South African Insurance Association

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Update on the Financial Intelligence Centre’s proposal to include short-term insurers as Accountable Institutions

Members of SAIA and the Financial Intermediaries Association (FIA) met with a delegation from the Financial Intelligence Centre (FIC) and Prudential Authority (PA) on 7 June 2018 to discuss an alternative proposal to the FIC’s proposed inclusion of short-term insurers as Accountable Institutions in terms of the FIC Act.

The FIC confirmed that the basis for the proposed inclusion, of short-term insurers as Accountable Institutions, is the information that stakeholders in the industry hold.

SAIA advised the FIC that the cost of such proposal versus the risk that the FIC seeks to mitigate should be explored and that a proportionate solution to such risk be sought. Accordingly, the SAIA proposed a risk assessment to determine the money laundering and terrorism financing risk across the short-term insurance sector including financial intermediaries.

Following a constructive discussion, the FIC agreed to a risk assessment to determine the vulnerabilities in the short-term insurance sector, including financial intermediaries.

SAIA, the FIA, PA and the FIC agreed to form a joint Task Team to commence with a money laundering / terrorism financing risk assessment of the short-term insurance industry, including financial intermediaries and underwriting managers. It was also agreed that an interim arrangement would be considered until the risk assessment is completed and alternative (final) proposals are made.

SAIA will draft a Terms of Reference for the joint Task Team and circulate it to the FIC, PA and the FIA for its respective input, particularly with reference to the scope of the assessment. 

As an interim measure, the FIC and the PA confirmed that the short-term insurance industry would be exempted as Accountable Institutions pending the outcome of the risk assessment.

For more information contact:
Easvarie Naidoo, SAIA Senior Legal Manager