AML/KYC

RTI
&
ANTI FRAUD

What is Money
Laundering

Money Laundering is moving illegally

acquired cash through financial systems
so that it appears to be legally acquired.
Illegal/Dir
ty/ Black
Money

Legal/
Clean/
White
Money

Why people want Money

Laundering
Difficult to keep and hide.
Threat of criminals.
Threat of law enforcement
agencies.
Prevent loss of value from
inflation.
Need to use money.

Why Money Laundering is to be

Prevented
Bad money drives out good money from the
system.
Inflation, price-rise.
Creation of parallel economy.
Loss of revenue to government.
Lavish show of wealth, leading to social
tensions.
Rise in crime.

Money Laundering
process
Placement
The proceeds of crime are injected into the system
Large amounts of money are divided and distributed
in a series of accounts

Layering
The separation of illicit proceeds from their source by
creating several layers of complex financial
transactions. Here the proceeds are moved further
from the original source appearing more legitimate.

Integration
The proceeds enter a legitimate business and the
financial economy as untainted property

Anti-Money Laundering
Legislation in India

The Prevention of Money Laundering Act, 2002

(PMLA) enacted to prevent money laundering and
provide for confiscation of property derived from,
or involved in, money laundering
Brought into force from 1st July, 2005
Administered by:
Financial Intelligence Unit (FIU-IND)
Enforcement Directorate (ED) for investigation
of and prosecution for money-laundering
offences

Financial Intelligence UnitIndia

(FIU-IND)
A central, National Agency established in 2004
which acts as Interface between financial sector
and law enforcement and intelligence agencies
Collects information
Analyzes information
Disseminates the information
Co-ordinates efforts to combat moneylaundering
Conducts Research and analysis

According to Section 3 of Prevention of

Money Laundering Act, 2002
whosoever directly or indirectly
attempts to indulge or knowingly
assists or knowingly is a party or is
actually involved in any process or
activity connected with the proceeds of
crime and projecting it as untainted
property shall be guilty of offence of
money-laundering.

PENAL PROVISIONS FOR THE OFFENCE

OF
MONEY LAUNDERING
Rigorous imprisonment
- Minimum 3 years
- Maximum 7 years
10 years for Narcotic Crime

Fine upto 5 lakhs

11

LEGAL OBLIGATIONS OF FINANCIAL

INSTITUTIONS

Identifying the customer and verification of

records of identity
Maintenance of record of specified transactions
for a period of 10 years from the date of
transaction.
Appointment of a Principal Officer under PML
Rules
Furnishing of reports on specified transactions to
Director, FIU-IND.

 IRDA issued AML Guidelines on 31st March 2006

and made the AML Guidelines mandatory
for all Insurance Companies from 1st of August
2006.
Accordingly Life Insurance Corporation of India
has adopted Anti Money Laundering Policy wef.
01.08.2006.

AML policy of the Corporation includes :

Framing Internal systems, procedures
and controls.
Appointment of a Principal compliance
officer.
Training of employees/agents.
Internal Audit of the system and
procedures.

Internal systems, procedures and

controls

Know Your Customer (KYC)-`

Making reasonable efforts to determine the
true identity of all Customers-New and
Existing Customers (wef.1/1/2006)
Documents for Identity Proof
Residence Proof
Recent Photograph
Income Proof for annual premium Rs 1 lakh
and above- Source of fund

Documents for identity proof

Passport
PAN Card
Voters Identity Card
Driving License
Letter from a recognized public authority
OR public servant verifying the identity and
residence of the customer.
Job card issued by NREGA
Letter issued by Unique Identification
Authority of India.

Proof of residence

Telephone bill pertaining any kind of telephone

connection (not older than six months)
Bank account statement with address
Letter from recognized public authority.
Electricity bill
Ration Card
Lease agreement with rent receipt (not more
than three months old)
Employers Certificate
Passport, Driving License, Aadhar

Documents for Income proof

Standard Income proofs
Income tax assessment orders/
ITRs
Employers certificate
Audited Company accounts
Audited firm accounts and
Partnership Deed

Non-standard Income proofs

CA certificate
Agricultural Income certificate

e-KYC

e-KYC is service offered by UIDAI to

verify KYC digitally
Organizations will have to get
approval and authorization by UIDAI
They have to use biometric scanning
device to scan fingerprint of the
customers
This will bring full details of customer
in a highly secured environment and
this can be copied and saved in the
database for future use
It saves time, efforts and cost for

