In the context of a large premium life insurance policy purchased with illicit funds, which regulatory provisions apply?

• A. Currency reporting requirements and Patriot Act provisions.
• B. Only state insurance regulation.
• C. No AML considerations.
• D. Only consumer protection laws.

Answer: (A)

When a large premium life policy is bought with illicit funds, AML controls for insurers kick in because life insurers are treated as financial institutions for anti-money-laundering purposes. The Bank Secrecy Act requires reporting of large cash transactions and the filing of Currency Transaction Reports when cash or monetary instruments exceed a threshold, typically $10,000. The Patriot Act adds further obligations, such as customer identification, ongoing due diligence, and monitoring to detect and report suspicious activity. While state insurance regulation governs licensing and solvency, and consumer protection laws address policy terms and consumer rights, they do not replace AML duties. So the regulatory provisions that apply include currency reporting requirements and Patriot Act provisions.