[Code of Federal Regulations]
[Title 31, Volume 1]
[Revised as of July 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR103.16]

[Page 380-382]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
                       DEPARTMENT OF THE TREASURY
 
PART 103_FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN 
TRANSACTIONS--Table of Contents
 
                  Subpart B_Reports Required To Be Made
 
Sec.  103.16  Reports by insurance companies of suspicious transactions.

    (a) Definitions. For purposes of this section:
    (1) Annuity contract means any agreement between the insurer and the 
contract owner whereby the insurer promises to pay out a fixed or 
variable income stream for a period of time.
    (2) Bank has the same meaning as provided in Sec.  103.11(c).
    (3) Broker-dealer in securities has the same meaning as provided in 
Sec.  103.11(f).
    (4) Covered product means:
    (i) A permanent life insurance policy, other than a group life 
insurance policy;
    (ii) An annuity contract, other than a group annuity contract; or
    (iii) Any other insurance product with features of cash value or 
investment.
    (5) Group annuity contract means a master contract providing 
annuities to a group of persons under a single contract.
    (6) Group life insurance policy means any life insurance policy 
under which a number of persons and their dependents, if appropriate, 
are insured under a single policy.
    (7) Insurance agent means a sales and/or service representative of 
an insurance company. The term ``insurance agent'' encompasses any 
person that sells, markets, distributes, or services an insurance 
company's covered products, including, but not limited to, a person who 
represents only one insurance company, a person who represents more than 
one insurance company, and a bank or broker-dealer in securities that 
sells any covered product of an insurance company.
    (8) Insurance broker means a person who, by acting as the customer's 
representative, arranges and/or services covered products on behalf of 
the customer.
    (9) Insurance company or insurer. (i) Except as provided in 
paragraph (a)(9)(ii) of this section, the term ``insurance company'' or 
``insurer'' means any person engaged within the United States as a 
business in the issuing or underwriting of any covered product.
    (ii) The term ``insurance company'' or ``insurer'' does not include 
an insurance agent or insurance broker.
    (10) Permanent life insurance policy means an agreement that 
contains a cash value or investment element and that obligates the 
insurer to indemnify or to confer a benefit upon the insured or 
beneficiary to the agreement contingent upon the death of the insured.
    (11) Person has the same meaning as provided in Sec.  103.11(z).
    (12) United States has the same meaning as provided in Sec.  
103.11(nn).
    (b) General. (1) Each insurance company shall file with the 
Financial Crimes Enforcement Network, to the extent and in the manner 
required by this section, a report of any suspicious transaction 
involving a covered product that is relevant to a possible violation of 
law or regulation. An insurance company may also file with the Financial 
Crimes Enforcement Network by using the form specified in paragraph 
(c)(1) of this section or otherwise, a report of any suspicious 
transaction that it believes is relevant to the possible violation of 
any law or regulation but the reporting of which is not required by this 
section.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through an insurance company, and 
involves or aggregates at least $5,000 in funds or other assets, and the 
insurance company knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or regulation or to avoid any 
transaction reporting requirement under federal law or regulation;

[[Page 381]]

