Rules for Combating Money Laundering

issued by

the Egyptian Insurance Supervisory Authority.

According to law No. 80 of 2002, for combating money laundering,

specific commitments imposed upon all competent authorities and

financial institutions including all bodies that transact insurance and

reinsurance activities, private insurance funds as well as insurance

brokerage business, whereas article 7 of the above mentioned law

stipulated that competent authorities should be designated to ensure an

effective implementation by the regulated financial institutions in

bringing up systems that would ensure full compliance with the law

provisions, including notification of money laundering suspected

transactions.

The above - mentioned commitments are to ensure the execution and

implementation of measures aiming at improving and activating the

existing practice already adopted in this respect in the insurance sector.

First: receiving and implementing Proposal Forms:

1) Companies transacting direct insurance business.

All direct insurance companies transacting business in the Egyptian insurance

market should adopt an adequate system and enforcing policies concerning

the identification of its client, his or her representative, and their legal

soundness as well as the real beneficiaries whether for corporate bodies or

natural persons, aiming at the following:

· To detect soundness of Proposal Forms ensuring the application of

principle “ Know Your Client “. Companies should pay special attention to

the following points:

· They should not undertake Proposal Forms for customers or clients

who fail to provide satisfactory evidence of their identity or who have

fictitious names.

· Proposal Forms submitted to the insurance company should be signed

by the customer and should be carefully reviewed and verified according

to the reliable information comprised in original submitted documents.

· In the case of obtaining Proposal Form through other methods such as

fax or Internet, the necessary procedures shall be taken to ascertain the

validity of these Forms and ensure the fulfillment of the necessary legal

conditions relevant thereto.

· Proposal Forms should include detailed information concerning

customers and their representatives such as the full name of the customer

and personal signature, date and place of birth, nationality, identification

no. , present and actual residence address, comprising the mail number,

phone and fax numbers, e-mail, profession, work address, current account

from which the premium is paid (if any).

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These Proposal Forms should include also the relationship between the

customer and the beneficiary and any other material information the company

finds that it is essential to be added.

Concerning corporate bodies, the Proposal Forms should include the

following:

- Legal situation and the nature of the business.

- The authorized person who is in charge to sign on behalf of the

body corporate.

- Names and addresses of the partners in the Partnership

Companies.

- In case of stock companies, the names and addresses of the

shareholders who own more than 10 % of the company’s capital.

· Inspection of the original documents has to be done by the concerned

officer, with retaining a signed copy confirming that it is a copy of the

original documents. He must ensure the accurateness of the submitted

data according to the following:

A – The individuals and their representatives

- The official document for identity (National card number – Identification

card – Passport – Military card).

- Concerning individuals who have immature mental capacity such as

minors, documents related to their legal representatives have to be

fulfilled.

-Documents of authorized persons approved by the customer to act on

his behalf, and their related data.

Back to Top

B – The corporate bodies:

- Documents of establishment proving the legal existence of the corporate

body and its structure by obtaining proof of incorporation and his

transacting activities specially the Commercial Register and Taxation

card.

- Documents verifying that any person purporting to act on behalf of the

corporate body is an authorized person.

- Concerning non-profit entities, the documents of establishment and the

nature of their activities should be fulfilled.

· Develop a clear customer acceptance policies and procedures.

Particular care should be given to the following customers, according to the

available information to the company on the time of processing the proposal

forms and determining the level of management to deal with such clients.

Examples of these customers include:

- Customers who pay the insurance premiums from their bank accounts

kept in countries do not have regulatory systems concerning combating

money laundry.

- Customers who transact regular activities related to precious goods such

as jewelry and gold, cars and masterpieces, dealing in real estates and

financing rent, gambling clubs and cinema industry.

- Customers who regularly travel abroad to countries which are famous by

agriculturing and trading drugs.

- Customers who does not care about the insurance rates or commission or

other matters materially related to the insurance cover.

Back to Top

· Special consideration should be given during the procedure of

accepting the Proposal Forms to the following:

- Existence of an insurable interest between the customer and the

beneficiaries. Particular care should be given to large insurance

transactions and insurance activities, which have no apparent economic or

visible lawful purpose.

