AML/CFT Red Flags – Banks (2)

Transactions Involving Unidentified Parties

  • Paying premiums in large third party cheques on behalf of the customer.
  • Assignment of a policy to unidentified third parties and for which no plausible reasons can be ascertained.
  • A number of policies taken out by the same insured for low premiums, each purchased with cash and then cancelled with return of premiums to a third party.

Free-Look Provisions and Other Matters

  • Frequent changes to the address or where the customer is a non-natural person, frequent changes to authorised signatories.
  • A policyholder may exercise cancellation rights or cooling off rights on life insurance products where the sum invested must be repaid (subject to any shortfall deduction where applicable). This could offer a readily available route for laundering money, and insurers should therefore be alert to any abnormal exercise of cancellation or cooling off rights by any policyholder. In the event that abnormal exercise of these rights becomes apparent, the matter should be treated as suspicious and reported through the usual channels.
  • Agents who have consistently high activity levels of single premium business far in excess of any average company expectation.
  • The use of an address that is not the customer’s permanent address, for example, utilisation of the agent’s office or home address for the dispatch of customer documentation.

Tax Crimes Related Transactions

  • Negative tax-related reports from the media or other credible information sources.
  • Unconvincing or unclear purpose or motivation for purchasing life policies in Singapore.
  • Originating sources of multiple or significant premiums are not consistent with the declared purpose of the policy.
  • Source of premiums are from another country or jurisdiction, often a tax haven with poor track record on CDD or record keeping requirements.
  • Policies managed by external asset managers who may not be adequately regulated and supervised.
  • The customer fails to reasonably justify the purpose of a transaction when queried by the direct life insurer.
  • Transactions with countries or entities that are reported to be associated with terrorism activities or with persons that have been designated as terrorists.
  • When a young person (aged about 17-26) purchases a life policy with cash value and surrenders it within a short period, which could be an indication of terrorism financing.
  • When a person receives funds from a religious or charitable organisation and utilises the funds for purchasing a life policy with cash value and surrenders it within a relatively short period.
  • The customer uses intermediaries which are not subject to adequate AML/CFT laws.

Direct Life Insurers – AML/CFT Red Flags

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