Suspicious transaction reporting under the PCMLTFA

Failure to report suspicious transactions can result in criminal or administrative penalties and public notice.

These penalties may be applied against:

• life insurance advisors, incorporated agencies, advisor partnerships, their partners, directors, officers and employees
• insurance companies, trust companies and securities dealers and their directors, officers and employees.

In addition, if you fail to comply, Sun Life can terminate your contract. You are not covered under your advisors' Errors & Omissions liability insurance.

For more information refer to:

• FINTRAC’s website: Penalty assessment for STR violations
• Advisor Site: Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)

A "suspicious transaction" is one where you have reasonable grounds to suspect that it is related to the commission of a money laundering or terrorist financing offence, whether or not the transaction was actually completed. You should assess all relevant factors, including your knowledge of the Client's business and circumstances, financial history, background and usual behaviour. Also, it could be the consideration of many indicators, not just one indicator that lead you to a conclusion that the transaction could be suspicious.

Is there a checklist that I can use to decide whether a transaction is suspicious?

No. There is a subjective aspect to deciding whether a transaction is suspicious. You must consider the transaction in the context of what's appropriate or usual for a particular Client or industry. The same type of transaction could be the norm for one Client but could arouse suspicion if it's requested by another Client.

At the bottom of this page , you'll find some examples of transactions and behaviours that might arouse suspicion. However, the list is not exhaustive. You must always be alert for any aspect of a transaction that seems out of the ordinary.

No. There is a subjective aspect to deciding whether a transaction is suspicious. You must consider the transaction in the context of what's appropriate or usual for a particular customer or industry. The same type of transaction could be the norm for one customer but could arouse suspicion if it's requested by another customer.

At the end of this Q&A document, you'll find some examples of transactions and behaviours that might arouse suspicion. However, the list is not exhaustive. You must always be alert for any aspect of a transaction that seems out of the ordinary.

No. Suspicious transactions can involve any type of movement of funds - for example, ACPs, EFTs or cheques.

No. There is no minimum amount for a transaction that could be considered suspicious

Yes, including all life and health insurance products, all savings and investment products, and annuities. If you are brokering a product through another company that does not have an alliance with Sun Life , you must report suspicious transactions either directly through FINTRAC and/or follow the procedure established by the company that supplies the product

Report the transaction to FINTRAC and to SLF via money.laundering@sunlife.com immediately.

FINTRAC (the Financial Transactions and Reports Analysis Centre) is an independent anti-money laundering and anti-terrorist financing report analysis agency established by the legislation. FINTRAC operates at arm's length from law enforcement agencies. Its mandate is to collect, analyze and (when appropriate) disclose information to help detect and prevent money laundering and terrorist financing in Canada and abroad.

Your suspicion about a relationship to a money laundering (ML) or terrorist financing (TF) offence may be the result of more than one transaction. In this case, include all the transactions that contributed to your suspicion in the same report.

The report requires basic information about the transaction, Client and/or beneficiary.

• Reports must be filed electronically with FINTRAC
• Before reporting, try to ascertain the identity of the person making or attempting the transaction unless this would tip them off that a report is being made
• Maintain confidentiality. Do not let the client know about the contents of the report or that the report has been made
• Visit FINTRAC’s website for further details on suspicious transaction reporting red flags, filing process and reporting method: Transaction Reporting Requirements.
• You must always notify Sun Life via email to Money.Laundering@sunlife.com with the full details of the unusual activity that triggered the suspicious transaction filing.
• Retain a copy of the Suspicious Transaction Report

Refer to Reporting suspicious transactions to FINTRAC for further guidance on how to report.

As an advisor, you have the right to refuse to enter into a relationship with a Client who makes you uncomfortable. Once a transaction has been initiated, however, you must allow it to continue. Completing the transaction process will avoid future problems if your suspicion proves to be unfounded, and avoid tipping off the Client if your suspicion is correct. It also helps authorities recover laundered money later on.

You must make your report to FINTRAC as soon as practicable after completing the measures required to establish reasonable grounds to suspect that a transaction may be related to the commission of a Money Laundering/Terrorist Financing offence. It's important to leave ample time for you to complete your report and request additional information, if necessary.

FINTRAC defines “soon as practicable” as follows: A time period that falls in-between immediately and as soon as possible, within which a suspicious transaction report (STR) must be submitted to FINTRAC. The completion and submission of the STR should take priority over other tasks. In this context, the report must be completed promptly, taking into account the facts and circumstances of the situation. While some delay is permitted, it must have a reasonable explanation.

Visit FINTRAC guidelines for further information on Reporting suspicious transactions to FINTRAC.

Visit FINTRAC’s website for expectations on completing the form/report including field completion instructions: Completing the STR form.

You must keep confidential the fact that you are filing a report. Telling the Client or other people could be considered an attempt on your part to interfere with a possible criminal investigation into money laundering. It's also important to limit any discussion about whether to report a transaction as suspicious. If the Client asks whether you plan to report the transaction, simply say that we comply with the law. The Client's question, in this case, could be considered suspicious.

You do not have to keep a record of suspicious transactions. Record-keeping will be encompassed by the reporting process. You also do not have to record transactions that you examined but decided did not have to be reported.

No. Your report is confidential and you cannot be charged for reporting a suspicious transaction in good faith, even if the transaction is legitimate. If you are not sure whether a transaction is suspicious, it's better to err on the side of caution and report it.

Tipping off a Client that you plan to file a report could be perceived as interfering with a possible investigation. If you are charged and convicted, you could face up to five years' imprisonment, a fine of up to $2,000,000, or both.

The Client's question would be considered suspicious,and should be included in your report.

Yes. You must report attempted transactions that you feel are unusual. If the Client cancels the transaction or if Sun Life decides to halt it for other reasons - for instance, underwriting concerns - you are required to report the transaction. Because the transaction was not completed, you may not have all the information such as the Client's name, address, date of birth, etc. That is okay - you are required to submit all the information that you have about the transaction and the Client.

The plan sponsor. Group plan members are not considered Clients.

Visit www.fintrac.gc.ca for full details and requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

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.

Remember that:

• 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.