- When a large cash transaction (any proceeds of $10,000 or more) is involved (either life insurance or annuity) , the following records must be kept/obtained from the client:
- Transaction record
- Amount and currency of the cash received
- The name, address and occupation of the individual from whom you received the cash from
- The purpose, details and type of transaction
- How the cash was received
- The account that was affected by the transaction (i.e. Policy number etc)
- Client’s information
- Name of the client
- Date of birth
- Proof of ID photo (if possible, make a copy of the ID)
- Third party determination and related records
- Third party’s name, address and occupation
- If business/corporation, obtain business number or incorporation documents
- Relationship between client and the third party
- Transaction record
- client must signed the “authorization for money order” form
Report to the compliance officer ASAP with all the above records attached if a large cash transaction is involves. Further action (report to FINTRAC) will be taken by the compliance officer then.
- If two or more cash transactions of less than $10,000 each were made within a 24 hour period, by or on behalf of the same client, these are considered to be a single large cash transaction if they add up to $10,000 or more.In this case, the large cash transaction applies, and reports the transaction to the compliance officer as explained above.
- Policy persistency monitoring:
- If an agent’s has too many chargeback on commission, need to pay an attention to make sure the same client is not applying to another insurance company with large premium involved
- Periodically check into client’s file to make sure client is not canceling the policy after surrender period and withdraw large cash amount and then apply to another insurance company again (with high premium involved
- The following will not be considered as large cash transaction and no record keeping is required:
- If the cash is from a bank or an authorized foreign bank
- The purpose of the transaction is for the purchase of an annuity or the purchase of a registered annuity as a direct transfer from a registered pension plan
- The purchase of an annuity paid for entirely with the proceeds of a group life insurance policy
- The opening of a registered plan
- Please see below from Insurance Council Bulletin (October 2003) regarding the details on how to report and record the transaction:
- The following is a summary of the legislative requirements under the PCMLTFA applicable to life insurance companies and agents. While Council is not responsible for regulation or enforcement of this legislation, we are providing details of this information to ensure life agents are aware of their responsibilities and obligations under the PCMLTFA. The following information is meant to be a guide only. Every life insurance agent should obtain more information through the contact information provided below.
- The PCMLTFA requires financial service providers, including life insurance companies and agents, to record and keep information about their clients. It also requires that these businesses report specific information on suspicious and other financial transactions to the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”). When a life insurance agent is an employee of a life insurance company or broker, these requirements are the responsibility of the company, except with respect to reporting suspicious transactions and terrorist property, which is applicable to both.
- Suspicious Transactions - You must report where there are reasonable grounds to suspect that a transaction is related to the commission of a money laundering offence or to the financing of a terrorist activity.
- Terrorist Property - You must report where you know that there is property in your possession or control that is owned or controlled by or on behalf of a terrorist group.
- Large Cash Transactions – Effective January 31, 2003, large cash transactions involving amounts of $10,000 or more received in cash, must be reported.
- The following records must be kept:
- Details of large cash transactions;
- Client information records; and,
- Official corporate records (binding provisions).
- Specific measures must be taken to identify the following individuals or entities:
- any individual who conducts a large cash transaction;
- any individual or entity that purchases an annuity or life insurance policy for which it may pay $10,000 or more; and,
- any individual or entity with which you have an ongoing business relationship.
POLITICALLY EXPOSED FOREIGN PERSON
- If you received a lump-sum payment of $100,000 from an individual for an annuity or a life insurance policy, you have to take reasonable measures to determine whether you are dealing with politically exposed foreign person.You also have to keep records and take additional measures.This can be done by:
- asking the client; or
- consulting a credible source of commercially or publicly available information about politically exposed persons.
- This has to be done within 14 days after the transaction occurred.
- If the individual from whom you received the lump-sum payment described above is a politically exposed foreign person, you also have to do the following:
- take reasonable measures to establish the source of funds used by the individual for the transaction; and
- within 14 days after the transaction occurred, get a member of senior management to review the transaction.
- Once a transaction has been reviewed, you have to keep a record of the following:
- the office or position of the individual who is a politically exposed foreign person;
- the source of the funds, if known, that were used for the transaction;
- the date you determined the individual to be a politically exposed foreign person;
- the name of the member of senior management who reviewed the transaction; and
- the date the transaction was reviewed.
THIRD PARTY DETERMINATION
- Where a large cash transaction record is required, you must take reasonable measures to determine whether the individual is acting on behalf of a third party. In addition, where an annuity or life insurance policy is purchased and the client is required to pay $10,000 or more over the duration of the policy, you must take reasonable measures to determine whether the client is acting on behalf of a third party.
- In cases where a third party is involved, specific information about the third party and the relationship with the individual providing the cash or account holder must be obtained.
- The following four elements must be included in a compliance regime:
- The appointment of a Compliance Officer; the development and application of compliance policies and procedures; periodic review of the effectiveness of policies and procedures; and, implementation of an ongoing compliance training program.
- FINTRAC has a mandate to collect, analyze, assess, and disclose information in order to assist in the detection, prevention, and deterrence of money laundering and the financing of terrorist activity.