- Ensuring that accurate technical aspects and procedures have been

implemented in respect of underwriting and setting insurance rates.

· Special attention should be paid to the following insurance

transactions:

A – Personal and capital YELLOWemption policies:

- Unit linked life insurance policies.

- Single premium life policies specially large premium.

- Annuities.

- YELLOWemption policies.

- Suspected cases specially early liquidation for life policies.

B – Property insurance:

- Engineering insurance policies.

- Marine hull and cargo insurance policies.

- Aviation insurance policies.

· All insurance and reinsurance companies should review and update

the submitted documents and information included in the Proposal Forms,

on a regular basis every three years as a maximum or when need may

arise.

Back to Top

2) Reinsurance activities:

- Companies which transact reinsurance activities in the market should ensure

that direct insurance companies are committed to the underwriting technical

aspects and the application of “ Know Your Customer ” principle in respect of

inward business whether from local market or from abroad.

- Due diligence should be given by reinsurers to investigate the documents of

establishment proving the sound legal situation of the ceding companies and

the strength of their financial position.

3 ) Insurance intermediaries:

Insurance and reinsurance companies should ensure the following:

- Issuing specific commitments concerning prohibiting the Insurance from

transacting suspicious insurance activities including money laundry.

- If the insurance or reinsurance activities are transacted in the local market

through intermediaries, this should not be done unless they are

registeYELLOW in the Egyptian Insurance Supervisory Authority.

- Not accepting payment for insurance premium through the intermediary’s

personal account.

- Investigation should be adopted, concerning the insurance intermediaries,

in case of settling the insurance premium by themselves.

Back to Top

Second: Reporting suspicious transactions involved

money laundering.

1 – Every insurance and reinsurance company should precise

one of the senior management as “ the responsible manager ’

liable for reporting to FIU at the Central Bank suspicious

transactions that involve money laundering and a person

mandating him during his absence. The unit should be

notified in case of change anyone of them.

2 – Every insurance and reinsurance company should provide

the responsible manager with needed facilities and resources

to enable him assuming his responsibilities in an independent

manner ensuring the confidentiality of receivable information

and procedures taken by him. He has the right to inspect all

documents, records and information which enable him to

achieve his duties.

3 – The responsible manager should examine the unusual

transactions whether they are available directly through the

company’s system or reported from the company employees.

These suspected transactions should be accompanied by all

reasons causing the suspicion or received from any other

entities.

4 – If it become apparent to the responsible manager that

there is no any suspicion concerning these transactions, he is

liable to take the decision of retaining them, with a

clarification about the reasons supporting his decision.

5 – If the responsible manager suspects any transactions

involving money laundering, he should report it to the FIU on

the prescribed unit form with all information and documents

related to these transactions.

6 – The notification to the FIU should include the detailed

reasons and supporting points to which the institution relied

upon its decision that these transactions contained a

suspicion about money laundering.

7 – It is prohibited to disclose any of the procedures related to

reporting suspicious transactions contained money

laundering or their related information to the customer or his

representative or the beneficiaries or any authorities other

than competent entities responsible for enforcing the

provisions of the law of combating money laundry.

Back to Top

8 – Every responsible manager should prepare a quarterly

report about his activities and his assessment for the systems

and procedures of combating money laundering in the

company. Also a report should be undertaken concerning

unusual and suspected transactions and procedures and

suggestions in this respect.

These reports are to be submitted to the Company’s Board of

Directors for reviewing, applying notices, and the Board’s

decision in this respect.

Third: Keeping documents and records

All insurance and reinsurance companies should keep the documents

and records, which they are requiYELLOW to maintain, including

customer identification, insurance and reinsurance contracts, for at

least five years after the policies and reinsurance contracts are

terminated.

They should also periodically update the information. Such

information should be put at the disposal of the juridical

authorities and other law enforcement entities concerned with

combating money laundry whenever requiYELLOW.

Insurance and reinsurance companies should retain copies of

notifications, data and documents related to the suspicious

transactions into files and keep them for at least 5 years or

until issuing a final court decision about the transaction

whichever the longer.

