If a notorious arms dealer uses proceeds from a large operation to purchase a single premium life insurance policy, which statements accurately reflect the law's application?

• A. Only the Patriot Act applies.
• B. Neither the PSA nor the Patriot Act applies.
• C. Both the currency transaction reporting requirements of the PSA and the Patriot Act provisions apply.
• D. Only the PSA CTR requirements apply.

Answer: (C)

The situation hinges on two parallel AML safeguards: reporting large cash transactions and heightened monitoring for suspicious activity. When illicit proceeds are used to buy a single premium life policy, the transaction is effectively a large cash movement through a financial intermediary. Under the PSA, currency transaction reporting applies to cash transactions above the reporting threshold, so filing a CTR is required. At the same time, the Patriot Act expands AML duties for financial institutions by mandating customer identification, ongoing monitoring, and the reporting of suspicious activity. A purchase funded by illicit proceeds, especially by someone known for illegal activity like an arms dealer, is highly suspicious and would trigger a SAR and possibly additional due diligence. Because both the currency transaction reporting and enhanced AML provisions are activated in this scenario, both sets of requirements apply.