Stay Alert with Athene’s Financial Crime Programs

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Last month, we shared information on Athene’s Anti-Fraud and Anti-Money Laundering (AML) Programs and your role as a financial professional. Our goal is to provide valuable information on an ongoing basis that can help you in your efforts to prevent, detect and combat financial crime.

Anti-Fraud

We’ve provided a few additional resources and identified some common red flags we look for, both during and after the sale, that may indicate that fraudulent activity has occurred.  

Athene has a centralized Special Investigation Unit (SIU) whose purpose is to investigate suspected insurance fraud. Our producer portal houses many resources you can use to help prevent, detect and combat fraud. Here are just a few …

It’s important to note that something that looks like potential fraud does not necessarily prove fraud. Even in the presence of several indicators, fraud may not have occurred. Indicators (red flags) are merely areas where fraudulent activity has been identified in the past.

We’re here to help! If you suspect fraud, please contact Athene for assistance:

 

Anti-Money Laundering

We’ve put together some information to help you report suspicious activity and understand the AML risk factors and how to mitigate them. 

The Financial Crimes Enforcement Network (FinCEN) is responsible for imposing Anti-Money Laundering (AML) compliance program and Suspicious Activity Reporting requirements on insurance companies. The insurance company is responsible for the conduct and effectiveness of its AML compliance program, which includes producer activities. The requirements apply to covered products. A covered product, for the purposes of an AML compliance program, includes:

  • Any annuity contract, other than a group annuity contract.
  • Any permanent life insurance policy, other than a group life insurance policy.
  • Any other insurance product with features of cash value or investment.

When unusual or suspicious activity relating to insurance is detected, the company will file a Suspicious Activity Report. The report is confidential.

Risk Factors

Insurance products can be used to facilitate money laundering. For example, currency can be used to purchase one or more life insurance policies or annuity contracts. These contracts may then be quickly canceled by a policyholder (also known as “early surrender”) for a penalty or the policyholder may utilize the “free look” period without penalty. When this happens, the insurance company refunds the money to the purchaser in the form of a check.

Insurance policies without cash value or investment features are lower risk but can be used by a policyholder to launder money or finance terrorism through the submission of inflated or false claims to its insurance carrier. If paid, the claims would enable the insured to recover a part or all of the originally invested payments.

Other ways insurance products can be used to launder money include:

  • Borrowing against the cash surrender value of permanent life insurance policies.
  • Selling units in investment-linked products (such as annuities).
  • Using insurance proceeds from an early policy surrender to purchase other financial assets.
  • Buying policies that allow the transfer of beneficial interests without the knowledge and consent of the issuer (e.g., secondhand endowment and bearer insurance policies).
  • Purchasing insurance products through unusual methods such as currency or currency equivalents.
  • Buying products with insurance termination features without concern for the product’s investment performance.

Risk Mitigation

To mitigate money laundering risk, certain policies, procedures and processes are created to include:

  • The identification of higher-risk accounts.
  • Customer due diligence, including Enhanced Due Diligence for higher-risk accounts.
  • Product design and use, types of services offered, and unique aspects or risks of target markets.
  • Monitoring, which involves the review of early policy terminations and the reporting of unusual and suspicious transactions such as …
    • A single or large premium payment.
    • The purchase of a product that appears to fall outside the customer’s normal range of financial transactions.
    • Early redemptions.
    • Multiple transactions.
    • Payments to apparently unrelated third parties.
    • Collateralized loans.
  • Recordkeeping requirements.