    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act, Public Law 91-508, as amended, 
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-
5314; 5316-5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the insurance company knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the insurance company to facilitate criminal 
activity.
    (3) (i) An insurance company is responsible for reporting suspicious 
transactions conducted through its insurance agents and insurance 
brokers. Accordingly, an insurance company shall establish and implement 
policies and procedures reasonably designed to obtain customer-related 
information necessary to detect suspicious activity from all relevant 
sources, including from its insurance agents and insurance brokers, and 
shall report suspicious activity based on such information.
    (ii) Certain insurance agents may have a separate obligation to 
report suspicious activity pursuant to other provisions of this part. In 
those instances, no more than one report is required to be filed by the 
financial institutions involved in the transaction, as long as the 
report filed contains all relevant facts, including the names of both 
institutions and the words ``joint filing'' in the narrative section, 
and both institutions maintain a copy of the report filed, along with 
any supporting documentation.
    (iii) An insurance company that issues variable insurance products 
funded by separate accounts that meet the definition of a mutual fund in 
Sec.  103.15(a)(1) shall file reports of suspicious transactions 
pursuant to Sec.  103.15.
    (c) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by 
Insurance Companies (SAR-IC), and collecting and maintaining supporting 
documentation as required by paragraph (e) of this section.
    (2) Where to file. The SAR-IC shall be filed with the Financial 
Crimes Enforcement Network as indicated in the instructions to the SAR-
IC.
    (3) When to file. A SAR-IC shall be filed no later than 30 calendar 
days after the date of the initial detection by the insurance company of 
facts that may constitute a basis for filing a SAR-IC under this 
section. If no suspect is identified on the date of such initial 
detection, an insurance company may delay filing a SAR-IC for an 
additional 30 calendar days to identify a suspect, but in no case shall 
reporting be delayed more than 60 calendar days after the date of such 
initial detection. In situations that require immediate attention, such 
as terrorist financing or ongoing money laundering schemes, the 
insurance company shall immediately notify by telephone an appropriate 
law enforcement authority in addition to filing timely a SAR-IC. 
Insurance companies wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call the 
Financial Crimes Enforcement Network's Financial Institutions Hotline at 
1-866-556-3974 in addition to filing timely a SAR-IC if required by this 
section.
    (d) Exception. An insurance company is not required to file a SAR-IC 
to report the submission to it of false or fraudulent information to 
obtain a policy or make a claim, unless the company has reason to 
believe that the false or fraudulent submission relates to money 
laundering or terrorist financing.
    (e) Retention of records. An insurance company shall maintain a copy 
of any SAR-IC filed and the original or business record equivalent of 
any supporting documentation for a period of five years from the date of 
filing the SAR-IC. Supporting documentation shall be identified as such 
and maintained by the insurance company and shall be deemed to have been 
filed with the SAR-IC. When an insurance company has filed or is 
identified as a filer in a joint Suspicious Activity Report, the 
insurance company shall maintain a copy of such joint report (together

[[Page 382]]

with copies of any supporting documentation) for a period of five years 
from the date of filing. An insurance company shall make all supporting 
documentation available to the Financial Crimes Enforcement Network and 
any other appropriate law enforcement agencies or supervisory agencies 
upon request.
    (f) Confidentiality of reports; limitation of liability. No 
insurance company, and no director, officer, employee, agent, or broker 
of any insurance company, who reports a suspicious transaction under 
this part (whether such a report is required by this section or made 
voluntarily), may notify any person involved in the transaction that the 
transaction has been reported, except to the extent permitted by 
paragraph (b)(3) of this section. Thus, any insurance company subpoenaed 
or otherwise requested to disclose a SAR-IC or the information contained 
in a SAR-IC (or a copy of a joint Suspicious Activity Report filed with 
another financial institution involved in the same transaction, 
including an insurance agent), except where such disclosure is requested 
by the Financial Crimes Enforcement Network or another appropriate law 
enforcement or supervisory agency, shall decline to produce the 
Suspicious Activity Report or to provide any information that would 
disclose that a Suspicious Activity Report has been prepared or filed, 
citing as authority 31 CFR 103.16 and 31 U.S.C. 5318(g)(2), and shall 
notify the Financial Crimes Enforcement Network of any such request and 
its response thereto. An insurance company, and any director, officer, 
employee, agent, or broker of such insurance company, that makes a 
report pursuant to this section, including a joint report (whether such 
report is required by this section or made voluntarily) shall be 
protected from liability for any disclosure contained in, or for failure 
to disclose the fact of, such report, or both, to the extent provided by 
31 U.S.C. 5318(g)(3).
    (g) Compliance. Compliance with this section shall be examined by 
the Department of the Treasury, through the Financial Crimes Enforcement 
Network or its delegees, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute a 
violation of the reporting rules of the Bank Secrecy Act and of this 
part.
    (h) Suspicious transaction reporting requirements for insurance 
companies registered or required to register with the Securities and 
Exchange Commission as broker-dealers in securities. An insurance 
company that is registered or required to register with the Securities 
and Exchange Commission as a broker-dealer in securities shall be deemed 
to have satisfied the requirements of this section for its broker-dealer 
activities to the extent that the company complies with the reporting 
requirements applicable to such activities pursuant to Sec.  103.19.
    (i) Applicability date. This section applies to transactions 
occurring after May 2, 2006.

[70 FR 66767, Nov. 3, 2005, as amended at 71 FR 26220, May 4, 2006]