08 Signs of Suspicious Activity in Life Insurance Business Sector in Vietnam

08 Signs of Suspicious Activity in Life Insurance Business Sector in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is money laundering?

According to Clause 1, Article 3 of the Anti-Money Laundering (AML) Law 2022, money laundering refers to the act that a natural or legal person performs to legalize the origin of the property derived from any offence(s).

Specifically, property derived from any offence(s) refers to the property obtained directly or indirectly from criminal activity; part of the income, proceeds, gain or profits generated from the property obtained from any illegal act(s).

(Clause 2, Article 3 of the Anti-Money Laundering (AML) Law 2022)

2. Signs of Suspicious Activity in Life Insurance Business Sector in Vietnam

Signs of Suspicious Activity in Life Insurance Business Sector are specified in Article 30 of the Anti-Money Laundering (AML) Law 2022 as follows:

(1) A customer requests the purchase of an insurance policy of unusually great value, or demands a lump-sum payment of insurance premiums if such payment is not permitted for the requested insurance product, despite the fact that its/his/her existing insurance policies are of low value and require the payment of insurance premiums in instalments.

(2) A customer requests the underwriting of an insurance contract for which each instalment of insurance premium paid does not match its/his/her current income.

(3) An insurance buyer pays the insurance premium through an account other than its/his/her account or the account of its/his/her authorized entity or person, or by bearer negotiable instruments.

(4) An insurance buyer requests replacement of the nominee beneficiary by a natural person who does not have a clear relationship with him/her.

(5) A customer accepts all unfavorable conditions not relating to his/her age, health condition; a customer requests the purchase of insurance for indefinite purposes; conditions and value of an insurance contract are contradictory to his/her needs.

(6) An insurance buyer waives the insurance contract promptly after purchase and requests transfer of paid insurance premiums to a third party; a customer regularly participates in insurance and transfers the insurance contract to a third party.

(7) A customer is a company where the number of insurance contracts for its employees or the amount of insurance premium in an insurance contract under which insurance premiums are paid on a lump-sum basis is unusually increased.

(8) An insurance company frequently pays a large amount of money for insurance to the same customer.

3. General licensing conditions applicable to insurance companies and reinsurance companies in Vietnam

According to Article 64 of the Law on Insurance Business 2022 stipulates general conditions for granting establishment and operation certificates of life insurance enterprises.

- Licensing conditions concerning founding shareholders or members:

+ In order to obtain business licences or permits, entities and persons applying for these licenses or permits must have the rights of business incorporation and management in Vietnam under the Law on Enterprises;

+ In order to obtain business licences or permits, entities applying for these licenses or permits need to have legal personality and is operating in Vietnam;

If each entity makes at least 10% of capital contribution, they must ensure that they generate profits within 03 consecutive fiscal years immediately before the date of submission of application packages for these licenses or permits, and must meet financial conditions in accordance with the Government’s regulations;

+ In order to obtain business licences or permits, insurers and reinsurers previously licensed for their establishment and operation in Vietnam that contribute capital to set up insurance companies; new reinsurers must generate business profits during 03 consecutive years immediately before the date of submission of application packages for these licenses and permits, and must meet the prudential ratio or the minimum required capital requirement specified herein.

- Licensing conditions concerning capital or assets:

+ The amount of Vietnamese-dong contribution to the charter capital must not be less than the minimum required amount of charter capital under the Government’s regulations;

+ Founding shareholders and capital-contributing members shall not be allowed to contribute borrowed funds or funds or assets held in trust for other entities and persons for equity participation purposes.

- Licensing conditions concerning personnel: Any nominee for a Chairperson of the Board of Directors or Chairperson of the Board of Members, Director or General Director, legal representative or actuary in an entity applying for such business licence and permit must meet managerial competency and qualification conditions and standards prescribed in Article 81 of the Law on Insurance Business 2022.

- The applicant for such business licence and permit must choose their business type in accordance with this Law and must have the draft charter conforming to the regulations of the Law on Enterprises.

4. Prohibited acts regarding insurance activities in Vietnam

Individuals and organizations are strictly prohibited from performing the following acts in insurance activities:

- Insurance, reinsurance, reinsurance ceding and insurance brokerage business activities are performed when none of establishment permits or business licences is obtained.

- Insurance, reinsurance, reinsurance ceding and insurance brokerage business activities are performed outside of the permissible scope of business.

- Insurance brokerage, insurance ancillary service business is done when eligibility conditions for doing so as prescribed in law are not met.

- The following fraudulent acts are committed:

+ Conspire with insurance beneficiaries to settle insurance claims and pay insurance illegally;

+ Forge documents, intentionally falsify information shown in documents required for filing claims for insurance coverage and payout;

+ Forge documents, deliberately falsify information to reject payment of insurance indemnities and insurance when insurable events happen;

+ Cause self-harm or bodily self-injury or deliberately self-inflicted loss or damage to property to claim insurance benefits.

- Using threats and force to obtain the consent to insurance contracts.

(Article 9 of the Law on Insurance Business 2022)

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