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Guideline on Anti-Money Laundering and the Combating of Terrorist FinancingAPPENDIX II - SECTOR SPECIFIC GUIDANCE:For Insurance Companies Registered under the Insurance ActA: TRANSACTIONS WITH INTERMEDIARIESIn addition to the guidance given in Part IV of the FOR, insurance companies should also:(i)(ii)(iii)ensure that if an agent or broker is responsible for collecting the information required to make a third partydetermination , these responsibilities are documented;ensure they receive client identification information in the required timeframes; andperiodically review, in a systemic manner, the quality of client information gathered and documented by theagent or broker to ensure that it continues to meet their requirements.Documentation of relationships and communications with, and client due diligence work of, agents and brokers,should be complete and current, and client information should be placed in the client’s record promptly uponreceiving it. Insurers should consider terminating relationships with agents or brokers that do not comply with agreedupon client identification responsibilities or provide the insurer with the requisite client information on a timely basis.Contracts with agents and brokers should be reviewed and updated as necessary to ensure compliance with theAML/ CTF laws and <strong>guideline</strong>s. The extent of the insurer’s exposure to the agent or broker for the results of clientdue diligence should be addressed expressly in the insurer’s inherent risk assessment.B: EXAMPLES OF SUSPICIOUS TRANSACTIONSa) Insurance Policies(i)(ii)(iii)(iv)(v)Application for insurance outside the policyholder’s normal pattern of business needs.Any lack of information or delay in the provision of information to enable verification to becompleted.Any transaction involving an undisclosed party.Early termination of policy, especially at a loss caused by front end loading, or where cash wastendered and/or the refund cheque is to a third party.A transfer of the benefit of a policy to an apparently unrelated third party.Page 53 of 75
Guideline on Anti-Money Laundering and the Combating of Terrorist Financing(vi)(vii)(viii)(ix)(x)(xi)(xii)(xiii)(xiv)Request for purchase of a policy requiring a large lump sum payment where the policyholder haspreviously requested only small, periodic-payment contracts.Attempts to use a third party cheque to make a purchase of a policy.Applicant shows no concern for the performance of the policy but much concern for its earlycancellation provisions.Applicant is reluctant to provide normal information when applying for a policy, provides minimal orfictitious information, or provides information that is difficult or expensive to verify.Applicant appears to have an unusual number of policies with different insurers.Applicant purchases policies in amounts considered beyond the customer’s apparent means.Applicant establishes a large insurance policy and within a short time period cancels the policy andrequests that the cash value be paid to a third party.Applicant wants to borrow the maximum cash value of a single premium policy, soon after payingfor the policy.Applicant uses a mailing address outside the area where the application is made and where thehome telephone is found to have been disconnected, upon verification attempt.b) Money Laundering Using Cash Transactions(i)(ii)Applicant attempts to use cash to complete a proposed transaction when this type of businesstransaction would normally be handled by cheques or other payment instruments.Applicant requests to make a lump sum payment by a wire transfer or with foreign currency.c) Money Laundering by International Activity(i)(ii)Application for a policy from a potential client in a distant place where a comparable policy could beobtained “closer to home”.Introduction by an agent/intermediary in an unregulated or loosely regulated jurisdiction or whereorganized criminal activities (e.g. drug trafficking or terrorist activity) are prevalent.d) Money Laundering by Employees or AgentsInsurance entities should pay particular attention to employees and agents who show: -(i)(ii)a sudden lavish lifestyle or do not take vacations.dramatic, unexpected increases in sales.Page 54 of 75
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