Case Study 1

The VIP Client in a Hurry

When commercial pressure compromises Due Diligence processes

Case Narrative

Maria Gonzalez is an independent insurance broker with 8 years of experience in Santo Domingo. On a Friday afternoon, she receives a call from Don Roberto Mendez, a well-known businessman in the area who wants to purchase a life insurance policy with an investment component for RD$15,000,000 (approximately USD 250,000).

Don Roberto explains that he needs the policy issued before Monday because he will be traveling abroad for business and wants to leave his family protected. He offers to pay the full premium in cash that same day. Maria, excited by the potential commission and pressured to meet her monthly target, begins processing the application.

During the document collection, she notices several warning signs:

  • Don Roberto is evasive about the specific origin of funds, vaguely mentioning "import business"
  • He insists on paying in cash and becomes upset when Maria mentions that amounts over RD$500,000 require additional documentation
  • The ID he presents has a different address than the one he verbally mentions
  • When searching for information about his company, Maria finds very little public information available

Maria debates between completing the sale (it would represent her largest commission of the year) or deepening the verification, risking losing the client. Finally, she decides to:

  1. Request additional documentation on the source of funds
  2. Perform a basic check against restricted lists
  3. Consult with the insurer's compliance department before processing

Don Roberto, annoyed by the "bureaucratic procedures," threatens to go to the competition. Maria maintains her position. Upon performing the verification, she discovers that Don Roberto has ties to a company investigated for tax evasion and that his name appears in an alert database for irregular commercial activity.

Context Analysis

External and Internal Factors

External Factors
  • Pressure from the competitive insurance market
  • Regulatory framework of the UAF and Superintendence of Insurance
  • Economic context that facilitates informal cash flows
  • Business culture that normalizes cash transactions
Internal Factors
  • Monthly sales targets for the broker
  • Level of training in ML/TF prevention
  • Established internal verification processes
  • Relationship with the insurer's compliance department

Causes of the Situation

  • Commercial pressure: Need to meet targets creates conflict with DD processes
  • Sophisticated client: Use of urgency and social prestige as pressure tactics
  • Atypical transaction: High amount, cash payment, unjustified urgency
  • Inconsistent information: Discrepancies in documentation and provided data

Potential Consequences

If DD is Omitted
  • Possible facilitation of money laundering
  • Regulatory sanctions for the broker and insurer
  • Irreversible reputational damage
  • Potential criminal liability
If DD is Applied Correctly
  • Protection of the financial system
  • Demonstrable regulatory compliance
  • Preservation of professional license
  • Strengthening of compliance culture

Applicable Legal and Regulatory Framework

  • Law 155-17: Law against Money Laundering and Terrorism Financing
  • Decree 408-17: Implementation Regulation of Law 155-17
  • UAF Due Diligence Guide 2026: Technical guidance for obligated entities
  • Superintendence of Insurance Resolutions: Sector-specific regulations
  • FATF Recommendations 2025: International reference standards

Actor Analysis

Directly Involved Actors

Actor Role Interests Priorities
Maria Gonzalez Insurance broker Generate income, meet targets, maintain reputation Balance between profitability and compliance
Don Roberto Mendez Client/Applicant Obtain policy quickly, avoid scrutiny Urgency and discretion in the transaction
Insurance Company Policy issuer Business growth, regulatory compliance Risk management and profitability

Indirectly Involved Actors

  • UAF: Supervision and receipt of Suspicious Activity Reports
  • Superintendence of Insurance: Regulation and supervision of the sector
  • Don Roberto's Family: Potential beneficiaries of the policy
  • Financial system: Affected by possible illicit use
  • Other brokers: Competition that might accept without DD

Actor Perspectives

Maria's Perspective
  • Ethical dilemma between profit and compliance
  • Fear of losing an important client
  • Professional and legal responsibility
  • Need for support from compliance department
Don Roberto's Perspective
  • Perceives DD as an unnecessary obstacle
  • Uses his social position as pressure
  • Seeks channels of least resistance
  • Possible intention to structure illicit operation

Practical Analysis

Components and Processes Involved

  • KYC (Know Your Customer): Verification of client identity and data
  • Source of Funds: Documentation and verification of the money's origin
  • Restricted Lists: Consultation in OFAC, UN, PEP databases
  • Risk Profile: Assessment of client's risk level
  • Escalation: Consultation with compliance department for alerts

