneficiary should be made through account payee cheque, electronic methods such as ECS, NACH,NEFT,RTGS etc. as approved by Reserve Bank of India from time to time.
b. No payment should be allowed to third party except as provided in contract or in case of superannuation/gratuity accumulations and payments to legal heirs/nominees in case of death benefits.

All payments shall be made after due verification of the bonafide beneficiary.
( i ) All free look cancellations especially in cases of policy holders indulging in free look cancellation on more than one occasion should be reported.
(ii) Assignment of policies is ordinarily not allowed to a third party (except where the assignment is to Banks/Fls/Capital Market intermediaries regulated by IRDAI/RBI/SEBI). Any deviation where suspicion of money laundering or terrorist financing arises, AML/CFT checks will have to be carried out on such assignments and STR should be filed with FIU -IND, if necessary.

Record keeping PMLA Rules 2005 requires maintaining records of Cash/Suspicious transactions/Counterfeit currency reports submitted to FIU-IND as well as those relating to the verification

All the customer identification data, account files and other records related with policy are to be preserved for at least a period of 5 years after business relationship is over. (IRDAI

Circular 28.09.2015)

ref: IRDAI/SDD/GDL/CIR/175/09/2015 dated Destruction of old records are to be carried as per the instructions issued by our Corporate Planning Department vide their guidelines dt.18.11.2000.

The records shall be maintained in electronic form and/or physical form

Services of third party service providers if availed; the appropriate records shall be maintained as per instructions of IRDAI.

11 Sharing of Information
Information on customers shall be shared with organizations such as Income Tax Authorities, Law Enforcement Authorities and such other authorities as required under law or by the order of the Court.

A “Designated Director” (as defined under the PML Rules 2015
The Head of the Department of Internal Audit at Central Office shall be designated as Principal Compliance Officer under the PMLA Act and Rules who shall ensure compliance with the obligations imposed under Chapter IV of the Act and the Rules Principal Compliance officer and the staff assisting him in the execution of AML guidelines shall have timely access to customer identification data, other KYC information and records.

The contact details of the Designated Director and the Principal Compliance Officer for AML/CFT guidelines shall be communicated to IRDAI and FIU-IND within 7 days in case of any change.

12 Responsibility on behalf of the Agents:

Services of defaulting agents who expose the Corporation to AML/CFT related risks on multiple occasions should be terminated and the details reported to IRDAI for further action.

2.2 Appointment of Designated Director and a Principal Compliance Officer

2.3. Recruitment and Training of employees/agents

A comprehensive training policy with dedicated training modules for employees and Agents with regard to AML program on the basis of IRDAI guidelines shall be regularly updated.
Training of our employees/agents should be an ongoing process; various training programs are to be developed for sensitizing employees/Agents towards AML/KYC norms.

The Agents and the employees shall be trained in various training centres regularly.

A. Training Policy for Agents:
Agents Training is taken care by Marketing Department. Following points shall be considered for inclusion in training module:

a. Agents, Corporate Agents & other intermediaries (hereinafter collectively referred to as Agents) have an actual interface with policyholders. Agents must be fully trained to recognise and avoid transactions where they suspect money laundering activities. Instruction Manuals on the procedures for selling insurance products, customer identification, record-keeping, acceptance and processing of insurance proposals, issue of insurance policies shall be set out.

Dedicated sessions on KYC/AML measures should be part of training program of Agents on continuous basis.
Proper maintenance of records of trained Agents under AML program.

Training Policy for Employees:

Dedicated session on KYC/AML measures should be part of
every training program of MDC.
Training module for Class III, Class II, Class I upto AO’s shall be taken care by ZTCs.
Special training session shall be envisaged for frontline staff of NB, Sales and Cashiers.
Division wise /Branch wise special programs for AML to all employees
Proper maintenance of records of trained employees in various categories under AML Program.
Induction training to new employees with a general appreciation of the background to money laundering.

Internal Audit/Inspection

The Inspection Departments shall verify level of compliance of PMLA Act, AML/KYC guidelines of IRDAI and internal procedures during their course of Inspection of all offices.
The Internal Audit Department shall verify the monetary/financial aspects of the IRDAI’s AML/CFT guidelines.

