After completing this module, participants will be able: To identify and list the importance of anti-money laundering (AML) and counter financing of terrorism (CFT), code of ethics and conduct (COE) , replacement of policies (ROP) and Fraud Awareness and agency conduct. To observe and follow the guidelines of AML/CFT, COE, ROP and Fraud Awareness and agency conduct. To appreciate the existence of AML/CFT, COE, ROP and Fraud Awareness and agency conduct in upholding the professionalism of Life Planning Advisor.
Disclaimer This power-point presentation is purely a training tool for the internal agency training programmes of Great Eastern Life Assurance (Malaysia) Berhad. All or any part of the contents of this presentation shall not be used directly or indirectly for soliciting insurance business, policyholder services and/or facilitating any other form of communications with any external party whatsoever. This information is correct as at 29112010
COURSE OBJECTIVES
To create awareness amongst agents on anti-money laundering (AML) and counter financing of terrorism (CFT) and appreciate its importance To understand the relevant regulations and laws governing AML & CFT
TODAYS OVERVIEW
1. 2. 3. 4. 5. 6. 7. Definition BNM Guidelines & Governing Regulations AML/CFT Framework Reporting Structure Suspicious Cases - Modus Operandi Other Developments On AML Q&A
b.
b.
2nd
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17)
Anti-Corruption Act, BAFIA Act, Betting Act, Child Act, Common Gaming House Act, Companies Act, Copyright Act, Corrosive & Explosive Substances & Offence Weapons Act, Customs Act, Dangerous Drugs Act, Dangerous Drugs (Forfeiture of Property) Act, Development Financial Institutions Act, Explosive Act, Firearms Act, Futures Industry Act, Insurance Act, Internal Security Act,
You are expected to recognize the major offences that are likely to generate illegal proceeds, such as drug trafficking, theft, corruption etc.
However you are not expected to be sure that a serious offence has been committed or whether or not something is actually an unlawful activity for the purpose of AMLA.
MONEY LAUNDERERS
Typical Characteristics - Money Launderers are: * * * * Focused on Intent Innovative Rich Prepared to lose some money
Layering (whitewashing) series of conversions or creating complex layer to distant from the source to disguise the audit trial and provide anonymity, eg: borrowing against insurance policies, premature termination of policies and liquidating investment linked policies
Integration returning the criminally derived wealth into legitimate funds, eg: funds reinvested into assets, real estate, stocks, business ventures
LAYERING Conversion / movements to separate the illicit proceeds from their source * To disguise audit trail * Provide an appearance of legitimacy * Provide anonymity
GOVERNING GUIDELINES
Purpose : To ensure that insurance industry is not a weak link in money laundering. Current Governing Guidelines on AML for insurance industry includes : 1) The Anti-Money Laundering Act (AMLA) 2001 - effective on January 15, 2002. UPW/GP1 : Standard Guidelines on Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) dated 3 November 2006 UPW/GP1[2] amended February 2009 UPW/GP1 [2]: Sectoral Guidelines 2 for Insurance and Takaful Industries dated 3 November 2006 amended February 2009
2)
3)
Note: UPW/GP1 & UPW/GP1[2] Issued in accordance with the AMLA 2001 and FATFs 40 Recommendations & 9 Special Recommendations for Implementation wef 15/11/06
GOVERNING GUIDELINES
Previous Guidelines On AML By BNM Which Had Been Superceded By The Issuance Of The Standard & Sectoral Guidelines: 1) Guidelines on Anti-Money Laundering Measures for the Insurance Industry JPI/GPI 27 - issued on April 25, 2001 2) JPI 20/2004 AMLA 2001 Verification Procedures issued on August 21, 2004 BNM is the Competent Authority appointed for the purpose of AMLA 2001 and Great Eastern is a Reporting Institution BNM established the National Co-ordination Committee - comprising of 12 other government agencies - to combat money laundering. They include the MACC, Inland Revenue Board, AGs Chambers, Royal Malaysian Police, Security Commissions, SSM, LOFSA, Anti Narcotics , Ministry Of Finance, Ministry Of Foreign Affairs, Ministry of Home Affairs and Royal Malaysian Customs
TIPPING OFF
Section 35 a. Any person who knows or has reason to suspect that an investigating officer is acting or proposing to act, in connection with an investigation which is being, or is about to be, conducted under or for the purposes of this Act or any subsidiary legislation made under it and discloses to any other person information of any other matter which is likely to prejudice that investigation or proposed investigation; or Any person who knows or has reason to suspect that a disclosure has been made to an investigation officer under this Act and discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following the disclosure. Upon conviction, a person shall be liable to a fine not exceeding RM 1 million or to imprisonment not exceeding one year or both.
b.
