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Terrorism: When customers become high risk clients


Terrorism and money laundering are global phenomena which have set nations on edge, while the battle to nip them in the bud rages on.

In the Nigerian financial sector, there are series of efforts geared towards combating terrorism and money laundering. And since the insurance industry is a crucial arm of the financial sector, it has mapped out and continues to review its own programmes in the fight against these vices. Consequently, the insurance sector has long joined the Anti-Money Laundering and Combating Financing of Terrorism AML/CFT regime.

Police Anti-bomb officers work near the engine of the Jeep used by the suicide bomber that ravaged ThisDay Newspapers in Abuja on April 26, 2012. AFP PHOTO
Police Anti-bomb officers work near the engine of the Jeep used by the suicide bomber that ravaged ThisDay Newspapers in Abuja on April 26, 2012. AFP PHOTO

As part of efforts geared towards the above, insurance companies now view individuals and entities whose source of wealth cannot be easily identified as high risk clients.

Such high risk clients include: non resident high net-worth individuals, trusts, charities, NGOs, as well as organisations receiving donations. Others are companies with close family shareholding or beneficial ownership, Politically Exposed Persons (PEPs) as well as those with dubious reputation as per available public information requiring higher due diligence.

Recall that the Financial Action Task Force (FATF) has asked Nigeria to complete the enactment of laws that adequately criminalise money laundering and terrorist financing.

According to FATF, Politically Exposed Persons are individuals who are or have been entrusted with prominent public functions both in Nigeria and abroad and those associated with them. They include heads of state or governments, governors, local government chairmen, senior politicians, senior government officials, as well as judicial or military or Para-military officials from the rank of major or its equivalent. Others are senior executives of state owned corporations, important political party officials, family members or close associates of PEP’s and members of the royal families.

Accordingly, insurance companies now obtain senior management approval before relationship is established with such clients, as well as approval of senior management vital for continued relation. Insurers now take steps to establish the source of wealth of PEPs, as well as conduct enhanced due diligence or monitoring of the relationship and in the event of abnormal discovery, flag the contract and contact NAICOM/NFIU.

All insurance companies now have AML/CFT program which at a minimum include policyholder identification; suspicious and currency transaction reporting, internal policies and procedures, appointment of compliance officer, training of employees/agents, record preservation, ongoing training as well as internal control/audit.

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