LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
A client proposes to fund a deposit with a cheque drawn on a company account belonging to her employer. At implementation the agent must:
- Arefuse all cheques that are not personal, since only personal accounts may be used
- Bdeposit it and note in the file that the client explained the source of the money verbally
- Caccept it, since the insurer only needs the funds to clear before units are allocated
- establish whose money it is and complete a third party determination before proceeding
Correct answer: D) establish whose money it is and complete a third party determination before proceeding
Anti-money-laundering rules require the agent to determine whether a third party is instructing or funding the transaction. A company cheque calls for an explanation, documentation of the relationship and a completed determination.
Why the other options are wrong
- AA company cheque may be acceptable once the relationship has been established.
- BA verbal note does not satisfy the documented determination that is required.
- CClearance of funds says nothing about whose money is being invested.
Exam tip
Funds from an account in another name always trigger a third party determination.
Common mistake
Treating source of funds as a formality when the payment comes from elsewhere.
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.