LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, life insurance agents and companies must:
- ARefuse all cash from clients, since any cash transaction is treated as suspicious under the Act
- BReport every sale to the police, so that law enforcement can screen the client's source of funds before the policy is issued
- CTake no action, since the Act applies to banks and securities dealers rather than to insurance
- Identify clients, keep records, screen for PEPs, report to FINTRAC, and maintain a compliance program
Correct answer: D) Identify clients, keep records, screen for PEPs, report to FINTRAC, and maintain a compliance program
AML obligations apply to insurers and agents acting for them. Suspicious transaction reports have no dollar threshold.
Why the other options are wrong
- ACash may be accepted subject to reporting rules and insurer policy.
- BReports go to FINTRAC, only for specified transactions.
- CObligations are extensive.
Exam tip
AML: identify, record, third party, PEP, LCTR/STR to FINTRAC.
Common mistake
Skipping identification because the client is a long-time acquaintance.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.