KYC and Risk Profile of Customer

Customer segmentation

Low Risk
Government servants,
salaried employees,
Regulators,
Statutory Bodies,
People belonging to
lower economic strata

High Risk
NRIs, HNIs, NGOs, Trusts,
PEPs, Organisations
receiving donations,
Companies having
family shareholdings

Regular premium
products with
premium less than Rs 2 lakhs p.a
and
SP products with
premium less than Rs 5 lakhs

Regular premium
products with
premium Rs 2 lakhs and above
p.a and
SP products with
premium Rs 5 lakhs
and above

Product segmentation

Monitoring and Reporting

of
Cash Transactions
Cash beyond Rs 50000 per transaction
per month PAN or Form No-60/61
Cash transaction above Rs 10 lakhs
p.m Report to FIU-IND by 15th next
month
Reporting of Suspicious Transactions

Suspicious Transactions
1.

2.

3.
4.
5.

Customer insisting on anonymity, reluctance to provide

identifying information, or providing minimal, seemingly
fictitious information.
Cash based suspicious transactions for payment of
premium and top ups over and above Rs.5 lakhs per
person per month. It should also consider multiple DDs/
pay order each denominated for less than Rs.50,000/-.
Frequent free look surrenders by customers;
Assignments to unrelated parties without valid
consideration;
Request for a purchase of policy in amount considered
beyond his apparent need;

Suspicious Transactions
6.
7.
8.
9.
10.
11.
12.
13.
14.

Policy from a place where he does not reside or is

employed;
Unusual terminating of policies and refunds;
Frequent request for change in addresses.
Borrowing the maximum amount against a policy
soon after buying it
Benefit transfer to an unrelated third party.
Premium paid by unrelated third party.
Cash top-ups or large top-ups.
Many policies with different Insurers.
Large-value single premium policies & early
cancellation even at a loss.

Verification at the time of

Claims-Death & Maturity/
Surrenders

No payment to third party except death claim

where payment made to Nominee/ Legal
heirs. All payments should be made after due
verification of the bonafide beneficiary
All payments by NEFT only
AML checks more important in case of
assignments to parties other than Financial
intermediaries

Responsibility of Agents
and Corporate Agents
Strict compliance to KYC norms mandatory
Violations in 2 occasions- Warning letter
More occasions - Penal action including
termination
Non compliance of AML/KYC NORMS Attract
punishment/ penalty/ termination as the case
may be

Appointment of Compliance
officers

Manager ( F&A) ---in Divisional office.

Regional Manager ( F&A)--- in Zonal
office.
Executive Director( Audit) ---in Central
office.
There are system generated reports from
CADW, to enable them to monitor the
implementation of AML guidelines.

Training Policy for Employees

Detailed sessions on KYC/AML guidelines should be

part of every training program of MDC.
Training module for Class III,II and I up to AOs has to
be taken care by ZTCs.
Special training sessions must be envisaged for
frontline staff of NB Deptt, Sales Deptt and Cashiers.
Division wise/ Branch wise special programs for
explaining AML guidelines to all employees.
Proper maintenance of records of trained employees in
various categories under AML Program.
Induction training to new employees with a general
appreciation of the background to money laundering.

Internal Control/ Audit

The Internal Audit and Inspection Department
will verify the compliance to all our circulars,
pertaining to AML/KYC norms, in conjunction
with IRDAs AML Guidelines.
The irregularities mentioned in the report can be
supported
with
constructive
suggestions
wherever necessary, to strengthen Corporations
AML policy and implementation.
Wherever Audit / Inspection Department feel the
necessity, they will report the matter to Audit
Committee of the Board.

Dedicated
Email-Id
Whistle blower id for AML / KYC
purposes

The Right To
Information
Act, 2005

SOME BASIC FACTS ABOUT

THE ACT
Title of the Act : Right to Information
Act, 2005 (Act No.22 of 2005)
Passed by the Lok Sabha on 11th
May, 2005
Received the assent of the President
of India on 15th June, 2005
Notified in the Gazette on 3121st June,

RIGHT TO INFORMATION
Right to information held by or under the control
of any public authority includes the right to i.

Inspection of work, documents, records;

ii.

