On 14 July 2021, IVASS published a new Regulation setting out rules on money laundering risk mitigation procedures and providing for amendments to IVASS Regulation No. 44/2019 regarding rules on internal organization, procedures and controls and customer due diligence for AML purposes.
Following a public consultation launched on 11 December 2019, on 14 July 2021 IVASS published its long-awaited Regulation No. 111/2021 setting out rules on money laundering risk mitigation procedures and providing for amendments to IVASS Regulation No. 44/2019 regarding rules on internal organization, procedures and controls and customer due diligence for AML purposes (“IVASS Regulation”).
IVASS Regulation adopts a risk-based approach and provides new organizational rules for the following market players operating in the life insurance sector: (i) Italian branches of EU insurance undertakings; (ii) Italian insurance agents and brokers and EU insurance intermediaries operating in Italy under right of establishment and (iii) EU insurance undertakings and intermediaries which are considered as established in Italy even if without a branch.
In this specific regard, the IVASS Regulation clarifies that the following entities are to be considered established in Italy even if they carry out their business without having a local branch:
- EU life insurance undertakings operating in Italy on a freedom to provide services basis - through agents, brokers, direct canvassers, financial intermediaries and EU intermediaries - collecting gross premiums for an overall amount higher than Euro 5 million;
- EU insurance intermediaries distributing life insurance products in Italy on a freedom to provide services basis through Italian collaborators enrolled under section E of the Italian Register of Insurance Intermediaries ("RUI").
Pursuant to the IVASS Regulation, insurance undertakings and intermediaries have different ways for setting up the mandatory AML function and appointing the related AML officer, as follows:
a) Italian branches of EU insurance undertakings - without prejudice to the possibility of outsourcing the AML function also outside their group or to the head office – are allowed to entrust the compliance function within the head office or the General Representative of the branch with the duties of the AML function and to appoint the AML officer within the head office, provided that certain conditions are met;
b) Italian agents and brokers and EU agents and brokers operating in Italy under the right of establishment in the life insurance sector are required to set up the AML function if they have at least 30 employees or collaborators enrolled in section E of the RUI and if they distribute insurance products in relation to which the volume of gross premiums exceeds Euro 15 million. In this case, agents and brokers carrying on business as sole proprietors are not required to appoint the AML officer since the agent or broker as natural person will be directly responsible for the AML function.
c) EU insurance undertakings established in Italy without a branch are obliged to appoint the person responsible for reporting suspicious transactions and the IVASS Measure provides the relevant criteria and conditions for his/her identification. EU insurance intermediaries established in Italy without a branch must transmit suspicious transaction reports to the relevant person of the reference company or, if this cannot be identified, directly to the Italian FIU.
Specific communications must be filed with IVASS in relation to, inter alia, the setting up and appointment of the AML functions and officers mentioned above.
The IVASS Regulation also amends IVASS Regulation No. 44/2019 by introducing the methodology for Italian and EU insurance undertakings and intermediaries for conducting the self-assessment exercise on the money laundering risk to which they are exposed in the performance of their business. In particular, IVASS Regulation No. 44/2019, as amended, now sets out the elements to be taken into consideration in order to identify the inherent risk, the vulnerability, the residual risks and the effectiveness of the safeguards and procedures put in place to mitigate the money laundering risks. A structured set of data and information is also to be sent annually to IVASS in accordance with the instructions to be published annually by the latter.
The IVASS Regulation will be published in the Italian Official Gazette shortly.
Insurance undertakings must communicate to each insurance agent and broker the amount which contributed to the calculation of gross premiums - distributed by each of them with respect to financial year 2019 - within 30 (thirty) days of the publication of IVASS Regulation in the Italian Official Gazette.
On first application of the IVASS Regulation:
a) EU insurance undertakings established without a branch and insurance intermediaries must comply with the provisions set out therein as from 1 January of the year following publication of the same (i.e. 1st of January 2022); b) the relevant information and data related to financial year 2020 must be transmitted to IVASS by 30 September 2021; c) the relevant communication to IVASS regarding, among other things, the setting up and appointment of the AML functions and officers is to be sent by 30 November 2021.