Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Welcome to
Anti-Money Laundering
Online Training
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Agent Training: Anti-Money Laundering
I. The USA PATRIOT Act
II. What Is Money Laundering
III. Company and Agent Responsibilities
IV. ACLI Case Studies
This Agent Training PowerPoint provides information about Anti-Money Laundering Regulations.
Remember, this material is for training and has not been filed or approved as advertising. It should not
be used as a sales tool.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
The USA PATRIOT Act
The USA PATRIOT Act was signed into law in 2001.
It was designed to increase the ability of law
enforcement agencies to protect people against
terrorism by expanding the authority of these agencies.
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The USA PATRIOT Act
The Act includes provisions to prevent the financial
services industry, including the insurance sector, from
being used for money laundering and terrorist
financing by criminals and terrorists.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
The USA PATRIOT Act
The Act requires insurance companies to establish
anti-money laundering (AML) programs that comply
with minimum standards developed by the U. S.
Department of the Treasury.
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The USA PATRIOT Act
Regulations issued by the Treasury Department and its
Financial Crimes Enforcement Network (FinCEN)
establish minimum requirements for insurance
companies anti-money laundering programs and
require insurers to report suspicious activities. These
regulations took effect May 2, 2006.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
The USA PATRIOT Act
The Treasury Department and its Financial Crimes
Enforcement Network (FinCEN) require insurance
companies to integrate Agents into the companies’
anti-money laundering programs and to monitor the
Agents’ compliance with the programs.
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Anti-Money Laundering Agent Training
I. The USA PATRIOT Act
II. What Is Money Laundering
III. Company and Agent Responsibilities
IV. ACLI Case Studies
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Money Laundering
• Is a varied and complicated process.
• Generally, but not always, involves cash transactions.
• Filters money through a series of transactions until it
appears to be obtained from ‘clean’ or legal activities or
sources.
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Money laundering has three phases that are
implemented in the following order:
• Placement
• Layering
• Integration
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Placement
Placement is the process of injecting illegally obtained
proceeds, including cash, into the financial system
through transactions such as bank deposits or the
purchase of certain insurance products.
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Layering
Layering is the process of separating illicit proceeds
from their criminal source through complex financial
transactions.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Integration
Integration is the process of putting the illicit
proceeds back into circulation in the economy, with
the appearance of legality.
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Funding terrorist activities around the world is
a common reason for money laundering.
• Funding involves the use of money, which may be
lawfully obtained, to fund illegal and dangerous
activities.
• Because of the three-phase process in money
laundering, it may be difficult to identify the funds
as laundered.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Anti-Money Laundering Agent Training
I. The USA PATRIOT Act
II. What Is Money Laundering
III. Company and Agent Responsibilities
IV. ACLI Case Studies
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Company and Agent Responsibilities
Life insurance Agents have an important role to play in
insurance companies’ anti-money laundering programs
because Agents have direct contact with customers.
Agents are in the best position to gather information
and detect suspicious activity.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Company and Agent Responsibilities
The USA PATRIOT Act sets in place two basic regulations
for insurance companies:
1. To develop and implement a written anti-money
laundering program applicable to ‘covered products’ that is
designed to prevent the company from being used to
facilitate money laundering or the financing of terrorist
activities.
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Company and Agent Responsibilities
2. To report ‘suspicious activities’ and to establish
procedures to obtain information from Agents necessary
to report these transactions.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Company and Agent Responsibilities
Each insurer is also required to establish an anti-money
laundering program that is risk-based. That means the
program addresses the money laundering risks that arise
from the company’s particular product mix and unique
business practices.
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Covered Products
Regulations do not apply to all insurance products, only to
those considered to be covered products. Covered
products are:
1. Permanent individual life insurance policy (other than a
group life insurance policy)
2. An annuity contract (other than a group annuity
contract)
3. Any other insurance product or deposit fund with
features of cash value or investment
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Customer Information
Insurance Agents typically are involved in sales operations
and are in direct contact with customers. Agents will often
be in a critical position of knowledge as to the source of
investment assets, the nature of the client, and the
objectives for which the insurance products are being
purchased.
