Page 45 - Annual Report 2017

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Thematic analysis on fees earned Own Risk and Solvency Assessment within the QFC. In 2017, the team supervised 59 authorised firms During the year, significant enhancements were made to
(financial institutions) and 28 Designated Non-Financial Businesses the risk-rating models to better capture beneficial ownership
The Investment Management department undertook a project to The Regulatory Authority’s Insurance Business Rules 2006 require all and Professions (DNFBPs). and corporate structures; the quality of internal governance
analyse the nature of the fees earned by QFC firms. The analysis was QFC insurers that are limited liability companies, with effect from arrangements and structures, including the adequacy and
informative of the nature of advisory business carried out. It detailed 1 January 2015, to conduct an annual ORSA. This is a detailed, AML/CFT regulatory framework effectiveness of internal audit and compliance functions;
the source of income for QFC firms, discerning between corporate forward-looking examination of the adequacy of an insurer’s risk The Regulatory Authority’s AML/CFT framework is underpinned by the level of compliance with AML/CFT legal and regulatory
advisory, capital markets and investment management activities. management policies, procedures and controls, and the insurer’s the AML/CFT Law No. 4 of 2010 that defines money laundering requirements; and the effectiveness of the AML/CFT policies
The pilot format will be converted into a standard template. present and future solvency needs given the insurer’s particular risk offences, assigns duties and obligations to financial institutions and procedures against FATF standards.
profile, stress testing and business plans. and DNFBPs, established the National Anti-Money Laundering and
Insurance Supervision The Regulatory Authority reviewed a number of ORSA reports in Terrorism Financing Committee (NAMLC), and set the fines and pen- Under the revised model, the combination of the more quan-

2017. On the basis of these reviews, there were improvements alties for breaches of the law. Law No. 4 made it a criminal offence tified assessments of the inherent risk levels and the effects
of risk mitigation on the inherent risk levels has resulted in the
In 2017, the Insurance Supervision team, responsible for 24 insurance compared to prior years. Generally, firms appeared to have made to provide financial or logistical support to terrorist groups or to raise assignment of overall risk profile scores that improve alignment
firms and intermediaries, conducted thematic reviews, assessed, good progress in implementing the ORSA process. However, for money for terrorist crimes in Qatar, and imposed penalties including to international best practices. The enhanced model also facil-
and analysed insurance firms’ Own Risk and Solvency Assessments some firms enhancements and further embedding of the ORSA jail sentences and fines. The Law is based on the standards issued itates more informed peer analyses and better insight into the
(ORSA) reports, and conducted risk assessment visits to a number process in their businesses are still required. by the International AML/CFT policy-making body, the Financial aggregate AML/CFT risks that authorised firms face.
of firms, all as key activities in its risk-based approach to supervision. Action Task Force (FATF).
Supervision communicated the review findings to the relevant Significant technology-related improvements were also made
Insurance charts insurers on an individual firm basis during risk assessment visits, high The Regulatory Authority has issued two Rulebooks that regulate to internal systems to facilitate the recording of AML/CFT issues
level meetings and other interactions with senior management. AML/CFT within the QFC. The Anti-Money Laundering and Combat-
Please see page 72 for a selection of graphs highlighting some key Firms viewed the feedback positively and recognised that the ing Terrorist Financing Rules 2010 and the Anti-Money Laundering identified during the risk assessments of DNFBPs. These included
trends and facts relevant to the Regulatory Authority’s authorised ORSA constitutes an important management tool for the Boards and Combating Terrorist Financing (General Insurance) Rules 2012 links to the Electronic Submission System to facilitate the submis-
insurance firms, as gleaned from the quarterly review of prudential and senior management of these insurers. The Regulatory Authority are collectively referred to as the AML/CFT Rules (Rules). These Rules sion of required and ad hoc regulatory reports; the capabilities
returns submitted on the XBRL-based reporting platform. will review future ORSA reports to ensure the findings of this review apply to all authorised firms and DNFBPs, including financial services of supervisors to manage data on individuals performing reg-
istered functions; and the creation and management of risk
Thematic reviews have been appropriately taken into account by relevant insurers firms and other professional services firms such as lawyers, auditors, mitigation programmes.
and are reflected in the ORSAs. accountants and trust service providers.
Line of business review AML/CFT supervisory approach Thematic reviews

During the year, the Regulatory Authority conducted a thematic ANTI-MONEY LAUNDERING/
review of the performance of medical and motor insurance busi- COMBATING THE FINANCING AML/CFT supervisors base their understanding of the sectoral and A programme of on-site risk assessments encompassing all 28
ness lines, which together represent over 75 percent of the total sub-sectoral risk factors on a high-level view from discussions with active DNFBPs, employing the improved risk rating tool, was a
insurance business written by QFC insurers. This review was con- OF TERRORISM (AML/CFT) and review of material published by the Regulatory Authority’s key area of focus in 2017.
ducted through a number of risk assessment visits held with QFC Macroprudential team, supervised firms’ prudential and conduct Taking into account the size, scale, and complexity of the
insurers, as well as other on- and off-site investigations, including The Regulatory Authority is committed to preventing QFC institu- supervisors, and from the information obtained from firms about the QFC’s DNFBPs’ activities, the overall AML/CFT risks arising for
analysis of regulatory prudential return data. tions from participating in activities that may constitute or facilitate money laundering/terrorism financing risks they face. This approach these firms, in terms of their customers and products, were
financial crime. Anti-money laundering laws and regulations target aids supervisors in identifying commonalities within each financial limited.
Medical and motor insurance lines performed reasonably well market manipulation, trade of illegal goods, corruption of public sub-sector and the financial sector as a whole.
and contributed positively to QFC insurers’ net profit. Although the funds and tax evasion, as well as the activities that aim to conceal The National Action Plan
quality of pricing varies across firms, with some using more sophisti- these practices. New models for risk-rating of firms
cated models while others rely primarily on market rates to derive Central to the Regulatory Authority’s risk-based approach to super- The AML/CFT team drafted a number of guidance papers
insurance premiums, premiums charged by firms proved to be ade- Because laundering money is one way in which terrorists finance vision is the employment of a proprietary risk-rating model to assess and templates in this regard, covering a risk-based approach
quate, in most cases, to cover the cost of claims and other related their activities, money laundering and terrorism go hand in hand. AML/CFT risks developed using the guidelines issued by FATF and the (including higher risk countries); customer due diligence
expenses with adequate margin for profit. The Regulatory Authority is dedicated to the setting and implemen- IMF model customised to the QFC environment. Broadly equivalent (including reliance on third parties); correspondent banking;
tation of standards to fight terrorist financing and other threats to models have been designed and deployed for authorised firms and beneficial ownership of legal persons and legal arrangements
the QFC. (including transparency); and the reporting of suspicious
DNFBPs, with any differences a reflection of the nature of the firms
The Regulatory Authority’s dedicated team of highly skilled AML/ and their respective activities. transactions.
CFT experts is responsible for anti-money laundering supervision