b'INSURANCE REGULATORY|ASIADuring its investigation conducted between Januaryimportant effective internal AML and counter-2015 to October 2017, the IA discovered the insurersterrorist financing controls and procedures.had failed to maintain effective procedures in determining whether their customers wereEnforcement Action Against Intermediariespolitically exposed persons (PEPs) prior toThe IA officially took over the regulation of licensed entering into business relationship and failed toinsurance intermediates on September 23, 2019. take reasonable measure to establish the source ofSince then, it has overtaken a total of 280 funds or wealth, or obtain senior managementunresolved investigation cases from the self-approval to continue the relationship when theregulated organizations that had previously customers were eventually identified as PEPs.regulated insurance intermediaries (namely, Hong The IA found that the insurers also failed to reviewKong Federation of Insurers, the Hong Kong documents, data and information relating toConfederation of Insurance Brokers and the customers that presented a high risk of moneyProfessional Insurance Brokers Association). These laundering or terrorist financing. In addition, the IAunresolved cases will be handled by the IA by concluded the insurers had not put in placereference to the applicable rules. These rules have adequate or effective monitoring procedures inbeen published and made available under s.125(1) of relation to existing business relationships withPart 9 of Schedule 11 to the IO.customers to identify transactions which wereOn May 28, 2021, the IA took its first disciplinary complex, of an unusually large amount, of anactions against two licensed insurance broker unusual pattern or which had no apparent economiccompanies, as they failed to submit their audited or lawful purpose. The insurers had no reasonablefinancial statements and auditors reports measures to ensure proper safeguards existed to(Financial Documents) within six months prevent the failures identified and to mitigatefollowing the end of the respective financial years.money laundering and terrorist financing risks. Under the IO, the failure to submit its Financial In the IAs findings, the insurers were discovered toDocuments not only calls for a disciplinary action by have contravened sections 5(10, 10(1), 10(2), 15, 19(1),IA, but also attracts possible criminal prosecution 19(3) and 23 of Schedule 2 to the AMLO. Underfor the broker company. The two relevant insurance section 32(1) of the AMLO, the IA had taken intobroker companies were found to be in breach and account of all relevant circumstances of the case inwere liable to a fine at Level 6 (HK$100,000). One of exercising its power to impose the pecuniarybrokers also had its license suspended.penalty of HK$7 million. These relevantOn July 7, 2021, the IA also took its first disciplinary circumstances included the duration of theaction against an individual insurance agent and contraventions (January 2015 to October 2017),prohibited him from applying for license for five remedial measures to address the deficienciesmonths as he contravened the Ordained and the identified, a clean disciplinary record and the needIAs Code of Conduct for Licensed Insurance Agents to send a clear deterrent message about an(Code of Conduct).114|Global Insurance Industry Year in Review 2021'