LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
A client asks to make several deposits just below the reporting threshold rather than one larger deposit. The agent should recognize this as:
- a possible attempt to avoid reporting, which may require a suspicious transaction report
- Bprudent planning that reduces unnecessary paperwork for both the client and the insurer
- Cacceptable, provided the total amount is disclosed to the insurer at the end of the year
- Dirrelevant, since reporting obligations rest entirely with the insurer rather than the agent
Correct answer: A) a possible attempt to avoid reporting, which may require a suspicious transaction report
Splitting amounts to stay under a threshold is a classic indicator of structuring. The agent must not help, must consider whether reasonable grounds for suspicion exist and must report through the required channel without alerting the client.
Why the other options are wrong
- BAvoiding a reporting requirement is not prudent planning but an indicator of risk.
- CA later disclosure does not cure a deliberate attempt to avoid reporting.
- DAgents have their own obligations and cannot leave reporting to the insurer.
Exam tip
Deliberate splitting to stay under a threshold is structuring and must be reported.
Common mistake
Helping a client break a deposit up to avoid paperwork.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.