Enhance insurance beneficiary identity verification for life insurers

Johannesburg, 12 Jul 2023

SprintHive is geared to partner with life insurers to advance their compliance following the Prudential Authority’s directive.

The Prudential Authority (PA) issued a directive in terms of Section 45 and item 8 of Schedule 1 read with Schedule 2 of the Financial Intelligence Centre Act 38 of 2001. The directive serves to direct entities to ensure that information is obtained in respect of the beneficiaries of life insurance policies and that the money laundering and terrorist finance (ML/TF) risk associated with the beneficiary must be incorporated into the overall assessment of the ML/TF risk posed by the client.

South Africa being added to the greylist by the Financial Action Task Force (FATF) is not a punitive measure by the list body, but rather intended to provide a doubling on the extent that is commensurate with the anti-money laundering Act. As a result, to get the country off the FATF list, we must get accurate and up-to-date information on beneficial ownership. This impacts both the public and private sector and calls on all supervising bodies such as the Prudential Authority to apply persuasive and decisive sanctions in case of non-compliance.

To simplify the directive in terms of section 45, as part of the customer due diligence (CDD) and ML/TF, life insurers must obtain the identification particulars of beneficiaries nominated by the client to satisfy their understanding of the risk associated with the client. Obtaining details of the beneficiary enables the institution to verify information when onboarding or when there is a change in beneficiary, which makes the overall process of paying out when the risk event arises easier to manage – as the information should already be available to assist in contacting the nominated beneficiary.

Part of the requirement is not merely to collect information on beneficiaries, but to verify that the beneficiaries are who they declared to be. At SprintHive, we are geared to partner with insurers to advance compliance according to the Prudential Authority’s directive. Our digital identity verification service with identity fraud detection, liveness check and facial biometrics enables insurers to have industry-aligned compliance. Beneficiaries can confirm their identity at their convenience using their mobile devices.

It is important to understand that we have between 24 to 36 months to get this right by doing our part in getting our country out of the greylisting. We are confident that a focus on (1) staying on top of the risk and (2) good customer due diligence will ensure compliance with PA directive and get us closer to exiting the FATF greylist. As a result of our solutions, one of our clients – a large retail credit provider – has experienced 0% identity fraud on their digital channel for over 18 months.

The cost of increased verification, fraud prevention and reporting will be substantially lower than the long-term cost of allowing our country to remain contaminated by fraud, crime and corruption.

SprintHive is a fast-growing South African fintech that enables seamless and innovative end-to-end customer onboarding services that drive conversion rates, prevent fraud and reduce risk and costs. It provides automated and easy-to-implement solutions that fully onboard a new customer in under two minutes.

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