The Audit and the Inspection departments shall give suggestions for strengthening the system. The Audit & Inspection Departments will periodically apprise CMC/HODs of progress in the implementation of the Policy.

Miscellaneous

Adequate screening procedures shall be employed in the selection process of Agents and employees.
The employees who contravene PML Act, 2002, IRDAI guidelines, procedures / circulars issued by Corporation shall be liable to disciplinary action under Life Insurance Corporation of India (Staff) Regulations, 1960, as amended from time to time.

Agents who contravene PML Act, 2002, IRDAI guidelines, procedures / circulars issued by Corporation shall be liable to disciplinary action as per LIC of India (Agents) Rules, 1973 as amended from time to time.

This policy shall be reviewed periodically and amended on the basis of experience, circulars and guidelines issued by various regulators from time to time.

The Departments concerned, may issue further Procedural Guidelines in conformity with this AML Policy and ensure compliance of the Provisions.

Copies of such Procedural Guidelines must necessarily be endorsed to the Principal Compliance Officer (Executive Director (Audit)).Departments will further submit a Monthly Status Report on the progress/deviations observed to the Principal Compliance Officer.

A Half Yearly Certificate of Compliance of this AML Policy will be put up to the Risk Management committee and the Board by the Designated Principal Compliance Officer.

Annexure I

Procedures for determination of Beneficial Ownership:

ln order to have a uniform approach across the financial sector, the following procedures for determination of Beneficial Ownership as mentioned in Rule 9(3) of PML Rules, 2005 as amended from time to time are prescribed:
(a) Where the client is a company, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control through other means.

Explanation. - For the purpose of this sub-clause-

1. "Controlling ownership interest" means ownership of or entitlement to more than twenty-five percent of shares or capital or profits of the company;
2. "Control" shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements;

(b)Where the client is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of/entitlement to more than fifteen percent of capital or profits of the partnership;

(c)Where the client is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has ownership of or entitlement to more than fifteen percent of the property or capital or profits of such association or body of individuals;

(d)Where no natural person is identified under (a) or (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official;

(e)Where the client is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with fifteen percent or more interest in the trust and any

other natural person exercising ultimate effective control over the trust through a chain of control or ownership; and

(f)Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

Any other `officially valid document’ that shall be notified by the Central Government, in consultation with the Regulator from time to time.

Annexure III Income Proofs

Standard Income proofs:

Income tax assessment orders/Income Tax Returns
Employer’s Certificate
Audited Company accounts
Audited firm accounts and Partnership Deed
Non-standard Income Proofs:

Chartered Accountant’s Certificate
Agricultural Income Certificate
Agricultural-land details & Income assessments
Bank Cash-flows statements, Pass-book

Annexure IV Implementation of Section 51A of UAPA:

To implement the said section an order reference F. No. 17015/10/2002- lS-Vl dated 27th August, 2009 has been issued by the Government of India. The salient aspects of the order with particular reference to insurance sector are detailed in the following paras:

(1) Procedure for freezing of Insurance Policies of `Designated Individual/Entities`

ln case any matching records are identified, the procedure required to be adopted is as follows:
a. Life lnsurers shall immediately and in any case within 24 hours from the time of identifying a match, inform full particulars of the insurance policies held by such a customer on their books to the Joint Secretary (lS-l), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail id: isis@nic.in.

b. The Life lnsurers shall also send a copy of the communication mentioned in

(1) (a) above to the UAPA Nodal Officer of the State/UT where the account is held, IRDAI and FIU-lND.

c. ln case, the match of any of the customers with the particulars of designated individuals/entities is beyond doubt, Life lnsurers would prevent designated individuals/entities from conducting any transactions, under intimation to the Joint Secretary (lS-l), Ministry of Home Affairs at Fax no. 011-23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessarily be conveyed on e-mail id: isis@nic.in
d. Life lnsurers shall file a Suspicious Transaction Report (STR) with FIU-IND in respect of the insurance policies covered by paragraph (1) (a) above, carried through or attempted, in the prescribed format.

e. On receipt of the particulars of suspected designated individual/entities lS-l Division of MHA would cause a verification to be conducted by the State Police and/or the Central Agencies so as to ensure that the individuals/entities identified by the Life lnsurers are the ones listed as designated individuals/entities and the insurance policies, reported by Life lnsurers are held by the designated individuals/entities.

f. ln case, the results of the verification indicate that the insurance policies are owned by or are held for the benefit of the designated individuals/entities, an order to freeze these insurance policies under section 5lA of the UAPA would be issued within 24 hours of such verification and conveyed electronically to the concerned office of Life lnsurer under intimation to IRDAI and FIU-lND.
g. The said order shall take place without prior notice to the designated individuals/entities. 'Freezing of insurance contracts' would require not-permitting any transaction (financial or otherwise), against the specific contract in question.