Taking notes, extracts, or certified copies of

documents or records;

iii. Taking certified samples of material;

iv. Obtaining information in the form of diskettes,
floppies, tapes, video cassettes or in any other
electronic mode or through print outs where
such information is stored in a computer
or in
32

WHAT IS A PUBLIC AUTHORITY

Public Authority means any authority or
body or institution of self government
established or constituted By or under the Constitution
By any other laws made by Parliament/State
Legislature
By notification issued or order made by the
appropriate Government, and includes any (i) Body owned, controlled or substantially
financed
by
the
Government.

(ii)
Non-Government
organization
substantially
financed,33

DEFINITION OF INFORMATION
information means any material in any form, including

records,
documents,
memos,
e-mails,
opinions,
advices,
press releases,
circulars,
orders,
logbooks,

contracts,
reports,
papers,
samples,
models,
data material held in
any electronic form
and
information relating
to any private body
which can be accessed
by a public authority
under any law
for the
34

WHO ARE NOT COVERED?

IB & RAW
Directorate of Revenue Intelligence
Central Economic Intelligence Bureau
Directorate of Enforcement
Narcotics Control Bureau
Aviation Research Centre
Special Frontier Force
CRPF, ITBP, CISF, NSG
Special Services Bureau
Assam Rifles
The Crime Branch-CID-CB, Dadra & Nagar
Haveli
Special Branch, Lakshadweep Police

EXEMPTIONS FROM DISCLOSURE

Informations disclosure of which
prejudicially affect the sovereignty,
integrity and security of India
Commercial and trade secrets, except in
public interest.
If it is available to a person in his fiduciary
relationship except in public interest.
Whose release is forbidden by a court or
tribunal or if disclosure might constitute
contempt of court.
Whose
release
is
likely
to
impede
investigation or prosecution process.
Whose disclosure may endanger the life and
safety of a person.
36
Whose disclosure would cause a breach of

RTI PROCESSES-CHARGES
Apply in writing or electronically- Request
in English/Hindi/Local Official language.
Rs 10 has to be deposited along with the
application. No fee for BPL applicants.
Rs 2 has to be paid for every page of
information sought.
Actual cost price for samples or models.
Actual cost price for paper larger than A4
size.
Rs 50 for information provided on diskette
For information in printed form, the price
fixed for the publication.
For inspection of records, no charge for the
first hour; but a charge of Rs 5 for37 every 15
mnts thereafter.

RTI PROCESSES-TME LIMITS

Time limit for giving information: 30 days,

If request through CAPIO 35 days
Information concerning life & liberty of a
person: within 48 hours
Information by third party: Add extra 10
days
Or else it is treated as refusal of
information.
No fee for delayed response
Reasons for seeking information shall not
be asked.
38

THIRD PARTY
Give a notice
to T.P in writing
INFORMATION
Notice should include a statement that T.P
can appeal
u/s 19

Opportunity to T.P to represent within 10

days of

receipt of

notice

CPIO to decide within 40 days after receipt

of

request
whether to disclose or not .

ROLE OF THE CAPIO & CPIO

The CAPIO will receive the request for
information or the appeals under the
act
and
forward
the
same
immediately but not beyond 5 days to
the
Central
Public
Information
Officer(CPIO). The CAPIO will also
assist those who cannot read or
write, to fill up the application.
The CPIO will process the request for
information
received
directly
or
through the CAPIO and dispose off
the same either by providing the
requested information or 40rejecting

DEEMED
CPIO

Section 5(4):
The CPIO may seek the assistance of any
other officer as he or she considers it
necessary for the proper discharge of his or
her duties.
Section 5(5):
Any officer whose assistance has been
sought under sub-section 4 shall render all
assistance
to the CPIO seeking his
assistance and for the purposes of any
contravention of the provisions of this Act,
such other officer shall be treated41as CPIO.

APPEALS
First appeal with senior in the department.
(30 D)
Second appeal with Information
Commission.(90 D)
Decision of Information Commission is
binding.
(Appeal against ICs decision can be filed
in High Courts/ Supreme Courts.)
42

PENALTIES
IC can fine PIO Rs 250 per day up to a maximum
of Rs 25,000/- for
Refusal to receive application
Not furnishing information within time limit
Malafidely denying information.
Knowingly giving incorrect, incomplete,
misleading information.
Destroying information which was subject of
request.
Obstructing furnishing of information in any
other manner.
Charging unreasonable fees for providing
information.

