Which law this is about

Federal Law No. 115-FZ of 7 August 2001 "On Combating the Legalisation (Laundering) of Criminal Proceeds and the Financing of Terrorism" requires financial institutions to check their clients and report suspicious transactions. Insurance companies are expressly named in the law among organisations carrying out transactions with funds, alongside banks, non-state pension funds and other financial market participants. The law's requirements also apply to insurance brokers.

The authorised body in this area is the Federal Financial Monitoring Service (Rosfinmonitoring). Compliance by insurers is supervised by the Bank of Russia.

What an insurer must do

Identify the client

Before concluding a contract, the insurer establishes information about the client, its representative, the beneficiary and the beneficial owner. For an individual this means full name, citizenship, date of birth, identity document details, address, and taxpayer number (INN) if available. For a company — name, INN, OGRN (state registration number), address, and details of its director and owners.

For certain small transactions the law allows simplified identification, which is why less information is requested when buying mass-market policies online.

Have internal control rules

Each insurer develops internal control rules, appoints a responsible officer and assesses client risk. Where the risk is higher, the company may request additional documents: on the origin of funds, the purpose of the contract, business reputation.

Report transactions

Transactions subject to mandatory control and suspicious transactions are reported by the insurer to Rosfinmonitoring. The list of mandatory control transactions and the threshold amounts are set by Article 6 of the law. The insurer is prohibited from informing the client that such information has been reported.

Keep records

Information and documents on clients and transactions are kept for at least five years after the relationship with the client ends.

Where this is most noticeable

  • Savings and investment life insurance — large premiums and the possibility of early termination with a surrender value make these products an area of special attention.
  • Large business contracts — the counterparty, beneficial owners and source of payment are checked.
  • Payment to a third party — if you ask for money to be paid to someone other than the policyholder or beneficiary, the insurer may ask for an explanation.
  • Cash payments and payments from abroad — a reason for additional questions.

Insurer's rights: refusal and suspension

The law allows an organisation to refuse to conclude a contract or carry out a transaction if it suspects that the transaction is being made to launder proceeds or finance terrorism, or if the client has not provided the required documents. Funds of persons included in the list of organisations and individuals known to be involved in extremist activity or terrorism are frozen.

What clients should know

  • A request for your passport and income details is not an employee's whim but a legal requirement.
  • Provide accurate information: an error in documents may delay a payment.
  • Pay premiums from your own account or card — payments from other people's accounts raise questions.
  • If a transaction is refused, ask for the reason and provide additional documents. If you disagree with the insurer's actions, you can file a complaint with the Bank of Russia.
  • Keep documents confirming the origin of large sums you pay under life insurance contracts.

More on products is in the life insurance section. Other legislation overviews are in the Laws section, and terms are explained in the glossary.