USA PATRIOT Act
Anti-Money Laundering Program

As part of the USA PATRIOT Act, insurers are required to establish anti-money laundering
(AML) programs and to integrate their agents and brokers into their programs. Columbian has
developed an AML program appropriate to counter the risks of money laundering for our
products, methods of distribution, contact with consumers and forms of customer payment and
deposits. While many of the processes involved in this program are conducted at our offices, our
field force is our first line of defense against money laundering schemes. To help prevent money
laundering, you must understand how it works, be able to recognize suspicious activities, and
comply with your responsibilities within the program.

How Money Laundering Works
Money Laundering is a process by which illegally obtained money is filtered through a series of
transactions that eventually make the money appear to be obtained from "clean," or legal, activities.
The money laundering process has been described as having three phases that often overlap:

• Placement - Injecting ill-gotten proceeds, including cash, into the financial system through
  transactions such as bank deposits or the purchase of insurance products with cash or
  investment value. This can include the purchase of life insurance policies or annuities
  funded by wire transfers or third party checks.
• Layering - Separating illicit proceeds from their criminal source through complex financial
  transactions. This can include the early surrender of the insurance policies or annuities used
  in the example above.
• Integration - Putting the proceeds back into circulation in the economy, with the appearance
  of legality. In this example, the individual has converted questionable cash to a more credible
  check from an insurance company.

Recognizing Suspicious Activities
Whether an activity should be considered suspicious depends on the type of activity and your
client's normal activity. Some "red flags" to watch for include:

• A customer who shows little concern for the features of a product, other than the early
  termination features.
• A customer who is reluctant to provide identifying information when purchasing a product,
  or who provides minimal or seemingly fictitious information.
• A party who is reluctant to reveal or is not fully aware of the nature of his or her business.
• Unusual payment methods, such as cash, foreign currency, foreign accounts, or cash-like
  instruments such as money orders, traveler's checks, cashier's checks, starter checks or credit
  card advance checks (when such usage of cash or cash equivalents is unusual).
• An attempt to purchase several small policies rather than one large policy for no valid reason or
  an individual having similar policies with several different companies.
• An attempt to avoid depositing funds that may be reported to the federal government as a
  large transaction. For example, a policyholder wants to pour in an amount of $10,000 or
  more to a policy, but wishes to do so using several small checks rather than one large check.
• A significant overpayment, especially if the policy does not allow for pour-in of additional
  money. For example, a policy payor on a whole life policy may submit a check for $15,000
  for a $1,500 annual premium and subsequently ask for reimbursement of the overpayment.
• A large pour-in to a contract, followed by an immediate withdrawal.
• A customer who borrows the maximum amount available soon after purchasing the product.
• Early termination of a product, especially at a cost to the customer or where payment is made
  by, or the refund check is directed to, an apparently unrelated third party.
• The return of a policy that refunds a large amount of premium during the free-look period
  with no apparent reason for not wanting the policy.
• The purchase of an insurance product inconsistent with the customer's needs.
• Insistence on speedy issue or service without the required paperwork or medical requirements.
• The transfer of the benefit of a product to an apparently unrelated third party.
• Repeated policy cancellations in a short period of time for significant amounts of money.
• Any proposed action that seems suspicious or doesn't make sense.

Your Responsibilities
To comply with the USA PATRIOT Act, you are required to:

• Provide proof of your AML training within 30 days of this bulletin. Upon receipt of your
  proof of training, your name will be entered into a drawing for a $100 American Express gift
  card! You may submit a copy of your certification from another company or take the free
  course at http://nailba.limra.com. When registering on the site, skip steps 2 and 3. When you
  have completed the training, print the "Thank you for participating in the LIMRA AML
  Training" page. Print and sign your name on the page, add the date and your Agent number,
  and fax to Columbian's Licensing Department at 607-724-1599. If you have difficulty with
  the website, please contact your Regional Sales Director or Columbian Representative.
• Verify the identity of every customer through a government-issued photo ID, such as a
  driver's license or passport.
• Verify the need for the insurance that is being purchased. Columbian's Needs Analysis
  Form, Form No. 4355CFG is a great tool for this requirement.
• Create a client profile for each client, documenting verification of identity and the need for
  the insurance. Include information on all policies or annuities purchased by the individual.
  Files must be retained for five years after termination of the policy or contract. State
  insurance regulations may require certain documentation to be retained for a longer period.
• Report transactions of more than $10,000 that are paid in cash or cash-like instruments, such
  as money orders, traveler's checks or cashier's checks.
• Report suspicious transactions of $5,000, whether conducted in an individual transaction or
  aggregate related transactions.
• Report any "red flag" suspicious activities.

The USA PATRIOT Act holds agents and brokers liable for reporting suspicious activities. Failure
to do so can result in charges of willful blindness. To report suspicious transactions or
activities, contact your Regional Sales Director or Columbian Representative. DO NOT
inform the client that you have suspicions or are making a report.

Click Here For An Insurance Agent Overview of the USA PATRIOT Act