Back to Top Fourth: Training

Insurance and reinsurance companies should develop and implement

periodic and ongoing training programs with particular emphasis on

those employees who are working in underwriting and claims

departments with the aim of increasing their efficiency in detecting

suspicious transactions and their commitments to the measures of

money laundry combating. Companies should pay special attention to

include these programs: description and nature of money laundry,

explanation of underlying legal obligation, reporting requirements.

Registers should be kept concerning all training programs which are

implemented during a period of time not less than 5 years. These

programs must include names of trainees, their qualifications, and the

competent entity which provide these programs either inside the

country or abroad.

Fifth: Internal control systems

Every insurance and reinsurance company should have adequate

internal control systems with the aim of applying supervision rules in a

proper way and reviewing these systems periodically in order to

discover any weaknesses in those systems. At the same time ensure

adequate commitment of applying them and take the necessary

measures to avoid these weaknesses. The Egyptian Insurance

Supervisory Authority should be notified with these systems taking into

consideration the following points:

- The ability of these systems to discover the operations which do not

comply with the volume or nature of customer’s activities or which are

transacted with suspected customers.

- The responsible manager must pay special attention to each unusual

transaction with amount exceeding certain limit specified by the

company’s management.

- Establishing an internal operation system which helps the acquainting

of customers in a better way and make sure of accuracy of the essential

data regarding them, this process must be done through an accurate

database easily accessible.

- Carrying on periodical quarterly examination to make sure of the

process of updating the data and documents concerning insurance

business. Also special attention should be given to the process of

claims settlement, surveyors experts reports, payments of insurance

premiums and monetary transfers, which take place by modern

technological methods.

- The insurance company must not appoint the same surveyor who

carried out the survey during the underwriting stage to handle the same

risk during the process of settling claims in the event of the risk has

been materialized.

- The insurance company must issue rules regarding surveyors and

loss adjusters concerning the risk of fraudulent action with the

customer or using misleading ways either in the process of risk

assessment of the concerned risk or in the process of settling the

claim.

Back to Top

Rules for combating money laundry

issued by

the Egyptian Insurance Supervisory Authority.

According to law No. 80 of 2002, for combating money laundering, specific

commitments imposed upon all competent authorities and financial institutions

including all bodies that transact insurance and reinsurance activities, private

insurance funds as well as insurance brokerage business, whereas article 7 of

the above mentioned law stipulated that competent authorities should be

designated to ensure an effective implementation by the regulated financial

institutions in bringing up systems that would ensure full compliance with the

law provisions, including notification of money laundering suspected

transactions.

The above - mentioned commitments are to ensure the execution and

implementation of measures aiming at improving and activating the existing

practice already adopted in this respect in the insurance sector.

First: receiving and implementing Proposal Forms:

1) Companies transacting direct insurance business.

All direct insurance companies transacting business in the Egyptian insurance

market should adopt an adequate system and enforcing policies concerning

the identification of its client, his or her representative, and their legal

soundness as well as the real beneficiaries whether for corporate bodies or

natural persons, aiming at the following:

· To detect soundness of Proposal Forms ensuring the application of

principle “ Know Your Client “. Companies should pay special attention to

the following points:

· They should not undertake Proposal Forms for customers or clients

who fail to provide satisfactory evidence of their identity or who have

fictitious names.

· Proposal Forms submitted to the insurance company should be signed

by the customer and should be carefully reviewed and verified according

to the reliable information comprised in original submitted documents.

· In the case of obtaining Proposal Form through other methods such as

fax or Internet, the necessary procedures shall be taken to ascertain the

validity of these Forms and ensure the fulfillment of the necessary legal

conditions relevant thereto.

· Proposal Forms should include detailed information concerning

customers and their representatives such as the full name of the customer

and personal signature, date and place of birth, nationality, identification

no. , present and actual residence address, comprising the mail number,

phone and fax numbers, e-mail, profession, work address, current account

from which the premium is paid (if any).

Back to Top

These Proposal Forms should include also the relationship between the

customer and the beneficiary and any other material information the company

finds that it is essential to be added.

