An address by Farinu, E. Olusegun, Acting Director Inspectorate Directorate, National Insurance Commission at the 2012 Anti-Money Laundering and Combating Financing of Terrorism

 Address by Farinu, E. Olusegun, Acting Director Inspectorate Directorate, National Insurance Commission at the 2012 Anti-Money Laundering and Combating Financing of Terrorism Workshop for Compliance & Internal Audit Officers of Insurance & Reinsurance Companies and CEOs of Insurance Broking Firms, Held in NECA House, Ikeja - Lagos, on 3rd – 4th May, 2012.

Protocols

It is a great pleasure and honour for me to welcome you to the 2012 Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Workshop for Insurance Institutions. This workshop would not have been possible without the commitment, support and assistance of our Management, especially the honourable Commissioner for Insurance.

I thank in particular, our host the National Employers’ Consultative Association (NECA) for their wonderful hospitality.

The idea of this workshop was discussed during a meeting between the Commission and World Bank IMF Technical Assistant Team in February 2012. The main object of the workshop is to share our experiences over the years and specifically to educate the industry players on the AML/CFT Return workbook which is being designed for AML/CFT on-site and off-site examination activities.  At the end of this workshop, a pilot AML/CFT Returns will be forwarded to all Life & Composite Insurance Companies for online completion and submission.  The data obtained, shall be used to assess and rate individual companies and produce initial AML/CFT risk mapping of the industry here in Nigeria.

I sincerely appreciate the efforts that all insurance institutions are putting in to implement National and international AML/CFT measures; and I thank you all for your participation in this workshop. Nevertheless, I would like to use this medium to call on all Insurance Institutions in Nigeria to put in place necessary infrastructure for compliance with anti-money laundering regulations.

During the course of this two (2) day workshop, we shall discuss areas for further collaboration with you.

I would not forget to thank our Distinguished participants, and Resource Persons for their support.

 For the past 3 decades, the international community has recognized the debilitating effects and deleterious impact of the twin problems of money laundering and terrorist financing and has taken steps, at both National and global level, to combat these scourges. Many multilateral instruments and best practices have been promulgated and adopted, but the Financial Action Task Force (FATF) 40+9 Recommendations remain by far, the most comprehensive and acceptable Standards against these phenomena.

Specifically, the FATF Recommendation 15 requires the mandatory implementation of some measures among them are:

(i)        Customer Due Diligence (CDD), record retention, detection of unusual and suspicious transactions and the reporting obligation;

(ii)       Develop appropriate compliance management arrangements e.g. at a minimum, the designation of an AML/CFT Compliance Officer at the management level;

(iii)      The AML/CFT Compliance Officer and other appropriate staff should have timely access to customer identification data and other CDD information, transaction records, and other relevant information; and

(iv)      Financial institutions should be required to maintain an adequately resourced and independent audit function to test compliance (including sample testing) with these procedures, policies and controls;

(v)       Financial institutions should be required to establish ongoing employee training to ensure that employees are kept informed of new developments, such as ML/FT techniques, methods and trends; and that there is a clear explanation of all aspects of AML/CFT laws and obligations, and in particular, requirements concerning CDD and suspicious transactions reporting; and

The FATF Recommendations on Money Laundering, including the 9 Special Recommendations on the Financing of terrorism, although they do not represent a binding international convention, they have been recognized, endorsed or adopted by many countries and jurisdictions who have made a political commitment to combat money laundering and terrorist financing by implementing the FATF standards. The standards set out the principles of action by governments and competent authorities, and allow countries a measure of flexibility in implementing these principles according to their unique circumstances and constitutional frameworks.

In order to ensure the uniform implementation of these standards, the FATF has also created a robust structure in the form of a network of its members and other FATF Style Regional Bodies, including GIABA.

Governments alone cannot successfully prevent and control money laundering without the support of the civil society, especially the private sector. Those who developed the standards against money laundering recognized the role of industry and therefore included specific obligations and responsibilities for the industry. Financial institutions according to the FATF Standards I referred to earlier are at the fore front of the fight against financially motivated crimes. As criminals seek to disguise the true ownership and movement of their illegal proceeds, the insurance sector is ultimately vulnerable to abuse for the purposes of laundering the proceeds from crime. This is why it is imperative to build capacity within the Insurance sector to prevent money laundering and deny wrong doers the benefits of their misconduct. It is in this context that this workshop is relevant and timely!

This is coming at a time when there is an increasing demand on financial and non-financial institutions to do more in terms of meeting their obligations under the international prudential guidelines for financial institutions and the AML/CFT standards.

Among the objectives of the workshop is to enhance capacity and build expertise of Insurance compliance officers in particular, Internal Auditors and other practitioners in the industry, who are involved in efforts and actions to prevent money laundering in their respective institutions.

In addition to aforementioned objectives, this workshop would also provide opportunities for networking among practitioners and policy initiators to share experiences and better understand our various difficulties and determine how we can continue to work together to build a robust Insurance Sector AML/CFT regime. I trust you would find this workshop very interesting!

Conclusion

In concluding, ladies and gentlemen, I would like to reiterate NAICOM’s strong commitment to assist all institutions to improve their systems. We would continue to forge partnerships with all stakeholders, especially, Insurance institutions that should be in vanguard of the crusade against money laundering and terrorist financing in this sector. We shall sustain cooperation with our sister organizations at home and abroad to share best practices and promote greater cooperation in our collective efforts.

 On this note, I would conclude by thanking you once more and wishing participants fruitful deliberations.