The Company is committed to prevent, detect, and rectify any non-compliance with the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Global Pacific’s Money Laundering and Anti-Terrorist Financing Compliance Regime include the following key components:  

4.1 Client Identification Procedures

• To identify an individual, refer to the original of a provincial, territorial or federal government issued document (e.g. birth certificate, driver’s license, passport, record of landing, permanent resident card).

a) Record the document’s unique identifier number on the KYC. Documents used for identification purposes must be valid (i.e. not expired).

b) If the client is not physically present the Advisor will confirm the individual has a deposit account with a financial entity. This can be done by acquiring and recording the client’s banking information (bank number, transit number, account number, branch phone number, branch address and joint account holder name if Applicable) in section 4 of the KYC, or by attaching a VOID cheque.

c) If the client is not physically present, the CO will use the banking information provided by the Advisor to contact the bank and verify client identification.

Corporations and Other Entities
To confirm the existence of a corporation:

a) Confirm existence as well as the corporation’s name and address by and referring to:
• the corporation’s certificate of corporate status;
• a record that has to be filed annually under provincial securities legislation; or
• any other record that confirms the corporation’s existence (e.g. the corporation’s published annual report signed by an independent audit firm, or a letter or a notice of assessment for the corporation from a municipal, provincial, territorial or federal government);

b) Determine the names of the corporation’s directors; and

c) Obtain information regarding beneficial ownership of the Company.

To confirm the existence of entities other than corporations:

a) Confirm existence as well as the entities name and address by and referring to:
• a partnership agreement, articles of association or any other similar record that confirms the entity’s existence. The record can be paper (a copy will be kept in the client file) or an electronic version from a public source (the entity’s registration number and the type and source of the record will be kept in the client file.

Keeping Client Information Up To Date
As Advisors conduct business with clients, the clients should be asked to confirm or update identification information. Depending on the nature of business with the client the frequency of updating information may vary. However, for situations deemed high risk by the CO, client identification information should be updated at least every two years.

4.2 Record Keeping Requirements

• For all non-exempt life and annuity policies where premiums paid over the life of the policy would reach $10,000 or more, an insurer and Advisor need to verify client identity by referring to valid original documents within 30 days by creating a record that contains the client’s name, address, date of birth and principal business or occupation. “Client” for group sales means the applicant.

Large Cash Transaction (LCT) Record Procedure

The Company and all of our insurance carriers have a No Cash policy. The likelihood of an Advisor contracted with the Company having to maintain this record is virtually nil.

1. If the Company learns that an attempt was made to pay by cash and the CO considers this suspicious, the Company must file a STATR with FINTRAC;
2. If cash was actually received, an LCT record must be filed;
3. The Advisor and insurer must maintain any actual LCT record;
4. Retain a copy of any record submitted by the Advisor;
5. Input information on the Company’s back-office system; and
6. The CO may flag the policy, associated policies, Advisor, or customer on the system for monitoring and reporting or set up a manual process for monitoring.

Client Information Records Procedure

The Company has verified that their insurance Company suppliers have embedded client ID requirements in their applications and supporting material, where necessary:

1. By keeping copies of applications for record purposes on our system, the Company captures initial identification information if it is provided to the Company by the Advisor.
2. The Company will communicate with the Advisor requesting he/she submit any missing information and to update information as necessary.
3. If an insurer notifies the Company that it has identified high risk customers who trigger the requirement to update, the Company will notify the Agent of the requirement and follow up in an effort to ensure that it was fulfilled.
4. Where the Company becomes aware of a high risk customer, the Company is subject to greater monitoring on our part.
5. For any client identified as high risk, a follow-up reminder will be flagged in the system to require the Advisor to verify all beneficial ownership information every two years.
6. Clients and/or transactions noted as potentially high risk are to be escalated to the CO for review. The client name and policy may need to be added to the Company’s high risk report for monitoring.