BNMs GUIDELINES
Minimum training requirement of Key Staff include : New employees Frontline staff (including agents) Administrative/operations supervisors, managers (including senior management) and Board of Directors Compliance officers
Substantiate by/ Verify Against : NRIC for Malaysians/permanent residents Passport for foreigners Where there is doubt, produce other supporting identification documents (with photograph) issued by an official authority A copy of the verified documents should be retained by the insurer for insurance policy with premium> RM50k p.a. (Currently being reviewed to comply with Group AML Policy retain all verified documents regardless of amount)
Failing to comply, a fine not exceeding RM 1.0 mil or 1 years imprisonment would be imposed.
Agents are encouraged to inform the Company to update the customers records when there are changes in their employment or nature of business.
WORKFLOW
Yes
----------------------------------------------------------------------------------------------------------------------------Regulatory & Supervisory Authority (RSA) * BNM * Securities Commission 12. Notify RI To Unfreese Immediately 6. Circulate Order 13. Unfreeze Funds 10. RSA To Verify Identity
No
11. Correct ?
* Labuan Yes Offshore 13. Inform MOIS 12. Account Financial (Name & Remains Services Amount) Frozen Authority -----------------------------------------------------------------------------------------------------------------------------Ministry Of Internal Security (MOIS) 4. Issue Order 5. Forward Order 14. Take Note & Forward To MOFA
-----------------------------------------------------------------------------------------------------------------------------Ministry Of Foreign Affairs (MOFA) 2. Received List 3. Circulate List 15. MOFA To Forward Details To UN
YOUR RESPONSIBILITY
All Agents, department officers and staff, in particular, the front line staff, should be alert and note any unusual proposal/transaction that is inconsistent with the clients financial flow or transaction pattern.
KEY OPERATING DEPTS, AGENTS & OTHER INTERMEDIARIES Head Office or Branch Offices
Sent to:
COMPLIANCE SECRETARIAT
Mail: Compliance Department, Level 7, Menara Great Eastern, No. 303, Jalan Ampang, 50450 KL.
BBB Bank
Cash Withdrawals
Insurance Company
Through Through multiple multiple intermediaries intermediaries in various in various locations locations
Layering
IL top-up
Insurance Company
Purchase single premium IL policy and early surrender within 1 month Purchase policy under company
Transfer
Investment
Layering
Integration
Purchase assets with overdraft and term loans In his or his family Members names
12 Investors 12 Investors
XYZ Co.
Buying and selling of shares without change of change of BO
AAA Company
MMM Company
Owned by
ZZZ Company
Placement #1
Transfer to
Mr. T
Involved in Payments for his bets
Withdrawn
Sold to
Ms. A
Sales Rep in boutique
Steal
Bank A/C
Placement
2.
3. 4.
7.
8.
9.
Evaluation technique is based on detailed questionnaire and a subsequent on-site visit conducted by a team of at least 3 selected experts from the legal, financial and law enforcement fields of other APG members.
3)
4) 5)
Partially compliant (PC): The country has taken some substantive action and complies with some of the essential criteria. Non-compliant (NC): Not applicable (NA): There are major shortcomings, with a large majority of the essential criteria not being met. A requirement or part of a requirement does not apply, due to the structural, legal or institutional features of a country e.g. a particular type of financial institution does not exist in that country.
9 Compliant 24 Largely Compliant 15 Partially Compliant 1 Non-Compliant Non-compliance is in relation to the Special
Recommendation 9 on cash courier - the assessors were of the view that the declaration imposed by M'sia for cross border cash courier is more for exchange control purposes rather than for AML.
Malaysia has obtained 67% (33 out of 49) compliant of 70% (Compliant & Largely Compliant) and above.
30
28 24
N O eo m dtos o fR me a n . c n i
25 20 15 10 5 14 12
Compliant
15 13 10 9 4 1 2 15
Need to be more vigilant Know my customer well Report to Compliance Secretariat if any of my customers are suspected to be involved in money laundering activities
All rights reserved. No part of this publication may be produced ,translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying and recording without the prior written permission of the copyright the developer and owner.