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Customer Information
Agents should expect to collect information needed to
assess the risk associated with a particular business – in
particular, to identify customers in high-risk businesses or
high-risk geographic locations or those using products or
services that may be more susceptible to abuse in money
laundering activity.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Methods of Payment
Certain forms of payments – cash, money orders, traveler’s
checks, and bank checks – can be used in the placement
phase of a money-laundering scheme. To manage this risk,
companies set limits on the forms of payments that will be
accepted and amounts acceptable for some of them.
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Methods of Payment
The goal is to reduce the chances that the insurance
business will be involved in money laundering, without
excluding forms of payment with a legitimate business
purpose.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Methods of Payment
Because Agents also collect at least the first premium due
under a policy, they may be called upon to inform
customers of these standards and to enforce them.
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Suspicious Transactions
Insurance companies are developing controls and
procedures to identify and report suspicious
transactions – in general transactions totaling $5,000 or
more that a company has reason to suspect.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Suspicious Transactions
These may include transactions that:
1. Involve funds derived from illegal activity or are
intended to hide funds derived from illegal activity
2. Are designed to evade reporting requirements imposed
by federal law
3. Have no apparent lawful purpose or are out of
character for your customer
4. Use the company to facilitate criminal activity
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Suspicious Transactions
Agents who are often in the best position to detect
suspicious activity should look out for:
• Customers who are resistant to requests for information
• Customers who are indifferent to the features of a
product, except for withdrawal rights
• Customers who seek products inconsistent with their
apparent needs
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Suspicious Activities
Suspicious activities, however, are not limited to a narrow
definition of money laundering.
They include any effort to involve an insurance company in
illegal activity, and may even include lawful transactions
that are not typical for the customer involved and for which
there is no reasonable explanation.
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Suspicious Activities
Under federal law, insurers and Agents are protected
from liability to customers for disclosing possible
criminal activity to their insurance companies, law
enforcement, and certain government supervisory
agencies.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Suspicious Activities
• Suspicious activity reports must be kept confidential.
• Customers cannot be notified that a suspicious activity
has been reported.
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Agent Training
Anti-money laundering regulations require insurance
companies to train their Agents on:
• Identifying suspicious customer behavior and
transactions
• Procedures to report suspicious activities to the company
• Agent’s responsibilities under the company’s
anti-money laundering program
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Testing AML Programs
Insurance companies are required to conduct independent
testing as to the effectiveness of their anti-money
laundering programs, including the compliance of their
Agents.
The Internal Revenue Service also examines insurance
companies on the adequacy and effectiveness of their antimoney laundering programs.
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Contractual Agreements with Agents
With respect to a company’s AML program, the
contractual responsibilities of Agents are similar to the
current responsibilities they undertake in connection
with company customer identification procedures.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Contractual Agreements with Agents
Insurers already have numerous compliance and best
practices guidelines that both captive and independent
Agents follow in order to continue writing business for the
company.
Insurers also require very extensive information gathering
by many of their Agents for underwriting purposes.
For more information, e-mail the AML Compliance Officer:
[email protected]
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Acknowledgement of Receipt
This acknowledges that I have completed ‘What to Expect Under the
Anti-Money Laundering Regulations’ and I have been instructed to
read the presentation in its entirety. I understand that I am expected
to comply with the rules and procedures contained therein, and that I
have an obligation to be alert for and responsible for identifying and
reporting suspicious new business or customer service transactions
that could be an indicator of money laundering or terrorist financing
activity. I also understand that violations of these procedures can
subject an individual Agent or the Company to civil or criminal
penalties. I have been instructed to report any such activity to my
Agency or Agency Owner.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Agent Training: Anti-Money Laundering
I. The USA PATRIOT Act
II. What Is Money Laundering
III. Company and Agent Responsibilities
IV. ACLI Case Studies
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American Council of Life Insurers
(ACLI) Case Studies
Read the case studies on the following pages to test
your understanding of anti-money laundering
scenarios.
After description of scenario, correct answers are
shown on the following page.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
No Picture ID
A potential customer meets with an Agent to purchase a life
insurance policy or an annuity. The Agent asks the person for a
driver’s license or passport. The potential customer shows a
‘passport’ with no picture and when questioned by the Agent
says that it is a military passport and that military passports do
not have pictures. When asked for another form of ID, the
person, unable to produce another ID, becomes irate and
questions whether this company wants the business or not.
How Should the Agent Respond?