RTI STRUCTURE IN LIC

Position

EXISTING
Designated
officer

Position

REVISED
Designated officer

Branch
Office
includi
ng
SOs

CAPIO

Branch
Manage
r (I/C)

CAPIO

ChiefManager/Sr.Branch
Manager/Branch
Manager
(I/C)
In the absence of Branch (I/C)Next Senior Most officer

Divisio
nal
office

CPIO

Manager
(CRM)

CPIO

Manager (CRM)

Manager
(P&IR)

1st

Manager (L&HPF)

Manager
(E&OS)

2ndAlternate
CPIO

Manager (P&IR)

Appellate
Authority

Marketing Manager
In case CPIO is in DM cadre,
SDM
(I/C)
will
be
1st
Appellate Authority

CPIO

Manager (Admn.)

1st
Appell
ate
Authority

ZTC

CPIO

Senior
Division
al
Manage
r (I/C)
Manager
(Admn.)

Alternate
CPIO

RTI STRUCTURE
RM (CRM)
IN
LIC
CPIO
RM (LEGAL)

CPIO
Alternate CPIO

RM (LEGAL)
SECY (P&IR)

1st Appellate Authority

RM (CRM)

1st Alternate Appellate

Authority

RM (P&IR)

2nd Alternate Appellate

Authority

RM (E&OS)

CPIO

Chief (RTI)

1st Alternate CPIO

Chief (Legal)

2ndAlternate CPIO

Chief (CP)

1st Appellate Authority

ED (RTI)

1st Alternate Appellate

Authority

ED (HRD/OD)

2nd Alternate Appellate

Authority

ED (Inspection)

RM (P&IR)

Zonal Office

Central Office

1st
Appellate
Authority

CPIO

Appellate
Authority

ZM (I/C)

ED (RTI)

Managing
Director

SECY(CRM)


IN ESSENCE RTI SEEKS
TO PROMOTE
- Transparency in Processes
- Adherence to Rules
- Accountability in Actions
- Prevention of Corruption
- Empowerment of Citizens

Anti Fraud
Policy:

Anti Fraud Policy

LIC has adopted the Anti Fraud Policy as a

part of Fraud Monitoring Framework for the
Corporation in accordance with Para C of
IRDA
Circular
IRDA/SDD/MISC/CIR/009/01/2013
dated
21.01.2013 which states that all Insurance
Companies are required to have an Anti
Fraud Policy duly approved by the Board.
Anti Fraud Policy of the Corporation was
approved in the 565th Board Meeting held on
14.02.2015 to minimize the risk and impact
of fraudulent activity.
Procedural and Operational guidelines for
Anti Fraud Policy were issued vide Circular

What is Fraud ?
Fraud can be defined as any
act committed with intent to
deceive or gain something to
which one is not entitled.

OBJECTIVES
The primary objective of this policy is to
minimize the risk of any fraud occurring
within the Organization and to optimize the
likelihood of its detection as soon as
possible leading to full investigation.
To Protect the Corporation from the
financial and reputational risks posed by
Insurance frauds.
To setup a framework to detect, monitor
and mitigate the occurrence of such
Insurance frauds within the Corporation.
To develop and promote an organizational
culture which encourages the prevention of
fraud by raising awareness of the need for


a)

CLASSIFICATION OF FRAUD
The frauds against the Corporation are classified into
Categories:
following

Internal
Frauds:
Frauds/misappropriation
of
Corporations funds by the employees/Officers of the
Corporation on their own or in collusion with others who
are either internal or external to the Corporation and
frauds by the employees of the Corporation on
deputation to the Offices they are serving.
b) Intermediary fraud: Fraud perpetuated by an Insurance
Agent, Corporate Agent, Financial Service Executive,
Direct Sales Executive, Chief Life Insurance Advisors,
Senior Business Associates, Agents, Brokers, Third Party
Administrators, Micro Insurance Agents, Intermediaries
etc. on their own or in connivance with the policyholders
against the Corporation and/or the Policyholders.
c) Policyholder fraud and/or Claims fraud: Fraud against the
Corporation in the purchase and/or execution of an
Insurance Product, including fraud at the time of making