(2) Procedure for unfreezing of insurance policies of individuals/entities inadvertently affected by the freezing mechanism, upon verification that the individual entity is not a designated individual/entity
a. Any individual or entity, if they have evidence to prove that the insurance policies, owned/held by them has been inadvertently frozen, shall move an application giving the requisite evidence, in writing, to the concerned Life lnsurers.
b. Life lnsurers shall inform and forward a copy of the application together with full details of the insurance policies inadvertently frozen as given by any individual or entity, to the Nodal Officer of lS-l Division of MHA within two working days.
c. The Joint Secretary (lS-l), MHA, the Nodal Officer for lS-l Division of MHA shall cause such verification as may be required on the basis of the evidence furnished by the individual/entity and if he is satisfied, he shall pass an order, within 15 working days, unfreezing the insurance policies owned/held by such applicant, under intimation to the concerned Life lnsurer. However, if it is not possible for any reason to pass an Order unfreezing the assets within 15 working days, the Nodal Officer of lS-l Division shall inform the applicant.

(3) lmplementation of requests received from Foreign Countries under U.N. Security Council Resolution 1373 of 2001

a. U.N. Security Council Resolution 1373 obligates countries to freeze without delay the funds or other assets of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities, including funds or other assets, derived or generated from property owned or controlled, directly or indirectly, by such persons and associated persons and entities.

b. To give effect to the requests of foreign countries under U.N.Security Council Resolution 1373, the Ministry of External Affairs shall examine the requests made by the foreign countries and forward it electronically, with their comments, to the UAPA Nodal Officer for lS-l Division for freezing of funds or other assets
c. The UAPA Nodal Officer of lS-l Division of MHA, shall cause the request to be examined, within 5 working days, so as to satisfy itself that on the basis of applicable legal principles, the requested designation is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee is a terrorist, one who finances terrorism or a terrorist organization, and upon his satisfaction, request would be electronically forwarded to the Nodal Officer in lRDAl. The proposed designee, as mentioned above would be treated as designated individuals/entities.
d. Upon receipt of the request by Nodal Officer in IRDAI from the UAPA Nodal Officer of lS-l Division, the list would be forwarded to Life lnsurers and the procedure as enumerated at paragraphs (1) on freezing of insurance policies shall be followed.
e. The freezing orders shall take place without prior notice to the designated persons involved.
(4) IRDAI would communicate all Orders under section 51A of UAPA relating to insurance policies, to all the Life insurers after receipt of the same from lS-l Division of MHA.

Annexure V Vulnerable Features/Products:
1. Single premium products-where the money is invested in lump sum and surrendered at the earliest opportunity;
2. Free look cancellations-especially the big ticket cases;

Annexure VI

Illustrative list of Suspicious Transactions

Customer insisting on anonymity, reluctance to provide identifying information, or providing minimal, seemingly fictitious information
Cash based suspicious transactions for payment of premium and top ups over and above Rs. 5 lakh per person per month
Frequent free look cancellations by customers;
Assignments to unrelated parties without valid consideration;
Request for purchase of Insurance policy considered beyond one’s
apparent need.
Policy from a place where the policyholder does not reside or is
employed.
Unusual termination of policies and refunds.
Frequent requests for change in addresses
Borrowing the maximum amount under an insurance policy soon after
buying it.
Inflated or totally fraudulent claims e.g. by arson or other means
causing a fraudulent claim to be made to recover part of the invested
illegitimate funds.
Overpayment of premiums with a request for refund of the amount
overpaid.
Multiple DD each of denomination for less than Rs. 50000/- for
payment of premium and top ups over and above Rs. 2 lakh per
person per month
Media reports about a customer
Information sought by Enforcement agencies