The Hindu Business Line : Regulator turns down insurers' plea

Turning down the plea of insurance companies, the Insurance Regulatory and Development Authority (IRDA) said it couldn't ease the norms pertaining to clients' identity as prescribed under the Prevention of Money Laundering Act, 2002 (PMLA).

The insurance regulator had on March 31 advised the insurers that as per the provisions of the PMLA, coming into effect from July 1, they should maintain a record of all the transactions of the value of more than Rs 10 lakh or its equivalent in foreign currency.

The PML Act makes it mandatory on the part of insurers to verify and maintain the record of identity of clients including a copy of recent photograph and current address in case of individual clients and further details such as nature of business and financial status in the case of institutional clients.

Finding it difficult to adhere to the guidelines in totality, the insurance companies have represented their concerns pertaining to documentation for identity and proof of residence. They raised doubts regarding the documents to be collected as valid identity/residence proof.

Responding to this, the IRDA has said the list of documents provided in Annexure-I of the guidelines for establishment of identity and residence proof may be deemed as illustrative. However, while providing this flexibility to insurers on satisfactory documentation for this purpose, the regulator made it clear that there should be no dilution of the requirement.

The IRDA has advised the insurers not to accept mechanically the documents that are easily obtained in any name like birth certificates, an identity card issued by the employer of the applicant even if bearing a photograph, credit cards, business cards, driving licenses (not bearing a photograph), provisional driving licenses and student union card.

Mandatory photograph

The regulator had taken up with the Financial Intelligence Unit-India (FIU-IND) the issue of doing away with the mandatory collection of photograph in case of individual clients. However, the FIU-IND has made it clear to the IRDA that the requirement of submitting a copy of the recent photograph by an individual client is justified and cannot be relaxed, according to the IRDA Member, Mr C.R. Muralidharan.

While intimating the FIU-IND response on the issue to insurers, he said the IRDA would take up the issue of mandatory photograph once again with FIU-IND in view of the representation received from the industry. However, the regulator has advised the insurers to comply with the PMLA Rules until the issues were resolved by FIU-IND.

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