BFIU asks insurers to report cash transactions of Tk10 lakh or more

The Bangladesh Financial Intelligence Unit (BFIU) has tightened anti-money laundering and counter-terrorist financing requirements for insurance companies, making it mandatory to report cash transactions of Tk10 lakh or more in a single day.

Under a circular issued on Monday to the managing directors and chief executive officers of all insurance companies, the BFIU also prohibited policies under anonymous, fictitious or pseudonymous names and directed insurers to strengthen customer verification, transaction monitoring and suspicious activity reporting.

Insurers must submit cash transaction reports (CTRs) within seven working days of the following month and retain relevant information and supporting documents for at least five years from the month of submission.

They must establish clear customer acceptance policies and verify identities using reliable, independent sources, including national identity cards, birth registration certificates, passports, photographs and addresses. If someone manages a policy on behalf of a customer, the insurer must verify that person’s authority.

Insurers are also required to monitor policy details, sources of funds and transaction patterns when establishing business relationships, renewing policies and processing financial transactions.

The directive calls for enhanced scrutiny of high-risk customers and unusual transactions. Complex, unusually large or apparently purposeless transactions without a clear economic or legal rationale must be examined.

In high-risk cases, insurers must collect additional customer information, establish the purpose of the policy and take appropriate measures. Politically exposed persons and other influential individuals must undergo applicable enhanced due diligence.

Insurance companies must enforce restrictions on individuals and entities subject to United Nations Security Council sanctions and those prohibited by the Bangladesh government. They must also prevent designated terrorists, groups and associated persons from accessing insurance services.

For foreign trade-related insurance, companies must verify letters of credit (LCs), import-export contracts, product descriptions and shipping documents against bank records. When an organisation purchases a policy, insurers must identify and retain information on its controlling persons and beneficial owners, including individuals holding 20% or more of its shares.

Each insurer must establish a central compliance unit at its head office, led by a senior official, to monitor high-risk transactions and ensure suspicious transaction or activity reports are submitted to the BFIU promptly.

The circular also requires stronger employee screening and training, internal audits and self-assessment procedures. Insurers must ensure compliance at branch and agent levels and maintain customer and policy records.

The instructions take effect immediately.