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Since this is suspicious activity related to a customer
applying for an insurance contract, the Agent should
immediately contact the Money Laundering Compliance
Officer at the insurance company to report all the details of
this meeting.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Change in Payment Behavior
The company operations department notices in an
exception report that for the third Friday in a row a small
business owner gave his Agent a payment of exactly $9,500
in money orders to add to his flexible premium fixed
annuity.
How Should the Agent Respond?
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The Agent should immediately notify the company’s Money
Laundering Compliance Officer that this customer has been
using equivalents, so that the Compliance Officer can
consider whether this form of payment is acceptable and
whether reporting is required.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
High Risk Businesses
A jeweler/precious metal dealer applies for a corporate owner
life insurance policy. In accordance with the company’s due
diligence procedures for owners in high risk businesses, the
dealer provides valid articles of incorporation and documents
verifying its identity are accurate and complete. The company
operations department notices on a monthly exception report
that on the first of every month, the Agent calls in requesting a
loan, which the owner immediately pays back with cash
equivalents.
How Should the Agent Respond?
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The Agent should recognize that monthly loans paid back
immediately are a ‘red flag’ and should call the company’s
Money Laundering Compliance Officer.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Disregard For Monetary Losses
An annuity owner calls his Agent to request a surrender of an
annuity, which was held for less than one year. When the Agent
apprises the owner of the surrender charges and potential
losses, the owner indicates that the fees and losses do not
matter and to please make the surrender immediately and wire
the money to an account located in Europe.
How Should the Agent Respond?
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The Agent should call the Money Laundering Compliance
Officer and await instructions.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Foreign Clients and Overseas Markets
During her annual Supervisory Interview, your top selling Agent
notifies you that two of her clients are currently residing in Iran.
Upon further investigation you learn that the address of record for
the policies of both clients is Michigan. Both contracts have been
in force for approximately 10 years.
According to the Agent, one of her clients is currently in Iran, but
the owner of the policy resides in Michigan. The other client, who
is the owner and Insured of his policy, is also currently living in Iran.
Both policies were issued in the United States and premiums are
being paid via electronic drafts with funds from U.S. banks.
How Should the Supervisor Respond?
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Contact administrative services and the AML Compliance
Officer, share the information you have obtained from the
Supervisory Interview and await further instruction.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Know Your Customer
As the Agent, you have written an application for insurance and the
client provides payment to you in the form of 18 money orders
totaling $9,088, ranging from $88.00 to $1,000 in amount. The
prospective insured is a 25-year-old female who does not have a
checking account. The application shows China as country of birth
and a current Orlando, Florida address. The application also
indicates that the proposed insured owns a Chinese restaurant in
Tampa, and your Agent’s statement indicates that you met the
client on solicitation. The application indicates that the applicant
has a driver’s license and a Social Security number.
How should you respond?
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Due to the nature of the premium payment, as well as the
admission that the client, a business owner, does not have a
checking account, you should expect that the Agency office
will contact the AML Compliance Officer immediately for
guidance. Perhaps a non-documentary review (enhanced
due diligence) is in order.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Suspicious Transaction Monitoring
Your field office receives what appears to be a $15,000 bank
draft from Tulips Bank in the Netherlands. The insured’s name
and policy number are written on the check, which appears to be
in USD. The name of an international concern is printed toward
the bottom of the check.
Is there anything unusual about this situation? What should
you (your office) do?
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The check should be referred to the Agency Owner, who in
turn should contact the AML Compliance Officer or the
insurance company’s treasury department for additional
instructions on how to handle premiums received as foreign
currency.
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Anti-Money Laundering Agent Training
PowerPoint
12/6/2013
Acknowledgement of Receipt
This acknowledges that I have completed ‘What to Expect Under the
Anti-Money Laundering Regulations’ and I have been instructed to
read the presentation in its entirety. I understand that I am expected
to comply with the rules and procedures contained therein, and that I
have an obligation to be alert for and responsible for identifying and
reporting suspicious new business or customer service transactions
that could be an indicator of money laundering or terrorist financing
activity. I also understand that violations of these procedures can
subject an individual Agent or the Company to civil or criminal
penalties. I have been instructed to report any such activity to my
Agency or Agency Owner.
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Congratulations!
You have completed the AntiMoney Laundering Agent
Training PowerPoint.
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