A compliance officer at an insurance company has been reviewing the transaction activity of several clients. Which transaction is considered a red flag for potential money laundering?

Question

Options

• AA client paid the quarterly life insurance premium using money orders from two different banks.
• BA client from a high-risk jurisdiction recently purchased property insurance for a real-estate
• CA corporation owns several affiliates and recently opened separate group life insurance policies
• DA client established a $100,000 charitable annuity with a non-profit organization that provides

• A
  84% (53)
• B
  5% (3)
• C
  2% (1)
• D
  10% (6)

Explanation

Paying the quarterly life insurance premium using money orders from two different banks is considered a red flag for potential money laundering. This is because money orders are often used by money launderers to avoid the scrutiny of banks and regulators, and to disguise the source and origin of funds. Using money orders from two different banks also suggests that the client is trying to evade the reporting thresholds or the record-keeping requirements that apply to cash transactions. The other transactions are not necessarily indicative of money laundering, although they may warrant further due diligence depending on the risk profile of the client and the nature of the insurance product.

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