Under Article 16 of the AML-CFT Decision, insurance operators must monitor activity by all customers to identify behavior that is potentially suspicious and that may need to be the subject of an STR or SAR when conducting operations related to life insurance and other investment-related insurance products. Transactions may be suspicious simply in virtue of their individual characteristics (such as their value, source, destination, or use of intermediaries) or because, together with other transactions, they form a pattern that diverges from expected or historical transactional activity or may otherwise be indicative of illicit activity, including the evasion of reporting or recordkeeping requirements. When monitoring and evaluating transactions, the operator should take into account all information that it has collected as part of CDD, including the identities of beneficial owners. In addition, higher-risk customers should be subject to more stringent transaction monitoring, with lower thresholds for alerts and more intensive investigation.

Transaction monitoring can include manual monitoring processes and the use of automated and intelligence-led monitoring systems. In all cases, the appropriate type and degree of monitoring should appropriately match the ML/FT risks of the operator’s customers, products and services, delivery channels, and geographic exposure, and may therefore vary across an operator’s business lines or units, where applicable.

Transaction monitoring programs should also be calibrated to the size, nature, and complexity of each institution. Operators with a larger scale of operations are expected to have in place automated systems capable of handling the risks from an increased volume and variance of transactions. Operators utilizing automated systems should perform a typology assessment to design appropriate rule- or scenario-based automated monitoring capabilities and processes. While smaller operators may rely on transaction monitoring systems that are less automated, they should still ensure that these are appropriately executed to address the risks from their day-to-day transactional activity.

Please consult the CBUAE’s Guidance for Licensed Financial Institutions on Transaction Monitoring and Sanctions Screening for further information.