Identified Warning Signs

Critical Alerts
  • Cash payment of high amount
  • Unjustified urgency for issuance
  • Evasion about source of funds
  • Appearance in alert databases
Moderate Alerts
  • Inconsistency in addresses
  • Little public information about company
  • Annoyance at standard requirements
  • Threat to go to competition

Quadrant Map: Priority vs Impact

High Priority / High Impact
  • Check restricted lists
  • Document source of funds
  • Escalate to compliance
High Priority / Low Impact
  • Verify data consistency
  • Confirm current address
Low Priority / High Impact
  • Investigate client's company
  • Evaluate complete risk profile
Low Priority / Low Impact
  • Document initial interaction
  • Record contact time
← Low Impact High Impact →

Critical Decision Analysis

Implications of Not Addressing the Situation

  • Possible complicity in money laundering (criminal liability)
  • Sanctions of up to RD$25,000,000 under Law 155-17
  • Suspension or cancellation of broker license
  • Permanent reputational damage
  • Impact on the associated insurance company

What Worked and Why

Correct Decisions
  • Requesting additional documentation: Complies with Enhanced DD required by the amount
  • Checking restricted lists: Identified critical alerts that justified caution
  • Consulting with compliance: Distributed responsibility and obtained institutional backing
  • Maintaining position under pressure: Demonstrated professional integrity

Possible Alternative Decisions

Alternative Pros Cons
Reject immediately Eliminates risk, saves time Loss of potentially legitimate client
Accept with basic DD Keeps client, generates commission Regulatory non-compliance, high risk
Refer directly to insurer Transfers responsibility Loses commission, doesn't solve the problem

Results and Impact Assessment

Success Metrics

  • Regulatory compliance: 100% adherence to required DD processes
  • Alert detection: Successful identification of high-risk client
  • Documentation: Complete file supporting the decision
  • Response time: Timely escalation to compliance department

Impact Indicators

Short-Term Impact
  • Loss of potential sale (commission)
  • Possible SAR generated
  • Strengthening of internal processes
Long-Term Impact
  • Protection of professional license
  • Reputation as responsible broker
  • Strengthened relationship with insurer

Alternatives if Decisions Had Not Worked

  • If the client is legitimate: Offer expedited process with complete documentation
  • If the insurer rejects: Document and archive case for future reference
  • If pressured by superiors: Escalate to corporate compliance or regulator level

Ethical and Social Impact

Ethical Implications of the Decisions

  • Professional integrity: Prioritizing compliance over personal economic benefit
  • Social responsibility: Contributing to money laundering prevention
  • System protection: Preventing the insurance sector from being used for illicit purposes
  • Example for colleagues: Establishing a standard of professional conduct

Ethical Implications of NOT Acting

Consequences of Omission
  • Passive complicity in possible crime
  • Betrayal of trust in the financial system
  • Deterioration of the insurance broker profession
  • Harm to indirect victims of money laundering
  • Erosion of compliance culture

Ethical Assessment of the Decisions

The decisions made by Maria are ethical and fair because:

  • They respect the current legal and regulatory framework
  • They protect the interests of third parties (financial system, society)
  • They maintain the integrity of the profession
  • They balance commercial interests with social responsibility
  • They are transparent and documented

Questions and Activities

Critical Analysis of the Case
  1. What are the main pros and cons of Maria's decisions?
  2. What short and long-term implications do these decisions have for her career?
  3. What would you have done differently in this situation?
  4. What additional complementary decisions would you propose?
  5. What alternative decisions would you propose and why?
  6. Mention 5 similar situations where these lessons apply
Alternative Scenario

Imagine that: Don Roberto turns out to be a completely legitimate businessman whose company was investigated by mistake and has already been cleared. He needed the policy urgently because he has a scheduled medical trip.

  1. How does this change impact your assessment of the case?
  2. What additional considerations would you take?
  3. How would you handle the relationship with the client after the verification?
Metacognition and Personal Reflection
  1. What knowledge and skills did you apply to analyze this case?
  2. What new things did you learn about Due Diligence?
  3. How do the decisions presented differ from what you would have done before studying this topic?
  4. How will you apply what you learned in your daily professional practice?

