Bahrain Monetary Agency issues insurance consultation on risk management, financial crime
The Bahrain Monetary Agency (BMA) has published a consultation paper, setting out proposed standards for insurers on risk management and the combating of financial crime.
The proposed rules cover two key areas of rules on business standards for insurers.
The module on risk management addresses such issues as credit risk, liquidity risk, market risk, insurance technical risk, operational risk, outsourcing risk and group risk.
The risk management module applies in full to all insurance firms, including takaful/retakaful firms, captive insurers and conventional reinsurers. It applies in part to insurance brokers, while insurance consultants, managers and appointed representatives are excluded from its purview.
Highlights of this module include rules on establishing limits for both assets and liabilities and requirements on ‘stress testing’ firms’ readiness to cope with potential liquidity crises and their financial readiness to withstand market risk, resulting from adverse movements in market values, currency or yield of an asset.
The module on financial crime, which applies to all insurance licensees, lays down the required systems and controls needed to minimize the risks associated with money laundering.
The consultation paper sets out in detail the requirements associated with customer due diligence.
The proposals contained in the consultation paper have been developed with the assistance of specialist regulatory consultants and are fully in line with standards applied in other leading insurance centers.
The consultation period runs until 31st August 2004. The consultation paper will shortly be available on the BMA website at www.bma.gov.bh
“We welcome comments from industry and other interested parties to the proposals contained in the consultation paper,” said Mr. Anwar Khalifa Al Sadah, Executive Director, Financial Institutions Supervision, at the BMA.
The current consultation paper is the 6th in a series of consultations that has been underway since 2003, as part of a major project to enhance Bahrain’s regulatory framework for the insurance sector.
All of the rules, being developed, will be contained in BMA’s Insurance Rulebook, scheduled for issuance in October this year.
The Rulebook will become effective for existing licensees on 1st January 2005. For new licensees, it will come into effect from the time of its issuance.
“BMA is committed to ensuring the continued health of its financial services industry,” said Mr. Al Sadah.
The overarching objectives of its insurance regulation are to ensure policyholder protection, maintain market confidence and apply international standards of regulation, he said. (menareport.com)
© 2004 Mena Report (www.menareport.com)