FMC Flow Chart

Branch Fraud Monitoring Committee

Functions & Responsibilities of Fraud

Monitoring Committee
1. FMC shall be responsible for monitoring Fraud cases
reported to it and advising the Competent Authority (as per
list below) on actions to be taken at respective level.
Sr.No.
Particulars
Competent Authority
1.
Central Office
Concerned HOD
2.
Zonal Office
Concerned HOD
3.
Divisional Office
Sr. Divisional Manager
4.
Branch Office
Branch-in-Charge
(including Satellite and Mini Offices)

2. All cases of frauds /suspected frauds shall be reported to

FMC from the lower offices to higher offices i.e. Branches to
Divisional Office, Divisional Office to Zonal Office, Zonal
Office to Central Office on monthly basis
3. FMC to ensure that all the Frauds are reported to the
appropriate law enforcement agencies as specified in the
Circular ref: Per/ER-Discipline/Cir No. 208/2014 dated
02.08.2014 regarding Classification and Reporting of Frauds.

Functions & Responsibilities of Fraud

Monitoring Committee
4. FMC to oversee the progress of investigations and to

review the monthly reports on fraudulent activities

reported during the month.
5. FMC along with the respective P&IR department shall
also co-ordinate with the law enforcement agencies to
monitor the progress of the cases handed over to
them.
6. Verification and Authentication of statistics of all the
fraudulent cases detected and action taken thereon in
IRDA prescribed formats. The business segment wise
data has to be submitted in the prescribed reports.
7. Provide opinion/recommendation for improvement
(preventive/corrective) to the concerned department
where frauds have taken place because of inadequacy
of the systems and procedures or laxity in following
the same.

ROLE OF INDIVIDUAL HODs

Identify, itemize and assess potential areas
vulnerable to fraud in their departments.
Implementation of and the adherence to the Anti
Fraud policy within the HODs functional areas at
various levels.
Development and maintenance of effective checks
& controls in the systems & procedures in order to
obviate potential frauds.
Inform concerned Fraud Monitoring Committee
immediately when a fraud has occurred or is
suspected.
Conduct Quality Management Analysis visits
regularly
and
diligently
ensuring
complete
adherence to laid down systems and procedures.
Seize the original records and keep it in safe

ROLE OF VARIOUS
INTERMEDIARIES

The
Corporation
expects
all
Agents,
Corporate
Agents,
Financial
Service
Executive, Direct Sales Executive, Chief Life
Insurance Advisors, Brokers, Micro Insurance
Agents etc. to abide by and co-operate with
the Corporations Anti Fraud Policy.
All the intermediaries shall be responsible
for compliance with applicable Insurance
Laws.
They should be familiar with the types of
improprieties that might occur in their areas
of responsibility and should be alert for any
indication of irregularities.

ROLE OF AUDIT/INSPECTION
Provide opinion about the adequacy of
systems & procedures to curb a potential
fraud.
Include areas susceptible to frauds in the
questionnaire.
Provide necessary support in causing
investigation.
The minutes of monthly meetings conducted
by various Fraud Monitoring Committees
shall be examined during the course of
Audit, Inspection & QMA. Appropriate debits
shall be given by Audit/Inspection if the
minutes are not maintained properly.
Audit / Inspection departments may make

FRAUD INDICATORS
The following fraud indicators may include but are not
limited to shall be examined closely:
Unusual employee behavior
Reluctance to take leave/ Regular long hours worked
by key employees
Over indulgence or being over inquisitive or showing
extra interest in others assignments
Over dependence, blind trust on one person
Key documents like vouchers, invoices, contracts,
files reported missing
Close relationship with suppliers/Contractors
Suppliers/Contractors who insist on dealing with a
particular employee only.
Excessive
variation
in
actual
expenditure
as
compared to sanctioned budget.

FRAUD INDICATORS

Tender conditions floated in such a way that can be

met only by specific contractors.
Selection of a single vendor/Contractor for many
tasks
Vague tender specifications/Disqualification of any
qualified bidder on flimsy grounds
Frequently overriding internal checks & controls
Bypassing superiors/subordinates
Inadequate monitoring & lack of oversight to ensure
that controls function as intended.
Lack of periodic testing and evaluation
Arrears of work
Pending bank reconciliations etc
Payment of loan /surrenders without establishing
identity beyond reasonable doubt.
Bypassing Stores Code procedure

Dedicated Email ID

Dedicated Email Id for reporting

of frauds
co_fraud@licindia.com

61