CAMS · Question #669
The product department of an insurance company proposes launching a special life insurance product with investment elements that allow clients to instruct payments to unknown third parties via…
The correct answer is A. Do not sign off on the product because it contains the option to make payments to unknown third. The life insurance industry is vulnerable to money laundering and terrorist financing, especially when policies allow payments to unknown third parties. Allowing policyholders to transfer funds to unknown third parties increases the risk of money laundering. FATF and EU AML…
Question
The product department of an insurance company proposes launching a special life insurance product with investment elements that allow clients to instruct payments to unknown third parties via partner financial institutions. The product department seeks fast-track approval from compliance to ensure quick market launch. What is the best course of action from a compliance perspective?
Options
- ADo not sign off on the product because it contains the option to make payments to unknown third
- BSign off on the product because client KYC is complete, and unknown individuals can be added
- CDo not sign off on the product because the compliance department was not involved from the
- DSign off on the product quickly to gain a competitive advantage while evaluation by compliance
How the community answered
(47 responses)- A85% (40)
- B4% (2)
- C2% (1)
- D9% (4)
Explanation
The life insurance industry is vulnerable to money laundering and terrorist financing, especially when policies allow payments to unknown third parties. Allowing policyholders to transfer funds to unknown third parties increases the risk of money laundering. FATF and EU AML Directives highlight life insurance policies as high-risk products.
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