You'll need to consider each case holistically based on all of the information you have accumulated including details of the Client's stated occupation or the nature of a business for entity accounts. It will be necessary to evaluate several relevant factors, such as how transactions align with your knowledge of the Client's occupation, normal business activity practices, financial history, past investment patterns, background and behaviour. Several indicators considered together - not just one - might lead you to conclude there are reasonable grounds to suspect that a transaction is related to the commission of a money laundering or terrorist financing offence. You should examine each transaction in the context of what seems appropriate and is within normal practices, and consider all of the circumstances surrounding the transaction.
- There is no minimum dollar amount for reporting a suspicious transaction.
- This legislation applies to all movement of funds, not only to cash transactions.
- A suspicious transaction can involve any type of product.
Because each case is unique and involves many considerations, there is no definitive checklist of characteristics of a suspicious transaction. Regulatory guidelines list examples of common indicators and examples of industry-specific indicators that might point to a suspicious transaction.
Examples of ML and TF indicators that may cause suspicion
Below are some examples for Life Insurance companies, brokers and agents. This is not a complete list.
You can visit FINTRAC’s website for additional ML and TF indicators organized by sector (including Securities Dealer and Financial Entity’s) and organized by topic of indicator.
ML/TF indicators related to identifying the person or entity
The following are examples of ML/TF indicators that you may observe when identifying persons or entities:
- There is an inability to properly identify the Client or there are questions surrounding the Client's identity.
- When opening a life insurance policy, the Client refuses or tries to avoid providing information required, or provides information that is misleading, vague, or difficult to verify.
- The Client refuses to provide information regarding the beneficial owners, or provides information that is false, conflicting, misleading or substantially incorrect.
- The identification document presented by the Client cannot be authenticated
- There are inconsistencies in the identification documents or different identifiers provided by the Client, such as name, address, date of birth or phone number.
- Client produces seemingly false information or identification that appears to be counterfeited, altered or inaccurate.
- Client displays a pattern of name variations from one transaction to another or uses aliases.
- Client alters the transaction after being asked for identity documents.
- The Client provides only a non-civic address or disguises a post office box as a civic address for the purpose of concealing their physical residence.
- Common identifiers (e.g. addresses, phone numbers, etc.) are used by multiple Clients that do not appear to be related.
- Common identifiers (e.g. addresses, phone numbers, etc.) are used by multiple Clients conducting similar transactions.
- Transactions involve persons or entities identified by the media, law enforcement and/or intelligence agencies as being linked to criminal activities.
- Attempts to verify the information provided by a new or prospective Client are difficult.
ML/TF indicators related to Client behaviour
- Client makes statements about involvement in criminal activities.
- Client conducts transactions at different physical locations, or approaches different employees.
- Evidence of untruthfulness on behalf of the Client (e.g. providing false or misleading information).
- Client exhibits nervous behaviour.
- The Client refuses to provide information when required, or is reluctant to provide information.
- Client has a defensive stance to questioning.
- Client presents confusing details about the transaction or knows few details about its purpose.
- Client avoids contact with Sun Life employees or Sun Life advisor.
- The Client refuses to identify a source for funds or provides information that is false, misleading, or substantially incorrect.
- The Client exhibits a lack of concern about higher than normal transaction costs or fees.
- Client makes enquiries/statements indicating a desire to avoid reporting or tries to persuade the reporting entity not to file/maintain required reports.
- Insufficient explanation for source of funds.
- Client terminates a life insurance policy or annuity after an initial payment is made without a reasonable explanation.
ML/TF indicators related to products and services
- Holding multiple accounts at several financial institutions for no apparent reason
- Suspected use of a personal account for business purposes, or vice-versa.
- Client appears to have recently established a series of new relationships with different financial entities.
- A product and/or service opened on behalf of a person or entity that is inconsistent based on what you know about that client.
- Use of multiple foreign bank accounts for no apparent reason.
- Frequent and/or atypical transfers between the client's products and accounts for no apparent reason.
ML/TF indicators related to change in account activity
- A business account has a change in ownership structure with increases in transactional activity and no apparent explanation.
- An inactive account begins to see financial activity.
- Accounts that receive relevant periodical payments and are inactive at other periods without a logical explanation.
- Abrupt change in account activity.
ML/TF indicators specific to life insurance
- Client wants to use cash for a large transaction.
- Client proposes to purchase an insurance product using a cheque drawn on an account other than his or her personal account.
- Client requests an insurance product that has no discernable purpose and is reluctant to divulge the reason for the investment.
- Client who has other small policies or transactions based on a regular payment structure makes a sudden request to purchase a substantial policy with a lump sum payment.
- Client conducts a transaction that results in a conspicuous increase in investment contributions.
- Scale of investment in insurance products is inconsistent with the Client's economic profile.
- Unanticipated and inconsistent modification of the Client's contractual conditions, including significant or regular premium top ups.
- Unforeseen deposit of funds or abrupt withdrawal of funds.
- Involvement of one or more other parties in paying the premiums or in any other matter involving the policy.
- Overpayment of a policy premium with a subsequent request to refund the surplus to another party.
- Funds used to pay policy premiums or deposits originate from different sources.
- Use of life insurance product in a way that resembles use of a bank account, namely making additional premium payments and frequent partial redemptions.
- Client cancels investment or insurance soon after purchase.
- Early redemption takes place in the absence of a reasonable explanation or in a significantly uneconomic manner.
- Client shows more interest in the cancellation or surrender of an insurance contract than in the long-term results of investments or the costs associated with the termination of the contract.
- Client makes payments with small denomination notes, uncommonly wrapped, with postal money orders or with similar means of payment.
- Changing the duration of the life insurance contract from the original purpose and intended use.
- The first (or single) premium is paid from a bank account outside the country.
- Client accepts very unfavourable conditions unrelated to his or her health or age.
- Transaction involves use and payment of a performance bond resulting in a cross-border payment.
- The same beneficiary for multiple policies.
- Relationship between the policy holder and the beneficiary is not clearly established.