2. 3. 4.
5.
General sales principles Explanation of the contract Disclosure of underwriting information Accounts and financial aspects
The Agents SHALL NOT: i. Influence the proposer and make it clear that all the answers or statements are the clients own responsibility.
ii.
All rights reserved. No part of this publication may be produced ,translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying and recording without the prior written permission of the copyright the developer and owner.
Replacement of Policies:
This session will cover the following:
What is ROP & Frequently Asked Questions on ROP? A flow chart of the ROP appeal process Brief background and circulars issued on ROP
Replacement of Policies:
What is Replacement of policies (ROP)? Any transaction involving the purchase of life insurance policy is construed as a replacement of policy if within 12 months before or after a new policy is effected, an existing life insurance policy has been replaced on the same life assured as per Category A or Category B.
Replacement of Policies:
CONSIDERED AS ROP WHEN: Transactions on old policy with same Life Assured Category A: Surrender/Full Withdrawal (ILP) Partial surrender (exclude ILP) Lapse, APL lapsed Category B Extended Tem Assurance (ETA) Reduced Paid Up (RPU) 1st APL raised with no repayment within 6 months Reduce premium
Replacement of Policies:
At Customer Service..
12 months backwards from CS transaction date
CONSIDERED AS ROP WHEN: Transactions on old policy with same Life Assured Category A Surrender/Full Withdrawal (ILP) Partial surrender (exclude ILP) Lapse, APL lapsed Category B Extended Tem Assurance (ETA) Reduced Paid Up (RPU) 1st APL raised with no repayment within 6 months Reduce premium
Replacement of Policies:
What happens when a Policy is identified as under ROP Category A ? Basic Commission and Overriding Commission will not be paid on the new policy when an existing policy is replaced under Category A.
NOTE: 1. As long as the ROP is classified as ROP Cat A, Basic Commission & OR will not be paid even if the RP Letter is signed and returned to NB / CS. 2. All Basic Commission & all OR will be not paid I.e the Agent will get zero commission and any paid will be clawed back
Replacement of Policies:
What happens when a Policy is identified as under ROP Category B ? If the RP letter is not signed and returned: At NB stage: the policy will not be made inforce At CSD stage: the commission and OR paid will be clawed back and the agent will get zero commission and OR on all subsequent premiums received.
NOTE: For Category B ROP, All commissions & OR not paid previously will be paid back once the RP letter is signed and returned to CS.
Replacement of Policies:
What are the types of policies affected by ROP? 1. Traditional policies (Whole Life & Endowment) 2. Term policies (Regular Premium) 3. Investment Link policies (Regular Premium) Note: Please refer to our circular dated 19th October 2009 on ROP for Smart Invest Premier Insurance
Replacement of Policies:
What are the types of policies NOT affected by ROP? Single Premium Traditional Policies Single Premium Investment Link policies Medical policies (e.g Great Medicare) Note:
Medical policies are not affected by ROP when they replace a non Medical policy. However ROMP applies where a medical policy replaces another medical policy- pl refer to our circular dated 10th July 2009 Ref CAD/0742/JULY2009 titled REPLACEMENT OF MEDICAL POLICIES (ROMP)
Ans: The life assured must be the same for the main plan. What will happen once a policy is identified as ROP? Ans: A Replacement of policy (RP) letter will be issued by NB or CS where the policyholder is required to sign and return the letter within 14 days. What will happen if the RP letter is not signed and returned to NB Dept? Ans: The NB will not be made in force
Ans: For category B:The commission and OR will be clawed back and no subsequent commission and OR will be paid on any further premiums received on the NB policy. NOTE: For category A: The commission & OR will be clawed back even if the RP letter is signed and returned. What will happen if a policy holder who receives the RP letter opts for option 2 in the RP letter where he does not want to continue with the new policy but retain his existing policy? Ans: Then GELM will consider allowing the policyholder to revive / reinstate the existing policy and will refund all premiums paid on the NB and claw back the respective commissions/OR/production etc on the new policy once the policy is revived / reinstated.
What will happen if the policyholder who receives the RP letter opts for option 3 in the RP letter where he is willing to reinstate the lapsed policy or is willing to refund back the surrender cheque plus interest to reinstate back his surrendered policy and also to retain his new policy. Ans: The new business will be made inforce and the commission and OR will be held back until the existing policy is reinstated. When this occurs, the agent concerned has to inform Agency Admin to credit back the commission and OR.