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Reference Material
Case Study 2

The Mysterious Offshore Company

Ultimate Beneficial Owner identification in complex corporate structures

Case Narrative

Carlos Ramirez, a corporate insurance broker, receives a request from Caribbean Investments Holdings Ltd., a company registered in the British Virgin Islands, to acquire executive life insurance policies for its "principal directors" in the Dominican Republic, for a total amount of RD$50,000,000.

The request arrives through a local attorney, Atty. Fernando Acosta, who presents corporate documentation that includes:

  • Certificate of incorporation of the offshore company
  • Power of attorney in the name of the attorney to represent the company
  • List of three Dominican directors as beneficiaries of the policies
  • Unaudited financial statements

When trying to identify the Ultimate Beneficial Owner of the structure, Carlos finds obstacles:

  • The offshore company is owned by another company in Panama
  • That Panamanian company is owned by a trust in the Bahamas
  • The attorney claims "attorney-client confidentiality" not to reveal information
  • The local directors say they are "employees" without shareholding participation

Carlos requests documentation demonstrating who owns more than 20% of the final structure. The attorney offers a "comfort letter" assuring that the ultimate beneficial owners are not PEPs nor are they on restricted lists, but without identifying them.

Facing the pressure to close the account (the commission would be RD$2,500,000), Carlos must decide how to proceed.

Context Analysis

External and Internal Factors

External Factors
  • Common use of offshore structures in international business
  • Jurisdictions with corporate opacity
  • Regulatory framework requiring UBO identification
  • International pressure for transparency (FATF, OECD)
Internal Factors
  • Complexity of the corporate structure
  • Resistance to revealing information
  • Use of legal intermediaries
  • Significant amount of the operation

Applicable Legal Framework

  • Article 17 of Decree 408-17: Obligation to identify Ultimate Beneficial Owner
  • 20% Threshold: Direct/indirect ownership or control that defines UBO
  • Enhanced DD: Required for high-risk foreign legal entities
  • Law 479-08: On commercial companies and transparency requirements

Consequences of Proceeding Without Identifying UBO

Critical Risks
  • Direct violation of Law 155-17 and Decree 408-17
  • Possible facilitation of laundering through opaque structures
  • Inability to monitor future transactions
  • Joint liability with the structure
  • Severe regulatory sanctions

Actor Analysis

Actor Role Interests
Carlos Ramirez Corporate broker Close account, comply with regulations
Caribbean Investments Holdings Applicant (legal entity) Obtain policies, maintain anonymity
Atty. Fernando Acosta Legal representative Facilitate transaction, protect client
Local directors Policy beneficiaries Receive insurance coverage
Ultimate Beneficial Owner (unknown) Real owner Anonymity, asset protection

Relationship Dynamics

The structure presents an intentional chain of opacity where each layer (offshore → holding → trust) adds distance between the real beneficiary and the visible transaction. The attorney acts as an information "firewall."

Practical Analysis

Warning Signs for Complex Structures

Red Alerts
  • Multiple layers of entities in different jurisdictions
  • Resistance to identifying ultimate beneficial owner
  • Use of opaque trusts
  • Exclusive representation by attorney
Yellow Alerts
  • High-risk jurisdictions (BVI, Panama, Bahamas)
  • Unaudited financial statements
  • Directors who deny real participation
  • Offering "comfort letters" without documentation

Ultimate Beneficial Owner Identification Process

  1. Request complete ownership chain: From the applicant entity to natural persons
  2. Identify owners >20%: At each level of the structure
  3. Verify effective control: Even if there's no direct ownership
  4. Document administrators: If no owner is identified, identify who controls
  5. Consult public records: Where available

Risk Quadrant

Urgent / Critical
  • Reject without UBO identification
  • Escalate to compliance
  • Document all resistance
Urgent / Moderate
  • Request deadline for documentation
  • Verify directors on lists
Planned / Critical
  • Investigate jurisdictions
  • Consult international databases
Planned / Moderate
  • Verify attorney in bar association
  • Review local company

Decision Analysis

Decision Options

Option Description Assessment
A) Reject the operation Do not proceed without complete UBO identification Recommended - Complies with regulations
B) Accept comfort letter Proceed with attorney's declaration Not recommended - Insufficient
C) Request extension Give deadline to obtain documentation Temporarily acceptable
D) Escalate to regulator Consult UAF on how to proceed Valid option in doubtful cases