Beneficial Owners Records Procedures

Insurers generally have embedded beneficial owner identification requirements in their applications:

1. Verify that the application is in good order before passing it through to the insurer.
2. Retain a copy of the record if the Advisor provides it. Advisors are required to obtain beneficial ownership information about any client who, directly or indirectly, owns 25% or more of an entity. In that case, the name, address and occupation of all of the corporation’s directors must be maintained.
3. Create record on the system.
4. Keep a record that indicates whether the customer is a charity registered with CRA or a non-registered entity that solicits charitable financial donations.
5. Escalate to CO, who will review as the client name and policy may need to be added to the Company’s high risk report for monitoring.

Not-for-Profit Organization Record Procedure

This information would likely be uncovered in the course of the Advisor’s client identity verification:

1. Verify that the application is in good order before passing it through to the insurer.
2. Retain a copy of the record if the Advisor provides it.
3. Create record on the system.
4. Keep a record that indicates whether the customer is a charity registered with CRA or a non-registered entity that solicits charitable financial donations.
5. Escalate to CO, who will review as the client name and policy may need to be added to the Company’s high risk report for monitoring.

Third Party Determination Record Procedure

Insurers generally cover off these requirements in their applications and processes. The Advisor is required to ask about third party involvement on the application:

1. Review material submitted by the Advisor for good order before passing it through to the insurer.
2. Retain copies for record purposes when the Advisor provides it.
3. Create record on the system.
4. If this situation is identified, a third party determination record must be created, which contains:
   a) the name, address, DOB and principal business of the third party (if an individual) and all of the above except DOB (if an entity);
   b) the nature of the relationship between the owner and the third party. If there are suspicions regarding the involvement of a third party, a statement must be signed by the owner that they are not acting on behalf of a third party.
   c) escalate to CO, who will review as the client name and policy may need to be added to the Company’s high risk report for monitoring.

Politically Exposed Foreign Person (PEFP) Record Procedure

Insurers generally cover off these requirements in their applications and processes. The Advisor is required to ask about PEFP status as directed on the application. The Company will:

1. Review the material submitted by the Advisor for good order before passing it through to the insurer.
2. If $100,000 or more has been received in a single payment, check to see that PEFP determination has been made.
3. Retain copies for administrative reasons of the PEFP determination including:
   a) the office or position that causes the person initiating the transaction to be considered a PEFP;
   b) the source of funds, if known;
   c) the date it was determined the person was a PEFP;
   d) the name of the member of senior management who reviewed the transaction within 14 days after the transaction;
   e) the date the transaction was reviewed.
4. Create record on the system and flag the PEFP field.
5. Escalate to CO, who will add the client's name, policy type, policy number and writing Advisor to the Company's high risk report for monitoring.

Records Retention Requirement Procedure

The Company maintains records for administrative purposes in order to fulfill their obligations to insurers and Advisors as follows:

1. Whatever records are submitted by Advisors and required by insurers in connection with the sale and service of policies.
2. If FINTRAC were to make a request, the Company would respond within 30 days after a request by assisting the Advisor and/or insurer in compiling records.
3. Would make available the records the Company maintains in their own systems and files.
4. The Company will retain records for 5 years from the day they were created or from the date of the last transaction.

4.3 Monitoring of Large Transactions

 Definitions:

Large Transaction: Any transaction attempted or completed of over $100,000 where the transaction represents new proceeds in cash, cheque, money order or bank draft. In the case of cash or money order, a large transaction report is required to be completed. A Large Transaction does not include money received from a financial entity, transfer between insurance companies, or from a public body.

Financial Entity: In this context, a financial entity means a bank, credit union, caisse populaire, a trust or loan Company or an agent of the Crown that accepts deposit liabilities.

Public Body: In this context, a public body means a provincial or federal department or Crown agency; an incorporated municipal body (including an incorporated city, town, village, metropolitan authority, district, county, etc.), or a hospital authority.

