Response to consultation on draft Guidelines under Articles 17 and 18(4) of Directive (EU) 2015/849 on customer due diligence and ML/TF risk factors
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Under the letter b) of par. 14.6, the fact that partial surrender or withdrawal are allowed at any time with limited charges of fees are indicated as factors that may increase the risk.
Anyhow, it has to be considered that under the Italian legal framework, investment products provide the right of (full) withdrawal of the contract within 30 days from the conclusion of the contract.
Besides, regarding costs, the new European legal framework, and in particular general principles and provisions emerging from IDD, requires that the design of new products should be more cost-efficient for the customer and should add value for the consumer (value for money).
In light of the above, withdrawal and surrenders could be considered as factors that may increase the AML risk, only:
- in case the right of withdrawal is not expressly provided by the law;
- in case the surrender is carried out with an incoherent frequency and at the very beginning of the contract (i.e. within the first year);
- in case the surrender costs do not include, at least, the cost of the demographic risk taken up by the Company.
Please confirm our interpretation.
14.9 Low risk related to the client
Regarding the risk factor laid down in the let. A), it would be interesting and useful to know which simplified measures the insurance undertaking should adopt on credit or financial institutions, in particular when the Bank is the policyholder of different collective policies. In this context, as for the listed Companies or the public administrations, we are wondering if it could be possible to avoid the customer due diligence on these subjects, which are supervised by independent Authorities and which are, in their turn, obliged subject under AML European and local rules.
14.10: Distribution channel risk: non face-to-face identification.
According to the guidelines, the non-face-to-face identification carried out without “adequate safeguards, such as electronic signatures or electronic identification documents that comply with Regulation (EU) No. 910/2014” is judged as a factor that may contribute to increasing anti-money laundering risk.
However, the same result of certainty and correctness of the identification could be reached by applying enhanced measures of customer due diligence, mainly if the insurance undertakings apply those measures ex laid down by the domestic Regulators specifically for non-face-to-face identification.
In this context, the consistency of the CDD with the proceeding provided explicitly by the local Regulators for non-face-to-face identification should be considered as factors which may contribute to reducing risk.
Alternatively, if the firm adopts adequate measures according to the above mentioned Regulation (so-called eiDAS Regulation), we ask to confirm that the customer due diligence could be carried out in a simplified form (i.e. through the use of specific video-identification procedures) or, due to the previous identification carried out through enhanced measures by the subject, which has issued the advance electronic signature (or other equivalent signature), the CDD could be completely avoided by the insurance undertaking.
Measure 14.22
The need to wait until the payout also in case of PEP beneficiary could be connected to need of confidentiality, especially in case of Insurance-based investment products, particularly suitable for wealth planning. In this context, it is essential to underline that, according to the insurance law framework, the policyholder has the specific right to change the beneficiaries before the insured event. The potential involvement of the beneficiary in case the full CDD is carried out at the inception of the contract could jeopardise the policyholder's right to confidentiality about her/his wealth/inheritance planning.
Besides, the beneficiary could change her/his status during the life of the insurance contract, so that her/his PEP status could become irrelevant after several years, a circumstance that should allow the Company to adopt simplified or ordinary CDD measures.
Question 1: Do you have any comments with the proposed changes to the Definitions section of the Guidelines?
NAQuestion 2: Do you have any comments on the proposed amendments to Guideline 1 on risk assessment?
NAQuestion 3: Do you have any comments on the proposed amendments to Guideline 2 on identifying ML/TF risk factors?
NAQuestion 4: Do you have any comments on the proposed amendments and additions in Guideline 4 on CCD measures to be applied by all firms?
NAQuestion 5: Do you have any comments on the amendments to Guideline 5 on record keeping?
NAQuestion 6: Do you have any comments on Guideline 6 on training?
NAQuestion 7: Do you have any comments on the amendments to Guideline 7 on reviewing effectiveness?
NAQuestion 8: Do you have any comments on the proposed amendments to Guideline 8 for correspondent banks?
NAQuestion 9: Do you have any comments on the proposed amendments to Guideline 9 for retail banks?
NAQuestion 10: Do you have any comments on the proposed amendments to Guideline 10 for electronic money issuers?
NAQuestion 11: Do you have any comments on the proposed amendments to Guideline 11 for money remitters?
NAQuestion 12: Do you have any comments on the proposed amendments to Guideline 12 for wealth management?
NAQuestion 13: Do you have any comments on the proposed amendments to Guideline 13 for trade finance providers?
NAQuestion 14: Do you have any comments on the proposed amendments to Guideline 14 for life insurance undertakings?
Please find below our comments on life insurance undertakings:Under the letter b) of par. 14.6, the fact that partial surrender or withdrawal are allowed at any time with limited charges of fees are indicated as factors that may increase the risk.
Anyhow, it has to be considered that under the Italian legal framework, investment products provide the right of (full) withdrawal of the contract within 30 days from the conclusion of the contract.
Besides, regarding costs, the new European legal framework, and in particular general principles and provisions emerging from IDD, requires that the design of new products should be more cost-efficient for the customer and should add value for the consumer (value for money).
In light of the above, withdrawal and surrenders could be considered as factors that may increase the AML risk, only:
- in case the right of withdrawal is not expressly provided by the law;
- in case the surrender is carried out with an incoherent frequency and at the very beginning of the contract (i.e. within the first year);
- in case the surrender costs do not include, at least, the cost of the demographic risk taken up by the Company.
Please confirm our interpretation.
14.9 Low risk related to the client
Regarding the risk factor laid down in the let. A), it would be interesting and useful to know which simplified measures the insurance undertaking should adopt on credit or financial institutions, in particular when the Bank is the policyholder of different collective policies. In this context, as for the listed Companies or the public administrations, we are wondering if it could be possible to avoid the customer due diligence on these subjects, which are supervised by independent Authorities and which are, in their turn, obliged subject under AML European and local rules.
14.10: Distribution channel risk: non face-to-face identification.
According to the guidelines, the non-face-to-face identification carried out without “adequate safeguards, such as electronic signatures or electronic identification documents that comply with Regulation (EU) No. 910/2014” is judged as a factor that may contribute to increasing anti-money laundering risk.
However, the same result of certainty and correctness of the identification could be reached by applying enhanced measures of customer due diligence, mainly if the insurance undertakings apply those measures ex laid down by the domestic Regulators specifically for non-face-to-face identification.
In this context, the consistency of the CDD with the proceeding provided explicitly by the local Regulators for non-face-to-face identification should be considered as factors which may contribute to reducing risk.
Alternatively, if the firm adopts adequate measures according to the above mentioned Regulation (so-called eiDAS Regulation), we ask to confirm that the customer due diligence could be carried out in a simplified form (i.e. through the use of specific video-identification procedures) or, due to the previous identification carried out through enhanced measures by the subject, which has issued the advance electronic signature (or other equivalent signature), the CDD could be completely avoided by the insurance undertaking.
Measure 14.22
The need to wait until the payout also in case of PEP beneficiary could be connected to need of confidentiality, especially in case of Insurance-based investment products, particularly suitable for wealth planning. In this context, it is essential to underline that, according to the insurance law framework, the policyholder has the specific right to change the beneficiaries before the insured event. The potential involvement of the beneficiary in case the full CDD is carried out at the inception of the contract could jeopardise the policyholder's right to confidentiality about her/his wealth/inheritance planning.
Besides, the beneficiary could change her/his status during the life of the insurance contract, so that her/his PEP status could become irrelevant after several years, a circumstance that should allow the Company to adopt simplified or ordinary CDD measures.