Recommended Decision

Course of Action
  • Communicate in writing that without UBO identification it is not possible to proceed
  • Offer a reasonable deadline (15 days) to present documentation
  • Document all communications and resistance
  • If refusal persists, formally reject and consider SAR

Results Assessment

Success Metrics

  • UBO identification: Yes/No - Determinant to proceed
  • Process documentation: Complete DD file
  • Deadline compliance: Response within established time
  • Verification quality: Depth of investigation performed

Impact Indicators

If the Operation is Rejected
  • Loss of potential commission
  • Demonstrated regulatory compliance
  • Protection of the insurer
  • Possible SAR to UAF
If Accepted Without UBO
  • Commission obtained
  • High regulatory risk
  • Possible future sanction
  • Personal liability

Ethical and Social Impact

Ethical Dimension

Opaque offshore structures are frequently used for:

  • Tax evasion that deprives the State of resources
  • Concealment of assets of illicit origin
  • Protection of corruption fortunes
  • Financing of criminal activities

Broker's Responsibility

The insurance broker is a system gatekeeper who has the ethical and legal responsibility not to facilitate the use of insurance products for illicit purposes, regardless of the potential economic benefit.

Applicable Ethical Principle

"The largest commission is never worth the price of professional integrity and complicity with activities that harm society."

Questions and Activities

Critical Analysis
  1. Is a "comfort letter" from an attorney sufficient to comply with the obligation to identify the UBO?
  2. What responsibility does the attorney have in this situation?
  3. How would you balance commercial pressure with regulatory compliance?
  4. What tools would you use to investigate offshore structures?
Alternative Scenario

Imagine that: The attorney finally reveals that the Ultimate Beneficial Owner is a former high-level public official from another country in the region who "prefers discretion" for personal security reasons.

  1. How does this change your analysis?
  2. What additional DD steps would you apply?
  3. Is the justification of "personal security" acceptable?

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Reference Material
  • UAF Guide 2026 - Chapter on Ultimate Beneficial Owner
  • FATF - Guide on Beneficial Owner Transparency
  • Panama Papers / Pandora Papers database
  • ICIJ - International Consortium of Investigative Journalists
Case Study 3

The Retired Politician

Application of PEP cooling-off period and Enhanced DD

Case Narrative

Atty. Ana Perez, an insurance broker with a wide portfolio of high net worth clients, is contacted by Don Miguel Torres, who was Vice Minister of Public Works until 2 years and 8 months ago. Don Miguel wants to purchase a universal life policy with an investment component for RD$30,000,000.

Don Miguel explains that:

  • He left public office almost 3 years ago
  • He currently runs a private engineering consulting firm
  • The funds come from his consulting fees
  • His wife is currently a director of a decentralized State institution

Ana investigates and finds that:

  • The PEP cooling-off period according to the UAF Guide is 3 years after leaving office
  • Don Miguel technically remains a PEP for 4 more months
  • His wife is currently an active PEP
  • Additionally, as spouse of a PEP, Don Miguel would be a PEP by association
  • Don Miguel's consulting firm has had contracts with public entities

Don Miguel argues that he no longer has political power and that the "cooling-off period is a formality." He pressures Ana "not to complicate things" since "all the brokers in the market know him."

Context Analysis

Definition of PEP according to UAF Guide 2026

Politically Exposed Person (PEP)
  • Direct PEP: High-level public officials, including vice ministers
  • PEP by Association: Spouses, partners, close relatives of PEPs
  • Cooling-Off Period: 3 years after leaving public office
  • Dual Status: Can be PEP through multiple channels (ex-official + spouse of active PEP)

Risk Factors Present

Elevated Risks
  • Active PEP status (still in cooling-off period)
  • PEP by association status (wife is official)
  • High amount of the operation
  • Public contracts of his consulting firm
Aggravating Factors
  • Pressure to evade processes
  • Minimization of risk by the client
  • Possible conflict of interest
  • Public works sector (high corruption risk)

Applicable Regulatory Framework

  • UAF Guide 2026 - PEPs Chapter: Definitions, categories, and treatment
  • Mandatory Enhanced DD: For all operations with PEPs
  • Senior management approval: Required for PEP onboarding
  • Enhanced monitoring: Throughout the business relationship

