A company contracts a life insurance policy with a savings feature of 100,000 USD for an individual in a high-risk country. The policy receives monthly cash deposits from unknown third parties. A mini

Question

Options

• AThe regular withdrawals from the policy by the end of the month
• BUnidentified third parties depositing cash to the policy
• CA company established in a high-risk country contracting a policy for a domestic individual
• DA policy for an amount of 100,000 USD is to be considered high and suspicious
• EA life insurance policy with a savings feature for a national from a high-risk country

• A
  74% (35)
• C
  4% (2)
• D
  15% (7)
• E
  6% (3)

Explanation

One of the common methods of money laundering in the insurance sector is to purchase policies with illicit funds, overpay premiums, and then cancel or surrender the policies to receive refunds or payouts. This allows criminals to move and disguise the source of their funds through the insurance company. Therefore, the regular withdrawals from the policy by the end of the month could indicate a money laundering scheme. Moreover, the FATF Guidance for a Risk-Based Approach for the Life Insurance Sector states that unidentified third parties depositing cash to the policy could also pose a high money laundering risk, as cash transactions are difficult to trace and third parties may act as intermediaries or nominees for the real beneficiaries. Therefore, the insurance company should conduct enhanced due diligence on the policyholder and the third parties, and monitor the transactions for any suspicious activity.

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