New Delhi: Insurance sector regulator IRDA has asked Birla Sun Life Insurance Company to adopt effective procedure to know source of funds by policyholders and not merely rely on documentation for premium payment of over Rs 1 lakh per annum.
"The Authority ... Advises Birla Sun Life Insurance Company to lay adequate emphasis on effective procedures for strengthening the compliance norms of the AML (anti-money laundering) and all subsequent regulatory instructions issued on this matter," IRDA said in an order to the company.
The Insurance Regulatory and Development Authority (IRDA) said it noticed that the company was relying on the declared income of the life assured or the policyholder along with the bank statements.
It added that effective systems were not in place for carrying out detailed due diligence in the instances where premium payment crossed the threshold limit of Rs one lakh per annum which came under violation of AML guidelines.
"In few instances where high value premium was involved it was observed that measures were not taken to establish the source of funds as envisaged in guidelines for Anti Money Laundering (AML)."
As per IRDA guidelines, the life insurers are required to take appropriate measures including conducting independent enquires where required and consulting a credible database, as part of their due diligence measures to establish source of funds than mere limiting to documentation of income proofs.