As a consequence of new regulatory guidelines, Mexican insurers will face tougher new requirements to assist in anti-money laundering activities. The new guidelines were issued by the National Insurance and Bonding Commission in July this year and will come into effect on January 19 2013. Insurers will need to update their internal 'know your client' policies and systems to ensure that they comply with the new requirements.
Files containing information relating to an insurer's clients must comply with the specific requirements and documentation determined by the regulator for each type of client (eg, Mexican individuals, foreign individuals and national or foreign entities). Files must be kept and safeguarded by the insurer for at least 10 years.
Insurers will need to create an alert system that facilitates compliance with the new guidelines and issues alerts when a client's transactional profile changes. The guidelines also oblige insurers to obtain important information from their clients, including submitting questionnaires to clients and beneficiaries. All information must be updated periodically.
Further, transactions qualified as 'high risk' by virtue of the client (eg, politically exposed clients or foreign residents entering into transactions in a foreign currency) will require special prior authorisation.
Among other obligations, insurers must file periodic reports with the commission that indicate all relevant and unusual transactions in which such entities are involved.
The new guidelines state that insurance agents will need to comply with the insurer's guidelines for obtaining customer information. However, insurers will be required to ensure that their agents comply with these obligations.
The guidelines will also affect reinsurance transactions. Mexican reinsurers will need to verify that foreign reinsurers wishing to cede risks have complied with similar anti-money laundering obligations. In such cases and where no such policies exist, the Mexican insurer must nonetheless comply with its own policies and request the corresponding information from the foreign ceding entity to better understand the nature of the transaction and the client's profile.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.