Paying premium several years in advance and terminating early for a refund (A):“A typical red flag is when a policyholder pays large premiums up front and then seeks early termination to receive a refund. This can be used to launder illicit funds by integrating them into the financial system and then retrieving ‘clean’ money.”(CAMS 6th Edition, Life Insurance ML/TF Risks; FATF Guidance for a Risk-Based Approach for the Life Insurance Sector)
Regularly switching policies and accepting penalties (D):“Frequent changes in insurance policies or products, even at a financial loss, are considered suspicious. This may indicate an attempt to obscure the money trail or integrate illicit proceeds.”(CAMS 6th Edition, ML/TF Red Flags in Life Insurance)
Incorrect Options:
B: Having multiple policies is common and not itself a red flag.
C: High premiums/payouts are not inherently suspicious.
E: Beneficiary payouts to elderly people are not ML/TF red flags.
[References:, CAMS 6th Edition, Life Insurance Red Flags, FATF Guidance for a Risk-Based Approach for the Life Insurance Sector, , ]
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