Money laundering, terrorism: NAICOM bars operators on excess premium

By IAfrica
In Nigeria
Apr 3rd, 2014
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The National Insurance Commission (NAICOM) has barred operators from charging excess premium on any policy to prevent money launderers and terrorism financiers from using that window to perpetuate crime.

There have been speculations that some unscrupulous operators allow terrorist financiers and others to launder illicit funds through the industry.

Director, Nigerian Financial Intelligence Unit (NFIU), Francis Usani, said despite the training and workshops for insurance and reinsurance firms and brokers, many operators were not complying with the Anti-Money Laundering and Combat of Financing of Terrorism (AML/CFT) rules.

Usani, who spoke at an AML/CFT training for operators in Lagos, said the Unit would sanction culprits.

Consequently, NAICOM has released guidelines on rebates, commissions, refund and returned premiums.

NAICOM’s Deputy Commissioner (Technical), Mohammed Kari, in a circular titled: Circular on Commissions, Rebates and Returned Premiums to all insurance institutions in Nigeria, said: “For the avoidance of doubt and in line with Article 3(9) of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Regulation 2013, no insurer, broker or its agents shall charge or receive premiums in excess of the actual premium on an insurance policy that may result in refunding the excess amount paid or with the intent of returning the excess in any form, by cash or otherwise to the insured, its agents or any party thereafter.

“An insurance institution shall keep and maintain a register of return or refund premiums in hard copy, where transactions are to be entered on the day they are made. The register shall be presented in such a manner to include: i) the date of transaction; ii) policy number; iii) name of client; iv) Name of insurer/broker/agent; v) gross premium received with date; vi) Commission paid with date; vii) net premium; viii)excess premium returned/refunded; and ix) reasons for the return or refund premium.

“Similarly, a register of policies cancelled or reversed after the receipt of premium or credit note from the broker must be kept and maintained by an Insurer. A Broker shall also maintain a register of cancelled businesses where the premium had earlier been received, notwithstanding whether it has been remitted to the insurer or not.

“All payments for returned premium which must be approved by the chief executive officer of the Insurance company shall be made in the name of the original insured or proposer. An Insurance Institution shall submit to the Commission a monthly soft copy of the report of Returned or Refunded Premiums and cancelled/reversed businesses in 3.2 and 3.3 above by the thirrd working day of the succeeding month in the format provided herewith and a Quarterly Report in hard copy not later than 14 days from the end of each quarter. The hard copy above must be signed by the Chief Compliance Officer and Head of Internal Audit of the Insurer and the Managing Director/chief executive officer in the case of Brokers.”

The circular also added: “Where there was no incidence of returned premium in any month, the Institution shall file a “Nil Return” in accordance with Section 3.5 above.

“Any unexplained payment or where the explanation, in the opinion of the Commission, is not satisfactory, such payment shall be deemed suspicious and subject to appropriate treatment under extant laws.”

The commission said any insurance institution that fails or omits to comply with the content of this circular shall be penalised in line with relevant provisions of the Insurance Act, 2003, the NAICOM Act, 1997,

It said regulations, guidelines and such other penalties as may be prescribed by the Commission from time to time.

On the commencement of reporting, it noted that the first report as contained in 2.3, 2.4, 3.5 and 3.6 covering the quarter from April 1, to June 30, shall be submitted not later than the July 14, adding that strict compliance was required.

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