Policy and Procedures: The Company does not deal with any cash transactions. However, an Advisor or the Company’s employee must complete a Large Transaction Report for any attempted large transactions and submit the completed form to the Company’s CCO at:

103 - 15225 104 Avenue, Surrey, BC
or by fax: 604.581.2629. Toll free fax: 1.888.561.1177

The report must be completed and submitted within two (2) business days of the attempted or completed transaction. If an attempted large transaction is determined to be suspicious, the Advisor or the Company employee must also complete a Suspicious Transaction Report. The Company’s CCO will review and report the transaction to FINTRAC according to their reporting requirements.

4.4 Reporting to FINTRAC

 Reporting Obligations to FINTRAC: The Company and the Company’s employees, Advisors and the employees of Advisors have an obligation to report the following to FINTRAC:

Large cash transactions - Attempted large cash transactions involving amounts of $10,000 or more received in cash must be reported (NB. the Company prohibits all cash transactions regardless of size).

Suspicious transactions - You must report where there are reasonable grounds to suspect that a completed or attempted transaction is related to the commission of a money laundering offence or to the financing of a terrorist activity.

Terrorist property - You must report where you know there is property in your possession or control that is owned or controlled by or on behalf of a terrorist or a terrorist group.

Large Cash Transaction (LCT) Procedure: The Company does not accept cash nor do their business suppliers. Therefore, the likelihood of having to make a LCT report is unlikely. In the event that cash was accepted, it would trigger a need to report, the Company would file a report according to the rules.

1. If a customer attempts to pay for a policy with cash and the attempt meets the criteria described in the STATR Rules section above, a STATR most certainly should be filed.
2. Regardless of the size of an attempted cash payment, if the circumstances are in any way suspicious and trigger any red flags, the CO must decide whether to file a report after also reviewing www.fintrac.gc.ca and Guideline 5 and Guideline 7 – Submitting Large Cash Transaction Reports to FINTRAC.
3. CO may flag any customer, policy/account, associated policy/account, or Advisor on their system for monitoring and reports or set up a manual process for monitoring.
4. The CO may consult with the affected insurer regarding the case, but should not discuss any decision about filing a STATR.

Reporting Obligations for Suspicious Transactions - All the Company employees, contracted Advisors or employees of contracted Advisors must send a Suspicious Transaction Report to FINTRAC when there are reasonable grounds to suspect a transaction (either completed or attempted) is related to the commission of a money laundering or a terrorist financing offence. There is no minimum threshold amount for reporting a suspicious transaction. Once it is determined there are reasonable grounds to suspect the transaction is related to the commission of a money laundering or terrorist financing offence, a report, including all required and applicable information, must be sent within 30 calendar days.

This 30-day reporting time limit begins when a member of the Company first detects a fact about a transaction that constitutes reasonable grounds to suspect it is related to the commission of a money laundering or terrorist financing offence. If such a fact is detected at the time of the transaction, the reporting timeline begins at the time of the transaction. However, if the fact is not detected at the time of the transaction, the 30-day time limit could begin at some time after. For example, if the fact were detected during a review by corporate security after the transaction took place, the 30-day time limit would begin when corporate security first detected the fact. Reporting persons and entities are protected from criminal and civil legal proceedings when they submit suspicious transaction or other financial transaction reports in good faith to FINTRAC, as required. The same applies to terrorist property reports.

Suspicious Transaction OR Attempted Transaction Report (STATR) Procedures - According to FINTRAC, “as a general guide, a transaction may be connected to money laundering or terrorist activity financing when you think that it, or a group of transactions, raises questions or gives rise to discomfort, apprehension or mistrust.” The Company instructs its employees to look for things that seem to be out of the ordinary and to trust your instincts when deciding when to escalate concerns.