Actor Analysis

Actor Status Implications
Don Miguel Torres Ex-PEP (4 months remaining) + PEP by association Requires Enhanced DD, enhanced monitoring
Wife (director) Active PEP Makes Don Miguel permanent PEP by association
Engineering consulting firm Company with public contracts Requires source of funds verification
Atty. Ana Perez Insurance broker Obligation to apply Enhanced DD

Complexity of PEP Status

Don Miguel presents a dual PEP status:

  1. Historical PEP: Ex-Vice Minister with 4 months remaining in cooling-off period
  2. PEP by association: Spouse of active public official (permanent status while she holds office)

Even after the 4 months, he will remain PEP by association due to his wife's position.

Practical Analysis

Enhanced DD Requirements for PEPs

  • Enhanced identification: Exhaustive verification of identity and background
  • Documented source of funds: Detailed verification of money source
  • Source of wealth: Explanation of how wealth was accumulated
  • Senior management approval: Executive-level authorization for the relationship
  • Enhanced ongoing monitoring: Periodic review of transactions and profile

Required Documentation

For This Specific Case
  • Sworn statement of assets (from when he was official)
  • Financial statements of the consulting firm (last 3 years)
  • Detail of contracts and main clients
  • Personal tax returns
  • Certification of consulting firm income
  • Information about wife's position

Action Quadrant

Immediate / Critical
  • Classify as PEP
  • Apply Enhanced DD
  • Obtain management approval
Immediate / Moderate
  • Document dual PEP status
  • Verify restricted lists
Planned / Critical
  • Investigate public contracts
  • Verify source of wealth
Planned / Moderate
  • Establish monitoring plan
  • Schedule periodic reviews

Decision Analysis

Application Assessment

Criterion Finding Implication
PEP status Confirmed (dual channel) Mandatory Enhanced DD
Cooling-off period 4 months remaining PEP treatment still applies
Source of funds To be verified Requires exhaustive documentation
Public contracts Present Conflict of interest risk

Recommended Course of Action

Steps to Follow
  1. Inform the client of his PEP classification and additional requirements
  2. Request all Enhanced DD documentation
  3. Verify on restricted lists and PEP databases
  4. Elevate to insurer for senior management approval
  5. If everything is satisfactory, proceed with enhanced monitoring
  6. Exhaustively document the process

Results Assessment

Metrics for this Case

  • Correct classification: PEP identified and appropriately treated
  • Complete documentation: All Enhanced DD documents obtained
  • Management approval: Obtained before issuing policy
  • Monitoring plan: Established and documented

Outcome Scenarios

Positive Scenario
  • Client accepts PEP requirements
  • Documentation is satisfactory
  • Senior management approves
  • Policy issued with monitoring
Negative Scenario
  • Client rejects requirements
  • Insufficient documentation
  • Senior management denies
  • Operation does not proceed

Ethical and Social Impact

Why PEP Treatment is Important

Public officials and their associates have access to State resources and decision-making power that makes them higher-risk subjects for:

  • Corruption and bribery
  • Embezzlement of public funds
  • Illicit enrichment
  • Conflicts of interest

Ethical Dimension of the Decision

Principle of Equality

Although Don Miguel may be a recognized and respected person, the application of Enhanced DD is not a judgment on his personal integrity, but an objective measure based on his status. Applying the same rules to all PEPs protects both the system and honest officials themselves.

Questions and Activities

Critical Analysis
  1. Why does the 3-year cooling-off period exist for PEPs?
  2. Is it fair to treat a former official differently than an ordinary citizen?
  3. What would you do if Don Miguel threatens to complain to your supervisor?
  4. How would you explain the additional requirements without offending the client?
Alternative Scenario

Imagine that: Exactly 3 years have passed since Don Miguel left office, but his wife has just been appointed Minister.

  1. Does his PEP classification change? Why?
  2. What level of DD would you now apply?
  3. What additional documentation would you request?

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Reference Material
  • UAF Guide 2026 - PEPs Chapter
  • Law 311-14 on Sworn Statement of Assets
  • UAF PEP database
  • Wolfsberg Group - PEP Guide
Case Study 4

The Suspicious Surrender

Detection of warning signs in early policy surrender operations

Case Narrative

Jorge Santana, an insurance broker, receives a call from his client Mrs. Carmen Diaz, who purchased a life insurance policy with savings component just 8 months ago for RD$5,000,000. Mrs. Diaz requests the full early surrender of her policy.

