Annex 1. Red Flag Indicators for the UAE Life Insurance Sector

Effective from 31/10/2022

The UAE Insurance Authority (now merged with the CBUAE) has issued the following list of red flag indicators when handling life insurance and other investment-related insurance products. ¹⁴ These indicators should be incorporated into an insurance operator’s AML/CFT policies, procedures, detection scenarios, and other processes for identifying potentially suspicious activity related to life and general insurance products.

	1.	The purchase of an insurance product does not reflect a customer’s known needs (e.g., purpose of the account).
	2.	The early surrender of an insurance product is taken at a cost to the customer.
	3.	The surrender of an insurance product is initiated with the refund directed to a third party.
	4.	The customer exhibits no concern for the investment performance of a purchased insurance product and instead exhibits significant concern for its early surrender terms.
	5.	The customer purchases insurance products using unusual payment methods, such as cash or cash equivalents, or with monetary instruments in structured amounts.
	6.	The customer demonstrates reluctance to provide identifying information when purchasing an insurance product.
	7.	The customer borrows the maximum amount available from their insurance product shortly after purchase.
	8.	The customer used to purchase low-premium insurance and pay premiums by making regular payments but suddenly purchases insurance that requires a large lump-sum premium payment, for which no reasonable explanations are provided.
	9.	The customer purchases an insurance product without concern for the coverage or benefits, or the customer only cares about the procedures for the policy loan, cancellation of insurance policy, or changing beneficiary when purchasing an insurance policy that has a high cash value or requires a high lump-sum premium payment.
	10.	The customer usually pays a premium by making regular payments but suddenly requests to purchase a large-sum policy by paying off premium all at once.
	11.	The customer purchases insurance products with high cash value successively over a short period of time, and the insurance products purchased do not appear to be commensurate with the customer’s status and income or are unrelated to the nature of the customer’s business.
	12.	The customer pays premiums in cash and in several payments marginally below the threshold for declaration but cannot reasonably explain the source of funds. In addition, the transactions do not appear to be commensurate with the customer’s status and income or are unrelated to the nature of the customer’s business.
	13.	The customer, after making a large premium payment for a policy purchased, applies for a large policy loan or cancels the policy in a short period of time, for which no reasonable explanations are provided.

¹⁴ Sources: FATF, Life Insurance Sector: Guidance for a Risk-Based Approach (October 2018), available at: https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/RBA-Life-Insurance.pdf; and U.S. Federal Financial Institutions Examination Council, Bank Secrecy Act/Anti-Money Laundering Examination Manual, “Insurance,” available at: https://bsaaml.ffiec.gov/manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/16.