A. Statement of Policy
Assurity Life Insurance Company and Assurity Life Insurance Company of New York (collectively, the “Companies” or “Assurity”) prohibit money laundering and activities that facilitate money laundering and/or the funding of terrorist or criminal activities. This Anti-Money Laundering Program (sometimes referred to as “the Companies’ AML Program,” “the Program” or “this AML Program”) is intended to facilitate compliance with all applicable laws and regulations aimed at deterrence and prevention of money laundering and terrorist financing, including the USA Patriot Act, The Bank Secrecy Act, and the Financial Crimes Enforcement Network, and the Amendment to the Bank Secrecy Act Regulations—Anti-Money Laundering Programs for Insurance Company (“Final Regulation”). All associates and producers for the Companies are expected to understand this Program and comply with its requirements.
“Money laundering” under this Program shall be generally understood as engaging in acts or transactions designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have legitimate origins or appear to constitute legitimate assets. Generally, money laundering occurs in three stages: placement, layering, and integration
Cash first enters the financial system at the “placement” stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler’s checks, or is deposited into accounts at financial institutions.
At the “layering” stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin.
At the “integration” stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.
Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.
This Program applies to the sale, administration and payment of benefits from individual cash value life insurance policies, reversionary annuity policies and annuities (“Covered Products”).
Every associate and producer is responsible for the implementation of and on-going adherence to the procedures and controls established by this AML Program. The failure of an associate or producer to carry out the requirements of this Program shall subject each such person to disciplinary action, up to and including termination, because of:
•the harm that can result from money laundering and/or terrorist financing;
•the passage of laws imposing the creation and use of this Program;
•the existence of significant criminal and civil penalties; and
•the possibility of reputational damage to the Companies.
Consistent with the importance of this Program to the Companies, their management, associates and producers, a copy of this Program shall be made available to each associate and posted on the producer website.
B. Producer Integration
Insurance producers play a vital part in the success of the AML Program. Producers have the initial contact with customers during the sales process and occasionally during the life of an insurance policy. Accordingly, the producer has potentially critical knowledge regarding the source of financial assets, the nature of the client, and the client’s objectives in purchasing insurance products. For this reason, producers have responsibilities in four principal areas relating to the Program.
•Training: Producers that sell Covered Products must receive appropriate anti-money laundering training, either from the Companies or from a third-party, in accordance with guidelines established by the Companies.
•Information Gathering: Effective customer due diligence is based on appropriate and accurate information about the client, which producers will be responsible for obtaining and furnishing this information at time of application. For example, for each Covered Product application, producers will be required to furnish—1) information about the source of funds used to pay the initial premium, 2) information explaining the purpose of the transaction, and 3) the background of the applicant.
•Methods of Payment: The Companies have established standards for acceptable and unacceptable forms of payment. Producers are responsible for ensuring that appropriate payment guidelines are followed and for notifying the Companies regarding attempts to engage in inappropriate payment behavior.
•Communication: Producers are the first line of defense in the detection of suspicious activity. They are responsible for bringing potentially suspicious behavior that they observe to the Companies’ attention and for cooperating with requests for information related to clients and client activities.
Each producer will be furnished with a guide defining their Producer Responsibilities under the Program, and failure to comply with these responsibilities will be grounds for discipline, up to and including termination and cancellation of the producer’s appointment and notification of relevant authorities. In addition, violations of anti-money laundering laws may expose involved producers to substantial penalties under federal law.
1. Information Gathering – Customer Due Diligence
Producers are responsible for obtaining and providing complete and accurate information in all applications and other documentation required for the issuance of a Covered Product or a transaction involving a Covered Product.
Producers must notify Assurity of any instance in which an applicant or customer has resisted providing information, appears to have provided false or misleading information, or has provided information that cannot be verified. Such information shall be reported to the Companies’ AML Coordinator.
Producers are also responsible, upon request, for performing any due diligence necessitated by the presence of any “red flags” that may arise concerning the sale of a Covered Product or a post-sale transaction involving a Covered Product.