Concerning corporate bodies, the Proposal Forms should include the

following:

- Legal situation and the nature of the business.

- The authorized person who is in charge to sign on behalf of the

body corporate.

- Names and addresses of the partners in the Partnership

Companies.

- In case of stock companies, the names and addresses of the

shareholders who own more than 10 % of the company’s capital.

· Inspection of the original documents has to be done by the concerned

officer, with retaining a signed copy confirming that it is a copy of the

original documents. He must ensure the accurateness of the submitted

data according to the following:

A – The individuals and their representatives

- The official document for identity (National card number – Identification

card – Passport – Military card).

- Concerning individuals who have immature mental capacity such as

minors, documents related to their legal representatives have to be

fulfilled.

-Documents of authorized persons approved by the customer to act on

his behalf, and their related data.

Back to TopB – The corporate bodies:

- Documents of establishment proving the legal existence of the corporate

body and its structure by obtaining proof of incorporation and his

transacting activities specially the Commercial Register and Taxation

card.

- Documents verifying that any person purporting to act on behalf of the

corporate body is an authorized person.

- Concerning non-profit entities, the documents of establishment and the

nature of their activities should be fulfilled.

· Develop a clear customer acceptance policies and procedures.

Particular care should be given to the following customers, according to the

available information to the company on the time of processing the proposal

forms and determining the level of management to deal with such clients.

Examples of these customers include:

- Customers who pay the insurance premiums from their bank accounts

kept in countries do not have regulatory systems concerning combating

money laundry.

- Customers who transact regular activities related to precious goods such

as jewelry and gold, cars and masterpieces, dealing in real estates and

financing rent, gambling clubs and cinema industry.

- Customers who regularly travel abroad to countries which are famous by

agriculturing and trading drugs.

- Customers who does not care about the insurance rates or commission or

other matters materially related to the insurance cover.

Back to Top· Special consideration should be given during the procedure of

accepting the Proposal Forms to the following:

- Existence of an insurable interest between the customer and the

beneficiaries. Particular care should be given to large insurance

transactions and insurance activities, which have no apparent economic or

visible lawful purpose.

- Ensuring that accurate technical aspects and procedures have been

implemented in respect of underwriting and setting insurance rates.

· Special attention should be paid to the following insurance

transactions:

A – Personal and capital YELLOWemption policies:

- Unit linked life insurance policies.

- Single premium life policies specially large premium.

- Annuities.

- YELLOWemption policies.

- Suspected cases specially early liquidation for life policies.

B – Property insurance:

- Engineering insurance policies.

- Marine hull and cargo insurance policies.

- Aviation insurance policies.

· All insurance and reinsurance companies should review and update

the submitted documents and information included in the Proposal Forms,

on a regular basis every three years as a maximum or when need may

arise.

Back to Top

2) Reinsurance activities:

- Companies which transact reinsurance activities in the market should ensure

that direct insurance companies are committed to the underwriting technical

aspects and the application of “ Know Your Customer ” principle in respect of

inward business whether from local market or from abroad.

- Due diligence should be given by reinsurers to investigate the documents of

establishment proving the sound legal situation of the ceding companies and

the strength of their financial position.

3 ) Insurance intermediaries:

Insurance and reinsurance companies should ensure the following:

- Issuing specific commitments concerning prohibiting the Insurance from

transacting suspicious insurance activities including money laundry.

- If the insurance or reinsurance activities are transacted in the local market

through intermediaries, this should not be done unless they are

registeYELLOW in the Egyptian Insurance Supervisory Authority.

- Not accepting payment for insurance premium through the intermediary’s

personal account.

- Investigation should be adopted, concerning the insurance intermediaries,

in case of settling the insurance premium by themselves.

Back to TopSecond: Reporting suspicious transactions involved

money laundering.

1 – Every insurance and reinsurance company should precise

one of the senior management as “ the responsible manager ’

liable for reporting to FIU at the Central Bank suspicious

transactions that involve money laundering and a person

mandating him during his absence. The unit should be

notified in case of change anyone of them.

