As an insurance and investment professional dealing directly with clients, you’re able to obtain information about their fund sources, reasons for purchasing annuities or other insurance products, and other personal details. This puts you as a first line of defense against money laundering.

The Money Laundering Process

Money laundering filters illegally gained money through various transactions that make the money seem to be obtained through legal activities. Annuities or other insurance products with an investment feature are often purchased and canceled during the free-look period to aid in these schemes.

Suspicious Activities

Because ignoring signs of money laundering can implicate you in the crime, you must be aware of red flags when investing clients’ money in annuities. Be concerned if the insurance product is inconsistent with the client’s needs, exceeds their income or liquid assets, or if they seem more interested in early termination features than product features. If your client hesitates to reveal typical application information, won’t provide a photo identification or other proof of identity, or attempts to use unusual payment methods such as cash, foreign currency, or credit card advance checks, they may be laundering money. Attempting to buy many small policies rather than one large one for no valid reason, breaking a large amount into small payments, and pouring money into and immediately withdrawing from a contract are also warning signs. Requesting a maximum load on a single premium policy soon after purchase, terminating a product early, insisting on a quick issue or service without paperwork or medical requirements, and transferring the benefit to an unrelated third party can signify money laundering.

Your Responsibilities

The USA PATRIOT Act holds you liable for reporting suspicious activities. Failure to do so can result in criminal charges. Read through your company’s anti-money-laundering requirements and adhere to them at all times. Verify each client’s identity through a government-issued photo identification, such as a driver’s license or passport. Include each client’s name, birthdate, physical address, and social security or tax identification number on applications. Verify the need for the annuity or other insurance product being purchased. Ensure all application information and associated documents are accurate and complete. Create a profile for each client, documenting identity verification, need for insurance, and information on all policies or products purchased. Retain your files for five years after policy or product termination or as long as state insurance regulations require. Report to your principal transactions over $10,000 paid in cash or through cash-like methods such as money orders, traveler’s checks, or cashier’s checks, as well as suspicious transactions of $5,000 conducted at one time or through related transactions. Your principal will determine whether a Suspicious Activity Report (SAR) needs to be filed with the U.S. Department of the Treasury. Under no circumstances should you inform the client you have suspicions or are filing a report.

Leaders in Financial Services Recruiting

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