If either the existing or the NB is a Keyman policy, will the NB be considered as a ROP? Ans: No Is policy loan considered as a replacement of policy transaction? Ans: No When an existing investment link policy is fully withdrawn, will the NB secured within 12 months be considered as ROP? Ans: Yes
If the policyholder cancels the policy within the cooling-off period, and subsequently decides to buy the same policy again within 12 months, will the NB submitted be considered as a ROP? Ans: No, the NB will not be considered as a ROP When the installment premium paid is not reduced but the sum assured is reduced for an investment link policy, will a NB secured within 12 months be considered as a ROP? Ans: No
What happens when a NB is submitted and an existing policy with another Insurer has a Category A or B transaction? Ans: No action will be taken on the NB unless there is a complain from the other insurer /agent through LIAM. What happens if a NB is submitted and an existing policy under OAC (Life Asia System) has a category A or B transaction? Ans: The NB will fall under ROP and the respective RP letters will be sent out and action will be taken accordingly.
What will happen if an existing policy that has lapsed resulting in a NB on the same life to be penalised, is reinstated / revived? Ans: The Agent for the New Policy must inform Agency Admin through their Business Development Staff and the full basic commission and OR clawed back will be paid and all monies clawed back will be paid back. Can an agent submit a consent letter / RP letter together with a new proposal? Ans: This will only be accepted for replacements of external policies i.e. issued by other Insurers. All replacement of internal polices (i.e. polices issued by GE inclusive of OAC policies) must wait for our RP letter which will be issued together with our SQL.
How will an agent know that his NB has been identified as a ROP? Ans: At NB stage: The Agent for the NB will be given a copy of the SQL, & also a RP letter & an ROP Notification letter from Agency Administration Dept. At CS stage: The agent will get a copy of the RP letter & an ROP Notification letter from Agency Administration Dept
Ans: The Agents copy of the RP letter will be sent to him through his GSMs box in his respective Branch How will the policyholder get their RP letter? Ans: The policyholders RP letter will be posted to his last known address by CS and at NB stage, letter is passed through the agent Will the Company accept it if the signed and returned copy of the RP letter is returned by the Agent? Ans: Yes
Can an agent get a copy of the RP letter if the original copy has been misplaced? Ans: Yes, he can get a copy from his Branch. The Branch administrator can get it from EDMS as the copy of RP letter is not available in ePartner. When will commission be affected if a new policy is identified as replaced? Ans: a) When the policy is replaced under Category A b) When the policy is replaced under Category B but the RP letter sent out by CSD is not signed and returned to the Company.
Ans: All basic commission and overriding commission paid on the new policy will be fully clawed back and no commission and OR will be paid on any subsequent premiums received on the policy. However, the following will still be paid upon meeting the respective requirements: Production bonus PR bonus & Deferred benefit
Will premiums received on a policy identified as ROP and penalised with zero commission and OR be considered for maintenance, promotion, supremacy and AOM? Ans: Yes Can an Agent submit a request for exemption from being penalised under the BNMs ROP under Category A ? Ans: Yes Is there a need to submit ROP Appeals for Category B ROP? Ans: No as commission & OR will be credited back automatically once the RP letter is signed and returned to CS (Customer Service Dept at your Branch and CS informs Agency Admin.
ePartner
4. ROLE OF AGENT Discusses the findings from the comparison worksheet with the policyholder and ensures the P/H understands the positive and negative features of the new and existing polices and gets the signed acknowledgement from the policyholder. Obtains contact details and time for interview.. Passes the signed comparison worksheet, ROP application form and the Justification Form to their respective BDMs who will pass them to Agency Admin NOTE: BDM / AAD to reject application with incomplete documents required
CS calls 3 times
Thereafter will inform agent to revert with contact details within 2 weeks. Appeal will be closed if no response.
9. AGENCY ADMIN Prepares worksheet. Checks & verifies findings for presentation to Appeal committee
10. APPEAL COMMITTEE: for recommendation 11. CEO/Appointed Actuary: for decision
12. AGENCY ADMIN Replies to respective agents, advises RM/BDM of decision made Takes action on all appeal policies not exempted and credits back all commissions on appeals approved and where commissions had been clawed back.