Jorge reviews the file and notes:

  • The policy was paid in full at inception (single premium)
  • Early surrender involves a 15% penalty
  • The client would pay approximately RD$750,000 in penalties
  • Mrs. Diaz insists that she "urgently needs the money"

Upon deeper investigation, Jorge discovers additional information:

  • Mrs. Diaz has no registered formal employment
  • The original payment was made through multiple transfers from different accounts
  • She now requests that the surrender be deposited into an account in her "brother's" name
  • When Jorge asks about the reason for the urgency, the explanations are vague and inconsistent

Mrs. Diaz pressures for the process to be "quick and discreet," mentioning that Jorge "doesn't need to ask so many questions."

Context Analysis

Money Laundering Typology: Early Surrender

Classic Insurance Laundering Pattern
  1. Placement: Enter illicit money as single insurance premium
  2. Layering: Money "transforms" into a legitimate financial product
  3. Integration: Surrender the policy obtaining "clean" money from an insurer

Warning Signs Present

Critical Alerts
  • Early surrender with high penalty (illogical economic loss)
  • Request for payment to third party
  • Original payment from multiple sources
  • Inconsistency between profile and income
Moderate Alerts
  • Short duration policy (8 months)
  • Single premium of high amount
  • Unjustified urgency
  • Resistance to providing explanations

Regulatory Framework

  • UAF Typologies: Early policy surrender with loss as warning sign
  • Mandatory SAR: When operations that make no economic sense are detected
  • Prohibition of payment to third parties: Without documented justification

Actor Analysis

Actor Apparent Role Possible Real Role
Mrs. Carmen Diaz Client/insured Possible front person or "smurf"
"Brother" (recipient) Beneficiary relative Possible true owner of funds
Transfer sources Client's accounts Possible accomplices or pass-through accounts
Jorge Santana Insurance broker Potential whistleblower or facilitator

Analysis of "Smurfing" or Structuring

The original payment through multiple transfers suggests structuring (smurfing): dividing a large amount into smaller amounts to avoid threshold reports. This is a classic laundering technique.

Practical Analysis

Economic Logic of the Operation

Cost-Benefit Analysis
Premium paid RD$5,000,000
Penalty (15%) -RD$750,000
Returns (8 months) ~RD$150,000
Actual net loss ~RD$600,000

Key question: Why would someone voluntarily accept losing RD$600,000? It only makes sense if the original money was illicit and the goal is to "clean" it.

Assessment Process

  1. Review original file: Was adequate DD done at inception?
  2. Analyze payment pattern: Verify sources of original transfers
  3. Evaluate economic logic: Does the operation make sense?
  4. Verify destination: Why to a third party's name?
  5. Document everything: Questions, answers, inconsistencies

Decision Quadrant

Immediate Action
  • Do not process the surrender
  • Escalate to compliance
  • Prepare SAR
Document
  • Record the request
  • Document the alerts
Investigate
  • Trace original transfers
  • Verify the "brother"
Review
  • Original policy file
  • Initial DD performed

Decision Analysis

Critical Decision: To Report or Not to Report

Elements That Configure Suspicious Activity
  • Operation without apparent economic logic
  • Profile inconsistent with financial capacity
  • Unjustified request for payment to third party
  • Structuring pattern in original payment
  • Resistance to providing information

Conclusion: Multiple elements configure the obligation to generate a SAR (Suspicious Activity Report)

SAR Process

  1. Document all detected warning signs
  2. Complete the SAR form with case information
  3. Send to UAF within established deadline (immediate for urgent cases)
  4. DO NOT alert the client about the report (prohibited by law)
  5. Suspend the operation until receiving instructions

What NOT to Do (Tipping Off)

Prohibition of Alerting

It is prohibited by law to inform the client that:

  • A SAR has been generated
  • They are being investigated
  • Their transactions are suspicious
  • The UAF has been notified

Alerting the client ("tipping off") is a crime that can result in criminal sanctions.

