Single Premium Policy With a Third-Party Payer

The red flags include:

• Third-party payer. The premium is paid by a company, not the applicant, and the company's ownership is unclear.
• Higher-risk jurisdiction. The payer company is registered in a jurisdiction the insurer classifies as higher risk.
• Opaque corporate structure. The applicant cannot name directors or produce financial statements for the 'family business'.
• Refusal to explain source of funds. A legitimate client with a USD 210,000 premium should be able to document the source. 'Private' is not an explanation.
• Immediate assignment to an unrelated trust. The applicant wants to transfer ownership to a trust whose beneficiary is not a family member, which can obscure the beneficial owner and separate the policy from the person who funded it.
• Post office box correspondence. This reduces the ability to verify the applicant's address and identity.
• Large single premium. USD 210,000 in one payment is a high-value transaction that warrants scrutiny.
• Commission incentive. The USD 12,000 commission creates a conflict and may tempt the agent to proceed without proper checks.

The combination is more significant than any single item. Third-party funding plus opaque ownership plus immediate assignment is a classic structure for concealing the beneficial owner or the origin of funds.

The agent must not submit the application as if it were routine. The agent must complete customer due diligence on the applicant and enhanced due diligence on the payer company, the trust, and the beneficiary. That means identifying the company's beneficial owners, obtaining directors' details and financial statements, verifying the source of funds and source of wealth, establishing the purpose of the policy and the reason for the trust assignment, screening all parties against sanctions and politically exposed person lists, and escalating to the compliance officer or senior management.

The agent must not tip off the client that a suspicious transaction report is being considered. The agent should not accept oral assurances, should not allow the client to dictate the level of documentation, and should not let the commission influence the decision. If the client refuses to provide the required information, the agent should explain that the insurer cannot proceed and decline or suspend the application.

If suspicion remains after the checks, the agent must report it promptly to the financial intelligence unit in the required form and retain records. The insurer may need senior management approval before continuing any higher-risk relationship, and continued monitoring would be required if the relationship is accepted.

It may accept only if the explanation is documented, verifiable, and sufficient to reduce the risk to an acceptable level; a plausible but incomplete explanation is not enough. The insurer must be able to identify the beneficial owner of the payer company, understand the corporate structure, and reconcile the stated source of wealth with the premium of USD 210,000. Bank statements, sale contracts, audited accounts, tax records, or other independent evidence should support the explanation.

Even if the source of funds is explained, the immediate assignment to an unrelated trust, the post office box, and the higher-risk jurisdiction require enhanced monitoring and senior management approval. The insurer should consider whether the structure makes commercial sense and whether the trust beneficiary is itself a PEP or sanctioned person. If the insurer cannot complete enhanced due diligence, it must not establish the relationship and should consider filing a suspicious transaction report.

Accepting the policy on a verbal assurance would breach the insurer's AML policy and expose it to regulatory action. The correct decision is to decline until all required information is obtained, or to decline permanently if the client continues to withhold it.