Amendments of Some Articles of Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises
2017-10-19
On October 19, 2017, the FSC introduced amendments to some articles of the Regulations, which require insurance companies to attach more importance to legal compliance, anti-money laundering and countering financing terrorism (AML/CFT) mechanisms and set more strict requirements for qualifications, professional training and roles of legal compliance staff and officers. The amendments focus on the following points:
1. In order to enhance corporate governance performance and accountability of board of directors and audit committee of an insurance company, the board of directors (council) is required to identify operating risks and supervise the establishment of an effective internal control system. The board of directors (council) of an insurance company is also required to properly address and report the risk that may cause significant loss to its company as soon as possible.
2. Insurance companies are required to incorporate a material contingencies handling mechanism and AML/CFT legal compliance management into related control operation guidelines and procedures, in order to handle material contingencies effectively and strengthen their mechanism of anti-money laundering and countering terrorism financing.
3. The Non-life Insurance Association and Life Insurance Association will draw up guidelines for “three lines of defense of internal control and audit system”, for more effective implementation of “three lines of defense” in the insurance industry.
4. Increase coverage and items of the internal control system audit by the CPA engaged by an insurance company; the audit shall cover foreign branches, while the audit items shall include operation of anti-money laundering system.
5. In order to enhance the legal compliance system of insurance companies, new requirements are now set for the headquarters regarding report content of compliance officers, qualifications of and training for legal compliance staff, and independence of legal compliance officers in foreign branches.
6. After the domestic competent authority or competent authority of a foreign branch finishes its inspection or such inspection report is received by the insurance company, the internal compliance unit in the headquarters of an insurance company is now required to report related important information to the board of directors (council) and the supervisor (supervisor or board of supervisors) or the audit committee. Such requirement is imposed to enhance the reporting mechanism of the insurance industry.
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Update:
2017-12-29