LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A prospective client wants to buy a large annuity with cash from an unexplained source and seems evasive. The agent should:
- Follow AML procedures: verify identity, ask about source, decline if unsatisfied, and report without tipping off
- BWarn the client that a large cash deposit will be reported to FINTRAC, so they can decide whether to proceed
- CAccept the deposit, since a large annuity purchase is good business and the client's affairs are not the agent's concern
- DSplit the deposit into smaller amounts below the reporting threshold, so the transaction does not attract attention
Correct answer: A) Follow AML procedures: verify identity, ask about source, decline if unsatisfied, and report without tipping off
Tipping off is prohibited; structuring to avoid reporting is an offence.
Why the other options are wrong
- BTipping off is prohibited.
- CAML duties apply to the transaction.
- DStructuring is an offence.
Exam tip
Suspicious: verify, inquire, report (no tipping off), never structure.
Common mistake
Telling the client 'if you deposit less, I won't have to report it'.
What this tests
CISRO competency component 2.2 — Integrate into practice the rules governing the activities of life insurance agents — which is weighted at 40% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 2
- A prospective client wants to confirm that an agent is properly licensed before meeting him. She should:
- A dual-licensed agent's mutual fund business is reviewed following a client complaint. The review will be conducted by:
- Assuris coverage applies to:
- OLHI's services are available to:
- Complaints about an agent's conduct (as opposed to an insurer's claim decision) should be directed to:
- The best summary of an agent's ethical obligations is to:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.