2 – Every insurance and reinsurance company should provide

the responsible manager with needed facilities and resources

to enable him assuming his responsibilities in an independent

manner ensuring the confidentiality of receivable information

and procedures taken by him. He has the right to inspect all

documents, records and information which enable him to

achieve his duties.

3 – The responsible manager should examine the unusual

transactions whether they are available directly through the

company’s system or reported from the company employees.

These suspected transactions should be accompanied by all

reasons causing the suspicion or received from any other

entities.

4 – If it become apparent to the responsible manager that

there is no any suspicion concerning these transactions, he is

liable to take the decision of retaining them, with a

clarification about the reasons supporting his decision.

5 – If the responsible manager suspects any transactions

involving money laundering, he should report it to the FIU on

the prescribed unit form with all information and documents

related to these transactions.

6 – The notification to the FIU should include the detailed

reasons and supporting points to which the institution relied

upon its decision that these transactions contained a

suspicion about money laundering.

7 – It is prohibited to disclose any of the procedures related to

reporting suspicious transactions contained money

laundering or their related information to the customer or his

representative or the beneficiaries or any authorities other

than competent entities responsible for enforcing the

provisions of the law of combating money laundry.

8 – Every responsible manager should prepare a quarterly

report about his activities and his assessment for the systems

and procedures of combating money laundering in the

company. Also a report should be undertaken concerning

unusual and suspected transactions and procedures and

suggestions in this respect.

These reports are to be submitted to the Company’s Board of

Directors for reviewing, applying notices, and the Board’s

decision in this respect.

Back to Top

The ratified reports should be sent to the Egyptian Insurance

Supervisory Authority.

Third: Keeping documents and records

All insurance and reinsurance companies should keep the documents

and records, which they are requiYELLOW to maintain, including

customer identification, insurance and reinsurance contracts, for at

least five years after the policies and reinsurance contracts are

terminated.

They should also periodically update the information. Such

information should be put at the disposal of the juridical

authorities and other law enforcement entities concerned with

combating money laundry whenever requiYELLOW.

Insurance and reinsurance companies should retain copies of

notifications, data and documents related to the suspicious

transactions into files and keep them for at least 5 years or

until issuing a final court decision about the transaction

whichever the longer.

Fourth: Training

Insurance and reinsurance companies should develop and implement

periodic and ongoing training programs with particular emphasis on

those employees who are working in underwriting and claims

departments with the aim of increasing their efficiency in detecting

suspicious transactions and their commitments to the measures of

money laundry combating. Companies should pay special attention to

include these programs: description and nature of money laundry,

explanation of underlying legal obligation, reporting requirements.

Registers should be kept concerning all training programs which are

implemented during a period of time not less than 5 years. These

programs must include names of trainees, their qualifications, and the

competent entity which provide these programs either inside the

country or abroad.

Fifth: Internal control systems

Every insurance and reinsurance company should have adequate

internal control systems with the aim of applying supervision rules in a

proper way and reviewing these systems periodically in order to

discover any weaknesses in those systems. At the same time ensure

adequate commitment of applying them and take the necessary

measures to avoid these weaknesses. The Egyptian Insurance

Supervisory Authority should be notified with these systems taking into

consideration the following points:

- The ability of these systems to discover the operations which do not

comply with the volume or nature of customer’s activities or which are

transacted with suspected customers.

- The responsible manager must pay special attention to each unusual

transaction with amount exceeding certain limit specified by the

company’s management.

- Establishing an internal operation system which helps the acquainting

of customers in a better way and make sure of accuracy of the essential

data regarding them, this process must be done through an accurate

database easily accessible.

- Carrying on periodical quarterly examination to make sure of the

process of updating the data and documents concerning insurance

business. Also special attention should be given to the process of

claims settlement, surveyors experts reports, payments of insurance

premiums and monetary transfers, which take place by modern

technological methods.

- The insurance company must not appoint the same surveyor who

carried out the survey during the underwriting stage to handle the same

risk during the process of settling claims in the event of the risk has

been materialized.

- The insurance company must issue rules regarding surveyors and

loss adjusters concerning the risk of fraudulent action with the

customer or using misleading ways either in the process of risk

assessment of the concerned risk or in the process of settling the

claim.