2. Methods of Payment
The Companies have prescribed the types and forms of payments that they will accept. These standards are set forth in the next section of this AML Program.
Producers have the following responsibilities with respect to acceptable payments:
•Producers shall communicate the restrictions on acceptable payment to applicants and customers in advance of accepting payment.
•If an applicant or customer gives the producer an unacceptable form of payment, the producer should explain what forms of payment are acceptable and return the unacceptable payment immediately.
•If the producer encounters difficulty dealing with an applicant or customer regarding the Companies’ acceptable and unacceptable forms of payment, the producer should call the Companies’ AML Coordinator.
•Producers may be asked by company personnel to obtain information with respect to forms of payment received by the Companies.
3. Communication regarding Suspicious Transactions
Red Flags—Examples of red flags that may warrant consideration of a suspicious activity report are set forth below. Producers will be notified, in the Producer Responsibilities and other training, of the red flags they are most likely to encounter. The Producer Responsibilities will also specify the reporting procedure for suspicious activities.
New Business Red Flags—The producer is in a key position to identify suspicious activity during the sales process. Accordingly, producers should be alert for, and should report any of the following red flags, which are expanded upon in the Producer Responsibilities.
•Applicant exhibits unusual concern about the Companies’ compliance with government reporting requirements or AML policies, particularly with respect to identity, type of business and assets, or is reluctant or refuses to reveal information concerning business activities, or furnishes unusual or suspect identification or business documents;
•Applicant wishes to engage in transactions that lack business sense or apparent insurance purpose, or are inconsistent with stated business objectives;
•Applicant refuses to identify or fails to indicate a legitimate source of funds;
•Applicant exhibits a lack of concern regarding commissions, surrender charges, sales charges, or other transaction costs;
•Applicant appears to be acting as an agent for someone else, is evasive about providing, or declines or is reluctant, without legitimate reasons, to provide information regarding the undisclosed person; or
•Applicant has difficulty describing the nature of his or her business.
Timing of Reports of Suspicious Activity—Producers will be notified in the Producer Responsibilities that they are required to report suspicious activity to the Companies immediately and to seek further guidance and instructions when requested to do so.
Follow-up and Reporting—When a producer detects any red flag, he/she may be requested to further investigate the matter. Further investigation may include gathering or attempting to verify additional information from the applicant, customer or from third-party sources.
The Companies have sole responsibility for determining whether to file a Suspicious Activity Report (SAR) and whether a SAR should be filed jointly with other entities subject to federal anti-money laundering rules.
The Companies’ Money Laundering Responsible Officers will be solely responsible for determining what information should be provided in response to requests for information concerning suspicious activity from applicants, customers, associates and producers. Appropriate records will be maintained.
Confidentiality—The Companies will file SARs when deemed appropriate. If a producer learns that a SAR has been filed, that information is strictly confidential and should not be disclosed. Under no circumstances may a producer or an associate of the Companies reveal that a SAR filing is being considered or has been filed. Further, no producer or associate may reveal the contents of a SAR to anyone because violations of confidentiality may result in civil and/or criminal penalties.
4. Training for Producers
Producers should obtain training on the Companies’ AML Program as specified in the applicable Producer’s Guide. Applications for a Covered Product submitted by any producer that has not completed the anti-money laundering training required by Assurity will be processed, but not issued, until evidence of training completion satisfactory to the Companies is provided.
5. Cooperation with Testing/Audit of AML Program
The Companies will conduct independent testing as to the effectiveness of this AML Program. Producers are required to cooperate with testing requests.
