Notice No. 012/2006-AMCM

SUBJECT:GUIDELINES ON PREVENTION AND COMBATING OF MONEY LAUNDERING AND FINANCING OF TERRORISM IN INSURANCE - UPDATE

Taking into consideration the recommendations of a technical nature made by the International Monetary Fund in relation to the text of the captioned guidelines, the Board of Directors of AMCM, pursuant to the supervisory power conferred by the provisions of Articles 6 and 9 of its Statutes, approved by Decree-Law No. 14/96/M, of 11 March, and according to the terms of Article 10 paragraph 2 a) of Decree-Law No. 27/97/M, of 30 June (Macao Insurance Ordinance), hereby determines the following:

  1. The rules set out in the “Guidelines on prevention and combating of money laundering and financing of terrorism in insurance”, established by Notice No. 009/2006-AMCM, of 18 August, are equally applicable to companies duly formed and authorised in Macao for the sole purpose of carrying on private pension fund management business, reinsurance business and captive insurance business;
  1. In Part II.4. (Stages of Money Laundering) of the abovementioned Guidelines, a new paragraph shall be added with the following text:

“21.A. It is necessary to emphasise that insurance policies are mainly used by criminals in the first two stages (placement and layering) of the money-laundering process.”

  1. In Part III.1. (Customer Identification) of the above Guidelines and according to the recommendations of the Financial Action Task Force on money laundering (FATF), insurers are required, in respect of the so-called “Politically Exposed Persons” (PEPs), to have in place appropriate measures for their identification; as such they shall:

- Have an appropriate risk management system to determine whether a customer is a PEP. The senior management of the insurer shall establish the acceptance policy for PEPs, bearing in mind the inherent reputational and other risks;

-Obtain senior management approval for establishing business relationships with such type of customers;

-Take reasonable measures to establish the source of wealth and source of funds; and

-Conduct enhanced ongoing monitoring of the business relationship.

  1. For the purposes of the preceding paragraph, “Politically exposed persons” shall mean

“Individuals who are or have been entrusted with prominent public functions in a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations and important political party officials”.

The above definition does not cover middle ranking or more junior individuals in the foregoing categories.

  1. The provision of preceding paragraph 3 is equally applicable to family members and close associates of PEPs;
  1. The sample report to the Office of Financial Intelligence, as contained in Annex G to the “Guidelines on prevention and combating money laundering and financing of terrorism in insurance”, shall remain valid up to the date on which the standard form of communication is established by the Monetary Authority of Macao.

Monetary Authority of Macao, 11 October 2006. For and on behalf of the Board of Directors: Anselmo Teng, Chairman; António José Félix Pontes, Executive Director.