It is important to know your clients and recognize when their activities fall outside of the normal or expected range. Consider suspicious any transaction that appears to lack a reasonable economic basis or recognizable strategy. Be aware of activities that raise a red-flag and could indicate money laundering; some examples include, but are not limited to the following:
If you suspect or know that a transaction involves funds related to an illegal activity or is designed to avoid regulations you must report the transaction to the Senior Life Market Compliance Department. A determination as to whether a report should be filed must be based on all the facts and circumstances relating to the transaction and customer. Different fact patterns will require different judgments.
You must not notify the client. The BSA prohibits employees and agents from informing clients that their activities have been or may be reported as suspicious, that a Suspicious Activity Report (SAR) is filed, or that an ongoing investigation regarding activities in his or her account is being conducted.
"Know Your Customer" is a fundamental principle used in complying with the obligations of due diligence to decrease the possibility of you or Senior Life being used to facilitate money-laundering activities. The following information should be collected concerning the client:
The majority of clients are not involved in money laundering so it is important to be able to identify routine transactions versus suspicious transactions. A client profile provides:
Federal rules require all records maintained under AML regulations be kept five (5) years and be reasonably accessible. If a state's regulations require the records be maintained for a longer period then they must be maintained for the longer time period. As an agent, be sure to keep all customer identification you obtain in the client’s file along with any information you provided to Senior Life. By documenting your actions, you protect yourself from possible penalties.
As an agent your responsibility does not end after the initial sale. If any of your future interactions with the client seem suspicious, notify Senior Life's Market Compliance Department. Learn enough about the client’s financial goals and situation to identify if a particular transaction makes sense for the client.
Recognizing the need for a more comprehensive anti-money laundering regime to fight drug trafficking, organized crime, and international terrorism, the U.S. Congress passed and President George W. Bush signed into law the USA PATRIOT ACT (Patriot Act), which, among other things, amended the Bank Secrecy Act (BSA) to require all businesses defined in the BSA as financial institutions to implement an Anti-Money Laundering (AML) program and report suspicious transactions to the Financial Crimes Enforcement Network (FinCEN). An insurance company is defined as a "financial institution." The characteristics of financial products, including certain life insurance products, make them potentially vulnerable to those seeking to launder money. FinCEN relies upon a network of state, federal and international law enforcement agencies to collect, analyze and disseminate information about money laundering. FinCEN is also the repository for all Suspicious Activity Reports (SAR).
The BSA grants the Treasury Department the authority to require firms under its jurisdiction to develop written policies and employee training programs for compliance with the provisions of the BSA. Additionally, the reporting and recordkeeping rules within the BSA require a financial institution to:
On the heels of the terrorist attacks on September 11, 2001, the Patriot Act was signed into law to combat terrorism. The Patriot Act gives law enforcement agencies broader powers in dealing with money laundering and terrorism, and makes it more difficult for money launders to use their traditional financial channels to launder money. The Patriot Act created new anti-money laundering responsibilities for insurance companies.
Money laundering is the illegal practice of placing money gained from criminal activity, "dirty money," through a series of apparently legitimate transactions in order to hide the criminal origin of the money. The goal is to make money from criminal activity appear to be from legitimate sources. Money is usually associated with cash though non-cash transactions can play a role. Any financial transaction can be a part of the process to hide the origin of the money
Although money laundering is a diverse and often complex process, it basically involves three independent steps that can occur simultaneously, separately or overlap.
Penalties for money laundering can be severe. Fines could be twice the amount of the transaction up to 1 million dollars. Any property involved in the transaction or traceable to the proceeds of the criminal activity may be subject to forfeiture. Individuals are subject to prison terms for being willfully blind to the fact that the transaction involved illegal funds. In addition, insurance companies risk losing their charter, and agents risk being removed and barred from insurance. Insurance companies have their own disciplinary policies and procedures.
Agents not complying could be subject to disciplinary action up to and including termination and will be reported to the proper legal authorities. To protect yourself from a willful blindness charge:
One of the most harmful outcomes from involvement in a money laundering investigation is damage to the agent and insurance company's reputation. Being aware of and following money laundering requirements helps protect our most valuable sales tool, your reputation.