A policyowner submits a 4,000. Shortly after the payment clears, the policyowner contacts the insurer, states the overpayment was a mistake, and requests that the $10,000 excess be refunded via a wire transfer to an unrelated corporate account in a high-risk jurisdiction. Under the USA PATRIOT Act and standard Anti-Money Laundering (AML) protocols, which of the following actions must the insurance company take?
- File a Suspicious Activity Report (SAR) with FinCEN within 30 days of detecting the suspicious behavior, while strictly keeping this filing confidential from the policyowner.Answer
- BInform the policyowner that the transaction has been flagged for federal review and file a Suspicious Activity Report (SAR) within 30 days.
- CSubmit a Currency Transaction Report (CTR) to the federal government within 15 days because the requested refund amount is at the $10,000 threshold.
- DImmediately freeze the policy and report the suspected money laundering attempt directly to the state Department of Insurance and local police.
Answer
File a Suspicious Activity Report (SAR) with FinCEN within 30 days of detecting the suspicious behavior, while strictly keeping this filing confidential from the policyowner.
The scenario describes a common money laundering technique where illicit funds are deposited as an overpayment and then withdrawn as a 'clean' refund. Because whole life insurance is a covered product and the suspicious amount exceeds $5,000, the insurer is federally required to file a Suspicious Activity Report (SAR) with FinCEN within 30 days. Additionally, the USA PATRIOT Act strictly prohibits 'tipping off' the suspect.
Step-by-Step Solution
Key Concept
USA PATRIOT Act AML Reporting and Anti-Tipping-Off Rules