{"id":7743,"date":"2022-12-02T12:36:27","date_gmt":"2022-12-02T12:36:27","guid":{"rendered":"https:\/\/signdesk.com\/in\/?p=7743"},"modified":"2025-09-17T07:32:06","modified_gmt":"2025-09-17T13:02:06","slug":"irdai-aml-master-guidelines-explained","status":"publish","type":"post","link":"https:\/\/melento.ai\/en-in\/blog\/irdai-aml-master-guidelines-explained","title":{"rendered":"Anti-Money Laundering Guidelines Explained – IRDAI AML\/CFT Guidelines"},"content":{"rendered":"

IRDAI Regulations For the Insurance Sector, 2022 – Master AML Guidelines<\/b><\/span><\/h2>\n

\"Anti<\/p>\n

The Insurance Regulatory and Development Authority of India (IRDAI) regulates the insurance industry in India. In 2013, and 2015, the IRDAI issued Master Guidelines on AML\/CFT for General and Life insurers, respectively. Several circulars were subsequently issued on the subject.<\/p>\n

On August 1, 2022, IRDAI issued a new set of regulations to safeguard the insurance industry from fraudulent financial activities like money laundering. This was brought into effect in anticipation of updating & consolidating AML\/CFT provisions in a single Master Guidelines instrument.<\/p>\n

The dedicated guidelines cover the provisions of the PML Act, rules, and other applicable norms (as amended from time to time) and are effective from 1\/11\/2022.<\/p>\n

The guidelines also lay out procedures for insurers to follow during the KYC verification process. The Video-based Identification Program or VBIP<\/a> <\/span>is encouraged by IRDAI to enable remote and secure client onboarding.<\/p>\n

The Need for Updated IRDAI KYC & AML Regulations<\/b><\/span><\/h2>\n

KYC (Know Your Customer) and AML (Anti-Money Laundering<\/a>) verification for individuals are now obligated prior to onboarding them, under IRDAI\u2019s Master Guidelines<\/span> for insurers. These onboarding rules have been imposed on all classes of general, health & life insurance businesses in India.<\/p>\n

The KYC & AML checks assist insurers in determining whether they can trust an individual with their financial services. They also assist these financial institutions in classifying their customers based on the level of risk (i.e., low, medium, & high).<\/p>\n

Key Takeaways For Insurers From the IRDAI Master Guidelines<\/b><\/span><\/h2>\n

Insurance businesses including general insurance firms, life insurance companies & health insurers can note major points pertaining to the regulations laid out in the AML\/CFT guidelines.<\/p>\n

While establishing an account-based relationship\/client-based relationship, insurers are required to follow Customer Identification Procedures and monitor their transactions on an ongoing basis.<\/p>\n

This requires them to set up a robust AML compliance program & conduct it whenever they transact with a new client\/customer.\u00a0 Insurers must create an AML\/CFT program that includes policies and procedures for dealing with ML (money laundering) & TF (terrorist financing) that reflect current legal and regulatory requirements.<\/p>\n

A successful AML compliance program must include certain key characteristics mentioned below:<\/p>\n

    \n
  1. Establishing policies & providing relevant training to keep employees up to date on AML laws<\/span><\/li>\n
  2. Performing KYC during onboarding & throughout the customer lifecycle<\/span><\/li>\n
  3. Reporting suspicious activity to regulators<\/span><\/li>\n
  4. Methodical recordkeeping that is auditable<\/span><\/li>\n
  5. Financial transaction monitoring<\/span><\/li>\n<\/ol>\n

    By incorporating these components insurers can establish an effective AML program<\/p>\n

      \n
    1. \n
        \n
      1. \n

        Employee Training & Recruitment Policies
        \n<\/b><\/h3>\n

        Insurers are required to implement adequate screening mechanisms as part of their employee recruitment\/hiring process. In addition, a continuous training program has to be enforced to ensure that all employees are adequately trained on the CFT & anti-money laundering guidelines.<\/p>\n

        Employees must be specially trained to handle problems caused by a lack of customer education. Additionally, the audit function must be properly staffed with individuals who are competent in the insurance sector\u2019s\u00a0 AML\/CFT policies & guidelines.<\/p>\n<\/li>\n

      2. \n

        Recordkeeping & Internal Audit<\/b><\/h3>\n

        On the basis of an overall risk assessment, the internal audit\/inspection departments of insurance businesses are necessitated to verify compliance with existing money laundering policies & procedures on a regular basis.<\/p>\n

        Insurers are allowed to maintain records in electronic and\/or physical form. They are also obligated to submit audit notes and compliance reports to the audit committee.<\/p>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

        KYC During Onboarding & During the Customer Lifecycle<\/b><\/span><\/h3>\n

        Given the potential risk of money launderers utilizing insurance services, insurers must now make an effort to determine the true identity of their customer. As per its Master Guidelines, IRDAI necessitates insurance providers to conduct customer KYC in the following manner:<\/p>\n

        KYC For a Juridical Person<\/b><\/span><\/h4>\n

        A juridical person is a non-human legal person who is not a single natural person but rather a legal entity recognized as a fictitious person. It includes government agencies, non-governmental organizations (NGOs), corporate entities & international organizations.<\/p>\n