Insurance Companies AML Red Flags

Customer uses a synthetic identity combining a real SSN with fabricated personal details to purchase a high-value whole life or universal life policy with minimal health underwriting.

Policyholder pays the first premium with a large wire from a third party who is not a documented family member or employer, and the wire memo provides no explanation for the payment.

Customer purchases a single-premium life insurance policy with a large wire transfer and requests surrender or policy loan within the free-look period, effectively using the policy as a money laundering vehicle.

Corporate-owned life insurance (COLI) policy is purchased with company funds but the insured employees are low-level workers with no executive role, and the death benefit is disproportionate to their compensation.

Policyholder wires premiums from an account in a jurisdiction subject to OFAC sanctions, routed through an intermediary bank, and requests the policy benefits be paid to a beneficiary in the same sanctioned country.

Multiple individuals listed as beneficiaries on separate life insurance policies all share the same address and phone number, with the policies purchased by a single agent associated with a massage parlor or escort service.

Foreign national uses a U.S. life insurance policy as a store of value, funding it with wires from a sanctioned jurisdiction and planning to surrender it later to receive clean U.S. dollars from the insurer.

PEP purchases a high-value life insurance policy with premiums paid via wire from a foreign government bank account, and the coverage amount far exceeds any documented legitimate salary or assets.

Policy applicant provides identification that appears altered or forged, with mismatched holograms, incorrect fonts, or a photo that does not resemble the person presenting the document.

Applicant for a life insurance policy uses a Social Security number that belongs to a deceased individual, or the number shows no credit history or prior tax filings.

Corporate policyholder is a shell company with no physical office, website, or employees, and the stated business purpose is inconsistent with the type or amount of insurance requested.

Customer pays premiums using sequentially numbered checks from multiple unrelated bank accounts, suggesting the policy is being funded by a network of nominees or shell accounts.

Corporate customer pays premiums from an account that receives frequent large cash deposits, with the business type inconsistent with the volume of cash activity observed.

Policyholder borrows the maximum allowable amount against the cash value of a life insurance policy shortly after funding it, with no stated purpose for the loan and immediate wire of proceeds overseas.

Customer cancels a policy and requests the refund be sent to a different bank account or payee than the one used for premium payments, with no documented explanation for the change.

Trust purchases an insurance policy but the settlor, beneficiaries, or protector are concealed, and the trustee is a professional fiduciary who refuses to disclose the ultimate beneficial owners.

Business entity is the policyholder and premium payer but the beneficial owners are foreign nationals from high-risk jurisdictions, with no legitimate business connection to the U.S. insurance market.

Foreign national applies for a U.S. life insurance policy and pays premiums via wire from a jurisdiction with weak AML controls or high corruption indices, with no U.S. residency or business ties.

Customer is unusually insistent on purchasing a policy with minimal underwriting, no medical exam, and maximum cash value accumulation, showing no interest in the death benefit or coverage details.

Applicant for a high-value policy is represented by an agent or broker who has a history of policies that lapse quickly, or who is under investigation by state regulators for churning or twisting.

Elderly policyholder is pressured by a new caregiver or family member to take out a policy loan, surrender the policy, or change the beneficiary designation shortly after the individual enters their life.

Corporate customer uses insurance premium financing arranged through an offshore lender, with the loan collateralized by the policy itself, creating a circular flow of funds between related entities.

Insurance company receives a wire for premium payment from an account name that differs slightly from the policyholder’s name, following an email request to update payment instructions that bypassed normal verification.

Customer applies for multiple insurance policies from different insurers within a short timeframe, using slightly different personal information or beneficiary designations in each application.

Policyholder makes premium payments that are inconsistent with their stated income or occupation, particularly when the premium amount exceeds annual earnings by a significant margin.

Customer becomes evasive or hostile when asked about the source of premium funds, refuses to provide financial statements, or provides inconsistent explanations about their income or wealth.

Elderly customer purchases a deferred annuity with a long surrender period at the direction of a “financial advisor” who gains power of attorney and then requests an early surrender with heavy penalties.

Business customer claims to be purchasing insurance for international trade shipments but the declared cargo values are inconsistent with commodity prices and no bills of lading are provided.