It appears that 10-8 leveraged life insurance loan strategies were, while they existed, a concern in terms of money laundering in the insurance sector.
One of the concepts that is most frequently under suspicion in the life insurance industry “involves a certain type of investment loan, where the interest is tax deductible, which is offered to customers who wish to take out a life insurance policy,” explains FINTRAC spokesman Peter Lamey. He points out that the loan allows the customer to take advantage of tax deductions and have a fixed rate of return, while enjoying insurance coverage at the same time.
“In general, reporting entities who have submitted STRs mentioning this unique suspicious concept did not specify their reasons for suspicion. However, many of them indicated that they had received payments by cheque prior to the payment of the loan, and that they had returned a specific amount of money to the client. Given the limited amount of information in the STR, the reporting institutions’ grounds for suspicion are not obvious. However, these operations could be related to the disbursement of illicit funds.”
