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Source : http://economictimes.indiatimes.com
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last activity : 07 06 2010 20:18:04 +0000
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The domestic insurance industry is grappling with two major policy regulations which came into effect within a short span of each other.
The Unit-Linked Insurance Policy (Ulip) guidelines came into effect from July 1, ’06, while the Anti Money Laundering (AML) guidelines were introduced from August 1, ’06. AML revolves around Know Your Customer (KYC) norms and these guidelines will apply to all proposals logged from August 1, ’06.
The norms are stringent and every policy proposal form has to be backed by numerous documents. In case of pension schemes — which earlier did not require the investor to attach income tax returns for any sum invested — under the new regulatory norms, the investor is required to submit a KYC form, along with his/her photograph, I-T returns for the past three years for annual premiums and top-ups adding up to more than Rs 1 lakh.
In addition, proof of the address, where the investor has been residing for more than three years, has to be submitted. In case there has been a change in address, then justification for the same has to be furnished.
It is also required that only the proposer makes premium payments; payments by third parties are not permissible. Premiums above Rs 50,000 cannot be paid in cash. Also, a relationship between the nominee and the policyholder has to be established. The new norms are applicable to endowment policies as well.
Money laundering is the process by which illegally-acquired funds are moved through a financial system, which may involve actions such as tax evasion or false accounting, and are made to appear legal. Money laundering usually occurs in three stages — placement, layering and integration.
Placement refers to the initial source of funds derived from illegal activities. Layering is the creation of complex networks of transactions, which attempt to murk the link between the initial source of funds and the end of the laundering cycle. Integration refers to the return of funds to some other legal activities for later usage.
The Unit-Linked Insurance Policy (Ulip) guidelines came into effect from July 1, ’06, while the Anti Money Laundering (AML) guidelines were introduced from August 1, ’06. AML revolves around Know Your Customer (KYC) norms and these guidelines will apply to all proposals logged from August 1, ’06.
The norms are stringent and every policy proposal form has to be backed by numerous documents. In case of pension schemes — which earlier did not require the investor to attach income tax returns for any sum invested — under the new regulatory norms, the investor is required to submit a KYC form, along with his/her photograph, I-T returns for the past three years for annual premiums and top-ups adding up to more than Rs 1 lakh.
In addition, proof of the address, where the investor has been residing for more than three years, has to be submitted. In case there has been a change in address, then justification for the same has to be furnished.
It is also required that only the proposer makes premium payments; payments by third parties are not permissible. Premiums above Rs 50,000 cannot be paid in cash. Also, a relationship between the nominee and the policyholder has to be established. The new norms are applicable to endowment policies as well.
Money laundering is the process by which illegally-acquired funds are moved through a financial system, which may involve actions such as tax evasion or false accounting, and are made to appear legal. Money laundering usually occurs in three stages — placement, layering and integration.
Placement refers to the initial source of funds derived from illegal activities. Layering is the creation of complex networks of transactions, which attempt to murk the link between the initial source of funds and the end of the laundering cycle. Integration refers to the return of funds to some other legal activities for later usage.
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2 comments on "Insurance - changing rules of game"
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Commented by
Jyoti Rath, Sr. Associate, Barclays
| 04 03 2009 08:28:19 +0000
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Hardik Patel, Team Lead (Staffing and Recruitment), Rishabh Softwares Pvt. Ltd. / Rishi Infotech Pvt. Ltd
| 07 24 2008 14:09:30 +0000
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