Question

All of the following transactions might indicate a money laundering red flag EXCEPT: a. The customer sets up a monthly debit to pay premiums from his or her checking account. b. The customer frequently overpays premiums and asks that overpayments be returned by company check. c. Premiums are paid through wire transfers from off-shore banks. d. A producer who has struggled for the past three years has suddenly started experiencing high sales but also high policy activity involving frequent withdrawals and policy loans.

Answer 1

All options except setting up a monthly debit to pay premiums from a checking account could potentially indicate a money laundering red flag.

Step-by-step explanation:

All of the options provided could potentially indicate a money laundering red flag, except for option a. The customer setting up a monthly debit to pay premiums from his or her checking account is a common and legitimate transaction. This method of payment is regularly used by customers to ensure timely and consistent premium payments.

Option b, where the customer frequently overpays premiums and asks for overpayments to be returned, could be a red flag as it may suggest an attempt to obfuscate the source of funds. Option c, where premiums are paid through wire transfers from offshore banks, is also a red flag. This type of transaction raises concerns about the origin of the funds and potential attempts to hide the source.

Similarly, option d raises suspicions due to the sudden increase in sales and policy activity involving frequent withdrawals and policy loans by a producer who has previously struggled. These activities may be indicative of money laundering attempts.