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29 March 2011
In March 2010 the Bank of Italy issued a consultation document on money laundering and terrorist financing, which was addressed to financial intermediaries and institutions. On February 16 2011 Italy's insurance regulator, ISVAP, published a draft of Regulation 42/2011 to implement Article 7 of the Anti-money Laundering Decree (231/2007). The draft regulation addresses organisational procedures and internal controls to prevent insurance undertakings and intermediaries from being exploited for money laundering and terrorist financing.
The regulation sets forth rules that affect the procedures, organisational structures and functions of insurance undertakings and their intermediaries. They are consistent with the provisions of ISVAP Regulation 20/2008 on internal controls, risk management, compliance and outsourcing.
In addition to Chapter IV, which deals mainly with the cancellation of previous rules, the regulation is divided in three main parts.
Scope of regulation
Chapter I contains general provisions and a description of the regulation's scope of application. The regulation applies to:
Chapter II represents the core of the regulation. It sets out rules on:
Responsibilities of corporate bodies, management bodies and executives
The regulation provides that corporate bodies must:
Among other things, the management body must:
Among other things, senior executives must:
Among other things, the body in charge of monitoring must ensure that the procedures are implemented to collect, record and store information in the centralised computer archive or other electronic archive.
Creation of anti-money laundering unit
Article 10 of the regulation introduces a significant new provision, requiring that a specific anti-money laundering office or unit be instituted within the monitoring body by an appropriate board resolution. In instituting the unit, regard must be had to the independence and professional skill and authority of its members, and conflicts of interest must be avoided.
The regulation provides that the unit must:
In addition, the regulation requires that the board appoint an individual to take charge of the unit. This individual may not have responsibility for operational functions; nor may he or she be under the authority of an individual with such responsibility.
Based on the size of the company, the responsibility for the anti-money laundering and terrorist financing unit may be outsourced or entrusted to a non-executive director where appropriate.
The legal representative of the insurance undertaking or intermediary (or an attorney-in-fact of such representative) must examine notifications of possible illegal transactions received from employees or the intermediary network.
Insurance undertakings must adopt measures to ensure that their networks comply with the anti-money laundering provisions and are adequately and regularly trained. Therefore, insurance undertakings must verify that such networks have adequate instruments and procedures to guarantee effective compliance with the applicable rules; such procedures must be recorded in the relevant agreements between insurers and their intermediaries.
Chapter III provides that agents and brokers must:
Comments on the draft regulation may be submitted to ISVAP until March 31 2011.
For further information on this topic please contact Marco Zechini or David Maria Marino at DLA Piper Italy by telephone (+39 02 80 61 81), fax (+39 02 80 61 82 01) or email (firstname.lastname@example.org or email@example.com)
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