Results Assessment

Compliance Metrics

  • Detection: Timely identification of warning signs
  • Escalation: Communication to compliance department
  • Report: SAR generated and sent to UAF
  • Confidentiality: Client was not alerted
  • Documentation: Complete case file

Possible Investigation Outcomes

If Laundering is Confirmed
  • Freezing of funds
  • Criminal investigation
  • Recognition for detection
  • Strengthening of controls
If It's a False Alarm
  • Legal protection for good faith
  • Process review
  • Possible release of funds
  • Institutional learning

Ethical and Social Impact

The Broker's Dilemma

Jorge faces a common dilemma: his client asks for an apparently legitimate service (to surrender her policy), but circumstances suggest illicit activity. Refusing may seem like "judging" the client; proceeding may make him an accomplice.

Social Impact of Money Laundering

  • Laundering allows criminals to enjoy illicit profits
  • It finances activities like drug trafficking, corruption, human trafficking
  • It distorts the economy and legitimate competition
  • It erodes trust in the financial system
Ethical Responsibility

The insurance broker has the ethical and legal responsibility not to be a conduit for money laundering. Reporting a suspicious operation is not "betraying" the client, it's protecting society and the system.

Questions and Activities

Critical Analysis
  1. What DD errors might have been made at policy inception?
  2. How should the source of funds have been documented originally?
  3. Is it valid to reject a surrender if the client has contractual right to it?
  4. What would you do if your supervisor pressures you to process the surrender?
Alternative Scenario

Imagine that: Mrs. Diaz presents a letter from an attorney explaining that the surrender is to pay for emergency surgery for her brother and that's why the deposit goes to his account.

  1. Does this change your analysis? Why or why not?
  2. What additional documentation would you request?
  3. Does this eliminate the other warning signs?

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Reference Material
  • UAF Guide 2026 - Warning Signs in Insurance
  • FATF - Laundering Typologies in Insurance Sector
  • SAR Preparation Guide
  • UAF Case Studies
Case Study 5

The Hidden Beneficiary

Suspicious beneficiary changes in life insurance policies

Case Narrative

Patricia Reyes, an insurance broker, manages a life insurance policy for RD$20,000,000 for her client Mr. Eduardo Villanueva, a 68-year-old businessman. The policy was taken out 5 years ago with his three children as beneficiaries.

Mr. Villanueva arrives at Patricia's office requesting a beneficiary change. He wants to:

  • Remove his three children as beneficiaries
  • Designate as sole beneficiary New Horizon Investments SRL
  • This company was incorporated just 3 months ago
  • The company's legal representative is a "business partner" that Patricia doesn't know

Patricia notices unusual behaviors:

  • Mr. Villanueva seems nervous and avoids eye contact
  • An unknown man waits for him in the parking lot
  • When Patricia asks the reason for the change, Mr. Villanueva gives evasive answers
  • The client mentions it's "a business arrangement" without providing details
  • Mr. Villanueva's children have been Patricia's clients and have a good relationship with their father

Patricia remembers reading a few weeks ago about a scam where elderly people were pressured to change policy beneficiaries in favor of fraudsters.

Context Analysis

Fraud and Abuse Typologies

Possible Illicit Scenarios
  • Extortion: Pressure on the insured to change beneficiary
  • Elder fraud: Manipulation of vulnerable persons
  • Money laundering: Use of policy to transfer value
  • Insurance fraud: Preparation for fraudulent claim
Vulnerability Factors
  • Advanced age of the insured (68 years)
  • Significant amount of the policy
  • Drastic change from family beneficiaries to company
  • Newly incorporated company as beneficiary

Warning Signs in Beneficiary Changes

  • Change from direct relatives to legal entities or third parties
  • Recently incorporated or unrelated beneficiary
  • Insured in vulnerable situation (age, health, isolation)
  • Presence of influential third parties during the request
  • Nervous or unusual behavior from the insured
  • Vague or inconsistent explanations

Protection Framework

  • Duty of protection: The broker must protect the client's interests
  • Law 352-98: Protection of elderly persons
  • Ongoing DD: Monitoring of significant changes in the relationship
  • Escalation: Communication to the insurer for atypical situations

Actor Analysis

Actor Role Position
Mr. Eduardo Villanueva Insured/Policyholder Possible victim of pressure or manipulation
Children (current beneficiaries) Original beneficiaries Unaware of the change, possible victims
New Horizon Investments Proposed new beneficiary Suspicious entity, possible fraud vehicle
"Business partner" Company representative Possible perpetrator or real beneficiary
Man in parking lot Unknown Possible watcher or intimidator
Patricia Reyes Broker Guardian and protector of the client