END
COURSE OBJECTIVES To create awareness amongst agents on Company Fraud Awareness Policy & Agency conduct and appreciate its importance
Training Agenda 1. Definition of Fraud 2. Types of Fraud 3. Handling of Agency Fraud 4. Guidelines & Procedures governing Fraud investigation Process 5. Our Responsibilities 6. Common Agency Misconduct & its implications
Definition of Fraud
What is Fraud? An act or omission intended to gain dishonest or unlawful advantage for the party committing the fraud or for other related parties .From GELM Fraud Control Policy
Types of Fraud
Types of Fraud
Internal Fraud Intermediary/Agency Fraud Policyholder & Claims Fraud External Fraud For the purpose of this policy, intermediary includes tied agents, financial advisory firms and insurance brokers (where applicable)
Fraud allegations (commonly known as agency misconduct cases) are investigated by an independent unit within GELM The Market Conduct Enforcement (MCE) unit. The MCE unit (previously known as the Centralized Investigation Unit (CIU) was set up in year 2003 and is now part of the Risk Management & Compliance Department.
Cases that are typically investigated by Market Conduct Enforcement (MCE) unit originate from the following sources: Complaints from policyholders/agents/external parties Feedback from policyholders via Replacement of Policy confirmation Feedback from policyholders via Claims application Referral from line departments Enquiry from authorities, e.g. BNM, LIAM
The following are the categories of major misconduct (fraudulent in nature) that will be investigated by Market Conduct Enforcement (MCE) unit : Misappropriation of premium Forgery Misrepresentation of facts Others (e.g., misuse of Easipay Form, use of pre-signed form, non-disclosure, use of unauthorized sales materials, professionalism & integrity)
Guidelines & Procedures governing Fraud PEP Year 1 M2 (eModule) investigation Process
Guidelines & Procedures governing Fraud PEP Year 1 M2 (eModule) investigation Process
D O N O T
DO NOT share customers information with external parties. DO NOT under any circumstances, forge signatures in
order to expedite the process.
DO NOT use unauthorised sales materials. DO NOT commit or abet in any fraud activities
DO explain clearly to the customers on guaranteed and nonguaranteed features of any insurance plan.
127
Misappropriation of Premium
Examples
1. Policyholder pays premium in cash to the agent but the cash payment was not remitted to the Company. 2. Policyholders cheque was used to pay 3rd party or agents own policy.
Signature Forgery
Examples
1. Forging on a form or document pertaining to a life assured who may be the proposer, an existing policyholder, a fictitious / bogus person, irrespective of whether consent was obtained from the proposer or the existing policyholder. Forging on other documents such as application for policy loans, surrender discharge voucher, with or without the consent of the policyholder.
2.
We received a complaint from a policyholder alleging that some one had forged her signature on Surrender Discharge Voucher.
Our Company had received a request for surrender of policy and had proceeded to process the request. When the policyholder received the surrender value, she was dissatisfied with the amount and had claimed that she was entitled to full refund as policy was still under free look period. That was when she had discovered that her signature was forged on the Surrender Discharge Voucher.
Our investigation revealed that the surrender voucher was both signed and witnessed by
the agents Immediate Officer (IO). The IO reverted claiming that his agent was new and both the agent and policyholder were not in town, the servicing agent had authorized the IO to proceed with the cancellation of the policy. To quicken the process, the IO had then forged the policyholders signature on the surrender voucher. The IO has misunderstood the refund and had submitted the request for surrender, not realizing that the request could be done under the Free Look period.
The consequence of the IOs action had led to termination of his Agency Agreement due to signature forgery, even though the IO had not benefited money wise from his actions.
Misrepresentation of Facts
Examples
1. Telling policyholder that an investment-linked policy has guaranteed returns with no risks. Informing policyholder that Company will reimburse their claims before the Company assesses the claims.
2.
All rights reserved. No part of this publication may be produced ,translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying and recording without the prior written permission of the copyright the developer and owner.
All rights reserved. No part of this publication may be produced, translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying and recording without the prior written permission of the copyright the developer and owner.
Tutu Foong
03-4259 8686
ChanChyeMun@lifeisgreat.com.my Franco Wong Wai Keong
03-4259 8693
TutuFoong@lifeisgreat.com.my
03-4259 8673
FrancoWongWaiKeong@lifeisgreat.com.my