1. If a review triggers concern about a transaction, escalate it immediately to the CO. While the CO should not discuss whether a STATR report will be or has been filed, he or she may contact the insurer(s) involved to consult regarding the transaction. The decision as to whether to file a STATR should not be discussed.
   a) Section 1 is mandatory and requires the Advisor, or in certain cases the Company employee, to fill out personal contact information should more information or clarification be necessary.
   b) Section 2 must be completed in its entirety by the Company employee or the Advisor with all known client information.
   c) Any additional or conflicting information that is not consistent with what was recorded on the KYC should be recorded in the lines that follow.
2. Any additional or conflicting information that is not consistent with what was recorded on the KYC should be recorded in the lines that follow.
3. The CO will immediately review to determine whether to report and what to report. As of the date that the CO determines that reasonable grounds exist, the Company has 30 days to make any report. If inquiries through the Advisors are required in order to reach the end customer, there is an enhanced likelihood that the customer would surmise that the Company was making a report. This must be taken into account each time that a suspicious transaction is identified, particularly if there are concerns about whether the Advisor is involved.
4. Where a STATR has been filed, arrange to monitor policy level and customer level activity on any affected policies for which the Company has records
5. Arrange to monitor the Advisor’s book of business for some period of time.
6. CO may flag the policy/account, associated policy/account, customer or Advisor on their system for monitoring and reporting or set up a manual process for monitoring.

Form of Reports - The Company has the necessary electronic technical capabilities to file electronically and will do so wherever it is FINTRAC’s preferred method.

Time is of the Essence - STATR reports, and any follow up requests by FINTRAC, must be filed with FINTRAC within 30 days of the detection of a fact that constitutes reasonable grounds. It is therefore of paramount importance that concerns be escalated to the CO as soon as they arise. The CO, in turn, must immediately consult the appropriate section of FINTRAC guidance and determine whether a report must be filed.

Terrorist Group or Listed Property Report Rules - The Company is a “reporting entity” with a legal obligation to send a terrorist property report to FINTRAC if the Company has property in its possession or control, including premium payments and insurance policies, that the Company (or an associated person) knows is owned or controlled by or on behalf of a terrorist group or listed person. According to FINTRAC, “this includes information about any transaction or attempted transaction relating to that property. All Terrorist Group and Listed Person Property Reports must be sent by paper as they cannot be sent electronically.” Additionally the Criminal Code of Canada requires each Canadian, regardless of where residing, to disclose to CSIS and the RCMP the existence of property in that person’s possession or control that meets the criteria above. If the Company or any of its “affiliated persons” (defined here as employees, since independent Advisors are directly subject to the rules) encounters any such circumstance, they may not complete or be involved in the transaction or attempted transaction. They must remove themselves from any involvement. Under the Criminal Code, the property must be frozen. Terrorist Group or Listed Person Property Reports can only be paper filed as of the date of this manual. See FINTRAC Guideline 5, section 3.2 for CSIS and RCMP contact information and Guideline 8.3 in Reference Material for information on obtaining forms.

Terrorist Group or Listed Property Report Procedure -

1. When an attempted or completed transaction is escalated by an employee or Advisor or is detected by the CO, the CO is to immediately review FINTRAC Guideline 7, which contains detailed instructions to assist in determining what, if any, reports must be made and to which entity(ies).
2. It is of utmost importance to interview the person who claims to know that he or she is in possession or control of terrorist property.
3. The CO is to consult the most current lists supplied by OSFI at http://www.ofi-bsif.gc.ca by referring to the “Terrorism Financing” link.
4. When an attempted transaction is detected, extra care must be taken to ensure that the property in question (most likely a premium payment, insurance policy, refund or payment of a benefit) is not processed. Under the Criminal Code, it may have to be frozen.
5. The CO may flag the policy/account, associated policies/accounts, customer or Advisor on their system and freeze activities or set up a manual process for monitoring.
6. If a non-employee licensed independent Advisor notifies the Company that he or she may be in possession of such property, the Advisor is required to make the report.
7. The CO is to immediately check with insurers as to their requirements for notification of this kind of report.

