Anti-Money Laundering Checklist

Collect name, DOB, address, and TIN/SSN or EIN for the policyholder and any beneficial owners holding 25% or more, per FinCEN's CDD Rule (31 CFR 1010.230). For entities, capture the certification of beneficial ownership. Verify against government-issued ID, IRS letters, or a reliable independent data source — not the application alone.

Run the insured, beneficial owners, and named beneficiaries through the OFAC SDN list, consolidated sanctions, and a PEP screening source (LexisNexis, Dow Jones, or equivalent). False positives are common with shared names — document the disposition reasoning, don't just clear the hit.

Score the customer Low, Medium, or High based on geography (FATF high-risk jurisdictions), product (cash-value life, annuities are higher risk than term life), customer type (PEP, cash-intensive business), and delivery channel. Document the rating rationale in the AML file.

For High-rated customers, PEPs, and those tied to FATF high-risk jurisdictions, collect source-of-funds and source-of-wealth documentation, obtain senior management approval before binding, and set monitoring frequency to quarterly. EDD memo goes in the AML file.

Tune thresholds for structuring (multiple premium payments under $10K), early policy surrender within the free-look or first 12-24 months, overpayment followed by refund request, and third-party premium payments. Document threshold rationale — examiners ask why $9,500 vs $9,000.

Work the alert queue daily. Each alert needs a documented disposition: cleared, escalated for investigation, or referred to the BSA Officer. Aging alerts past 30 days without disposition is a Tier 1 audit finding.

Pull the customer's full transaction history, CDD file, prior alerts, and any negative news. Interview the producer of record if behavior is inconsistent with the original application. Investigation memo records the facts considered, parties contacted, and the disposition reasoning.

Required annually under 31 CFR 1025 for covered insurance products (cash-value life, annuities). Tailor content by role — producers see red flags at point-of-sale; ops staff see them at premium processing and surrender. New hires complete training within 30 days of start.

Push FinCEN advisories, FATF typology reports, and internal lessons-learned from recent SARs to the producer field force. Include current sanctioned jurisdictions and emerging schemes (trade-based laundering, crypto-on-ramp via insurance products).

BSA requires five-year retention of CIP records, SARs and supporting documentation, CDD/EDD files, and training logs. Some state DOIs require longer; check NY, CA, and FL. Premature destruction creates spoliation exposure if a SAR subject is later subpoenaed.

FinCEN expects independent testing annually for higher-risk programs, biennially at minimum. The tester cannot be the BSA Officer or report to them. Scope covers CIP, CDD, monitoring rule effectiveness, SAR quality, training, and recordkeeping.

Monitor FinCEN advisories, OFAC sanctions changes, and state DOI bulletins (NY DFS especially). Material changes trigger a policy update, training refresh, and rule recalibration. Document the change-management trail.