C. Acceptable Methods of Payments
The Companies will accept the following methods of payment for initial and renewal premium and contributions for Covered Products:
•Automatic bank withdrawals;
•Personal checks;
•Cashier’s and other similar type checks in amounts below $200 per month per policy and above $10,000;
•Money orders in amounts below $200 per month per policy;
•Credit cards for initial premium (excluding Single Premium Whole Life products), renewal premium or renewal contributions;
•Cash for renewal premiums or contributions where payment by cash has a historical basis;
•ACH and wire transfers for premiums or contributions where made by employers and third party administrators; and
•ACH and wire transfers for premiums or contributions where such a payment method has a historical basis.
Other forms of payment, including producer personal checks (except with regard to policies owned by producer family members (defined as current spouse, children, parents, siblings and grandchildren, and including those related by marriage)), producer credit cards, cash, wire transfers and cashier’s checks and money orders, except as noted above, will not be accepted.
Notice of acceptable methods of payment for initial premiums or contributions shall be communicated to producers. Notice of acceptable methods of payment for renewal premiums or contributions shall be communicated to producers and policyholders. The Producer Responsibilities may constitute the notices to producers contemplated above.
D. Money Laundering Responsible Officers Function
Each of the Patriot Act and the Final Regulation require the naming of an individual or committee responsible for specific duties related to this AML Program. Specifically, the designated individuals or committee must be certain:
•The Program is implemented effectively, including monitoring compliance by agents and brokers with their obligations under the Program;
•This AML Program is updated as necessary; and
•The appropriate individuals are educated and trained as required by the Final Regulation.
The Treasury Department’s discussion of this aspect of the Final Regulation states the individual or committee should have complete and full responsibility and authority to enforce the procedures and policies developed. That responsibility includes making sure associates have the resources necessary to address matters arising under the Program. As the individual or committee is deemed to be responsible for the implementation and day-to-day operation of the Program, knowledge regarding the Program and the requirements of the Bank Secrecy Act (and obviously the operations of our business) is indispensable. Moreover, be it an individual or committee, whoever is charged with being responsible for these functions must be thoroughly familiar with all applicable Financial Crimes Enforcement Network (FINCEN) forms and shall be deemed to have read and reviewed all postings to the FINCEN web page.
Because the Companies’ operations that are potentially susceptible to money laundering cross divisional lines, the Companies have determined that a cross-functional committee of individuals is most appropriate to manage implementation and day-to-day operation of the Program. Accordingly, associates of the Companies having the following (or functionally equivalent) titles have been selected to fulfill the required functions as Money Laundering Responsible Officers (“MLRO”). The MLRO Committee shall meet as frequently as necessary to ensure this AML Program is working correctly and all of the related requirements are satisfied.
Title
V.P. Sales (Individual and Worksite)
Director, Agent and New Business Administration
Director, Worksite and Group Administration
Director, Underwriting Services
Director, Inforce Administration
Director, Customer Connections
Director, Claims Management Services
Director and Controller
AML and Legal Services Coordinator
The AML and Legal Services Coordinator or a designee shall take minutes for all MLRO Committee meetings and shall serve as the primary point of contact for the AML Program, reporting to the broader MLRO Committee as appropriate.
E. Policies, Procedures and Controls
Policies, procedures and controls are the heart of a successful anti-money laundering program. The Companies have established the policies, procedures and controls necessary to detect, deter and prevent using the Companies and their Covered Products for money-laundering and terrorist financing activities. Those policies, procedures and controls are based on and respond to the risks identified by the Director of each operating area during an earlier-conducted risk assessment.
These risk assessments are monitored and updated for continued sufficiency and are separately maintained by Assurity’s AML Coordinator and the appropriate Director for each operational area.
The result of following the policies, procedures and controls is the identification, if any, of red flags. Any associate who observes red flags should immediately bring the same to the attention of a supervisor, who should then confirm the presence of red flags and then notify the Director of the operational area involved. The Director should, in turn, bring the matter(s) to the attention of the AML Coordinator and/or other members of the MLRO Committee identified in the preceding section of this AML Program.
