LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
Anti-money-laundering requirements for segregated fund and annuity sales include:
- ANothing specific, since anti-money-laundering rules apply to banks and securities dealers rather than insurers
- BRequirements only for cash deposits over the reporting threshold, since other funds have already passed through a bank
- Identity verification, third-party determination, source of funds, FINTRAC reporting, and politically exposed persons
- DRequirements only for non-resident clients, since Canadian residents are identified through the tax system
Correct answer: C) Identity verification, third-party determination, source of funds, FINTRAC reporting, and politically exposed persons
Life insurers and agents are reporting entities under Canadian AML legislation for these products.
Why the other options are wrong
- AAnti-money-laundering rules apply fully to segregated funds and annuities.
- BIdentity verification applies broadly, not only to cash.
- DThe rules apply to all clients.
Exam tip
AML: ID, third party, source of funds, LCTR/STR, PEP checks.
Common mistake
Accepting a large deposit without identity verification.
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.