Power Dynamics

The situation suggests a power asymmetry where Mr. Villanueva could be:

  • Emotionally manipulated (isolated from family)
  • Intimidated (presence of unknown third party)
  • Deceived (supposed beneficial "business")
  • Extorted (unverbalized threats)

Practical Analysis

Client Protection Protocol

Immediate Steps
  1. Don't process immediately: Request time for "administrative procedures"
  2. Talk privately: Find a private moment with the client without third parties
  3. Verification questions: Confirm that the decision is free and voluntary
  4. Document observations: Behavior, presence of third parties, responses
  5. Escalate to insurer: Report situation before processing

Verification Questions

  • "Mr. Villanueva, are you making this decision freely?"
  • "Are your children in agreement with this change?"
  • "Can you explain your relationship with this company?"
  • "Is anyone pressuring you to make this change?"
  • "Would you like us to talk privately?"

Risk Quadrant

Immediate Action
  • Stop the process
  • Verify client's wellbeing
  • Alert the insurer
Urgent / Minor
  • Document the visit
  • Record description of third party
Investigate
  • Verify beneficiary company
  • Contact family members
Follow-up
  • Review client history
  • Verify previous changes

Decision Analysis

Action Options

Option Pros Cons
Process the change Fulfills client's request Possible facilitation of fraud or abuse
Reject outright Avoids complicity May violate legitimate client's rights
Request time and verify Balance between protection and service Requires more time and resources
Contact family members Could reveal manipulation Confidentiality violation if legitimate

Recommended Course of Action

Protection Protocol
  1. Inform client that the change requires "administrative review" (2-3 days)
  2. Find opportunity to speak privately with Mr. Villanueva
  3. Communicate observed warning signs to the insurer
  4. Verify the company "New Horizon Investments" in records
  5. Consider contacting children if there are clear signs of coercion
  6. If free will is confirmed, proceed with additional DD on new beneficiary

Results Assessment

Success Indicators

  • Client protection: Insured protected from possible fraud
  • Will verification: Confirmation of free decision
  • DD on beneficiary: Company verified before registering
  • Documentation: Complete process file

Possible Outcomes

Scenario A: Fraud Detected
  • Mr. Villanueva admits pressure
  • Original policy is protected
  • Report to authorities
  • Grateful family
Scenario B: Legitimate Decision
  • Client confirms free will
  • There's valid commercial reason
  • Proceed with DD on beneficiary
  • Document the process

Ethical and Social Impact

Protection of Vulnerable Persons

Elderly adults are frequently victims of:

  • Financial scams
  • Emotional manipulation
  • Economic abuse by relatives or third parties
  • Pressure to change wills, beneficiaries, ownership

Broker's Responsibility

Duty of Care

The insurance broker has a duty of care toward their clients that goes beyond simply processing transactions. This includes:

  • Verifying that decisions are voluntary
  • Protecting against third parties seeking to take advantage
  • Alerting when risk situations are detected
  • Acting in the client's best interest

Ethical Balance

Patricia faces the balance between:

  • Client autonomy: Right to make their own decisions
  • Protection: Duty to protect against possible abuse
  • Confidentiality: Respect for client privacy
  • Prevention: Avoiding being an instrument of fraud

Questions and Activities

Critical Analysis
  1. Does the broker have the right to question the decisions of a competent adult client?
  2. At what point does protection become excessive paternalism?
  3. How would you balance client service with suspicion of fraud?
  4. What would you do if Mr. Villanueva insists on proceeding despite your warnings?
  5. Is it ethical to contact the children without the client's consent?
Alternative Scenario

Imagine that: Mr. Villanueva explains to you privately that the company belongs to his new romantic partner, that his children don't accept the relationship, and that he wants to protect her financially without family conflicts.

  1. How does your analysis change?
  2. What additional DD would you do on the new beneficiary?
  3. Would you proceed with the change? Under what conditions?

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Reference Material
  • UAF Guide 2026 - Ongoing Monitoring
  • Law 352-98 on Protection of Elderly Persons
  • IAIS - Insurance Fraud Prevention
  • Vulnerable Client Protection Protocols