F. Training and Monitoring Functions
The Final Regulation requires that the “appropriate persons” must have “on-going” training. The training provided is to cover the requirements of this Program and money laundering risks so that “red flags” can be identified and acted upon. The training is required to be updated, records maintained of the content of the training, and who has completed it. Persons with specific obligations under this AML Program should receive periodic updates and refreshers regarding the Program.
The Final Regulation, unlike the proposed regulation, extends the training requirement to agents and brokers.
The Companies will utilize the anti-money laundering training program offered by the Life Insurance Marketing and Research Association (“LIMRA”) for home or administrative office associates having a role in the implementation and on-going operation of this AML Program. Utilization of this training was instituted after promulgation of the proposed regulation. Based on the experience with LIMRA’s anti-money laundering training courses, the Companies are satisfied the LIMRA training meets the Final Regulation’s requirements and should continue to be used for associate training. LIMRA’s training shall be supplemented by knowledgeable directors and supervisors addressing specific company factors including:
•The Companies’ applicable payment policies;
•the identification and reporting of cash and cash equivalent transactions;
•the identification, referral and reporting of suspicious activity;
•the pertinent customer identification requirements; and
•job specific requirements and procedures;
•and advising associates where they should take matters of concern they observe. Associates should complete retraining every two calendar years.
As before, all associates having a role in the implementation and on-going operation of the Program shall take the training and receive periodic updates when made available. Also, as before, an associate’s failure to complete such training shall be grounds for disciplinary action, up to and including termination.
Assurity has reviewed, investigated and determined the LIMRA anti-money laundering training courses for producers also meet the requirements of the Final Regulation.
Accordingly, the Companies adopt, as their corporate policy, that producers must complete the appropriate LIMRA course(s) before the Companies will issue policies for Covered Products based on applications from them. Producers shall complete retraining every two calendar years. No producer should be appointed with and solicit Covered Products for Assurity unless they have received AML training.
Agent monitoring is to be conducted on an on-going basis. The specific areas to be monitored include: compliance with furnishing relevant customer-related information; compliance with the Companies’ payment policies and procedures; whether the producer is identifying, referring and notifying the appropriate Company of suspicious customer payments; and whether the producer’s customer and payment records are accessible to the Company. Such monitoring will include reviewing the quality of applications, reviewing the forms of payment received with applications, following up on customer complaints and following all the procedures set out throughout this Program. Supervising personnel should also instruct those they supervise to be alert for producer red flags.
G. Independent Audit Function
The Patriot Act requires that “an independent audit function to test programs” be one of the components of an anti-money laundering program for an insurance company. The final regulation specifies this AML Program must:
Provide for independent testing to monitor and maintain an adequate program, including testing to determine compliance of the company, insurance agents and insurance brokers with their obligations under the program.
Under the Final Regulation, the person or persons performing this function cannot be the person or persons involved in administering the Program. The person selected to perform this function should be responsible, have the level of authority to perform the required function, and be able to perform a results-oriented audit. Based on the above considerations, the Companies designate Assurity’s internal audit department to perform the independent audit function for this AML Program.
A primary purpose of the audit’s function is to determine whether the Program complies with the requirements of the Patriot Act and the Final Regulation—including the compliance of agents and brokers with their obligations under the Program. Accordingly, the required testing should be a full, fair and objective appraisal of the adequacy of the Anti-Money Laundering Program, whether implementation is meeting the Program’s purposes and whether the Program is functioning as designed.
The audit report should be documented, submitted to senior management and, where identified, include recommendations for improvement.
Although the Final Regulation does not specify the frequency of independent audits, it does note how often such audits should occur depends on the assessment of risks associated with the Companies’ Covered Products. The Companies’ risks, at least comparatively, are small. Nevertheless, performing such audits no less frequently than annually, consistent with the practice of the financial services industry is appropriate.
This Assurity Life Insurance Company and Assurity Life Insurance Company of New York Anti-Money Laundering Program is approved and effective as of September 10, 2020.
Thomas E. Henning
President and Chief Executive Officer
Assurity Life Insurance Company
Assurity Life Insurance Company of New York