Insurance firms cautioned against customers with incomplete identity

A traffic officer at the scene of an accident involving a car and a boda boda rider. Many motorists don’t know that in such situations, the accident victims (parties) are covered by Third Party Insurance. FILE PHOTO 

By Faridah Kulabako

In Summary

All insurance companies are required to design policies to help them do customer due diligence.

Insurance players have been urged to desist from insuring risks of prospective customers who decline to provide full information needed by the latter to establish their true identities.

Mr Michael Olupot-Tukei, the assistant commissioner in the directorate of economic affairs office of the president, said people who conceal some information about their dealings could be involved in money laundering and as such, they should not enter into any business relationship with them.

“You [insurers] are supposed to know your customers in detail before selling them any insurance policy to ensure that the money they are bringing into the system is clean money to avoid being penalised,” Mr Tukei told the insurance industry’s chief executives last week.

He added that with the passing of the Anti-Money Laundering (AML) Bill last month, all insurance companies are required to establish policies that will help them do customer due diligence to establish the identity and the background of the customer for financial risks assessment, in addition to training employees on how to detect a suspicious transaction to guard against money laundering.

Money laundering is the process of cleaning ill-gotten money through the financial system of a country by concealing or disguising the identity, source, location and destination of the money.

Basic customer identification information includes the full name, permanent residential address, occupation, employer and an identification document among others.

Mr Tukei, however, said the use of birth certificates is discouraged, unless it is accompanied by a sworn-in affidavit. This is because it does not carry a passport size photograph of the holder.

Mr Tukei added that although the insurance industry is not very prone to money laundering compared to banking and capital markets, it is increasingly becoming a target of launderers, exposing it to operational, legal and reputational risks