Why insurance? A criminal can pay a large premium with dirty money, cancel during the free look or surrender early, and receive a clean check from an insurance company. That is why federal anti-money-laundering (AML) rules reach insurers that issue covered products, such as permanent life insurance (other than group) and annuities.
What the insurer's AML program must include (31 CFR §1025.210):
Risk-based policies, procedures and internal controls that integrate its agents and brokers.
A designated compliance officer.
Ongoing training of appropriate persons, including agents and brokers (the insurer can train them directly or verify outside training). The rule does not set a fixed retraining cycle; the company's program does.
Independent testing of the program.
Suspicious activity reports (31 CFR §1025.320):
Required for suspicious transactions of at least $5,000 conducted through the insurer.
Filed with FinCEN no later than 30 calendar days after initial detection; if no suspect is identified, up to another 30 days, but never more than 60 days after detection.
The SAR and supporting records are kept for 5 years, and a SAR is confidential: never tell the customer one was filed.
Cash: a business that receives more than $10,000 in currency in one transaction or related transactions files a report on IRS/FinCEN Form 8300 (31 CFR §1010.330, applied to insurers by §1025.330).
Red flags: a beneficiary with no clear relationship to the insured, large cash or cash-equivalent payments, little interest in the policy's benefits but strong interest in cancellation or early surrender, and quick borrowing against a new policy. In practice, agents report these to the insurer's compliance team quickly; the exact internal deadline is set by company policy.