Privacy Safeguards - FINTRAC provides assurance that it has safeguards in place including:

• independence from law enforcement and other agencies to which it is authorized to disclose information;
• criminal penalties for unauthorized use or disclosure of personal information under its control;
• the requirement that police get a court order to obtain further information from FINTRAC; and
• the application of the Privacy Act to FINTRAC.

4.5 Risk Assessment

 FINTRAC has indicated that some insurance products can be attractive to money launderers. Insurers face these risks directly and the Company relies on their controls in addition to those the Company has implemented for higher risks. The Company could face legal, regulatory, financial and reputation consequences associated with fraud and market conduct abuses perpetrated by Advisors or their customers. In many respects, the Advisors with whom the Company contracts are their customers or clients. In order to fulfill contracts with their insurance and financial suppliers, the Company takes a number of steps to mitigate these risks, including procedures aimed at detecting and preventing fraud, including money laundering. Risk assessment must be conducted as often as necessary by the Company, but in no event less than once every two years. The risk assessment focuses on the following:

Product Risk Controls: Insurers have embedded questions in applications and forms for high risk products and many insurers’ transaction monitoring systems are designed to identify anomalies and unusual patterns.

Advisor Risk Controls: All Advisors with whom the Company does business are provincially licensed which means they have been screened by a regulator, including criminal background checks. They have had to attain the necessary credentials in order to be able to sell insurance, which might serve as a barrier for entry for money launderers. Advisors are also directly subject to the requirements and penalties of the Act. Insurers and the Company screen all Advisors prior to entering into contracts with them. The Company actively monitors the flow of business, looking for anomalies and patterns that might represent improper market conduct practices and fraud, including money laundering. The Company considers these to be powerful controls that minimize risks presented by the channel in which the Company does business.

Customer Risk Controls: Like insurers and Advisors, the Company has implemented policies and procedures to capture and maintain customer identity information. See Record Keeping Requirements in Section 2 above

4.6 Risk Mitigation

 Special Measures for High Risks - The following measures are used to monitor high risk situations:

• develop reports and establish frequency for review of reports that list high risk transactions.
• flag activities or changes in activities from normal expectations and elevate concerns as necessary;
• set parameters regarding accounts or transactions that would trigger early warning signals and require mandatory review;
• flag transactions that have potential suspicious transaction indicators relevant to the relationship and escalate them should additional indicators be detected.

New Business and Inforce Checklists for Prompts and Escalation - The Company new business and inforce administration employees review applications and inforce changes in order to be able to submit them in good order to insurers. In the process, the Company also uses these reviews as a way of monitoring Advisor and customer activity in high risk products. Employees are given instructions on when to escalate to the CO. Yearly training reinforces the reasons behind the monitoring and is intended to sensitize employees to unusual sales patterns and questionable policy changes. Once escalated to the CO, a case will be reviewed closely. If necessary and prudent, the Advisor might be contacted to provide information or to contact the customer for information.

Proposed procedure - All cases involving PEFPs or any other high risk customers or Advisors that are confirmed by the CO are flagged on their system and monitored closely, including review by the CO of all transactions.

Making Reports to Regulators

Immunity - No criminal or civil proceedings may be brought against the Company if the Company has made a report in good faith. Given the severe penalties for failing to make reports, the burden is on the Company to ensure that the Company discharges its obligations.

4.7 Anti-Money Laundering and Anti-Terrorist Financing Training Program

Procedure - The Company has implemented and will continue to refine a training program for its employees. Annual reviews of the compliance program and policies and procedures are scheduled with employees. New employees will be trained soon after they are hired. The Company employees are made aware that they cannot disclose that they have made a STATR, or disclose the contents of such a report, with the intent to prejudice a criminal investigation, and that there is immunity for making a report in good faith.

Advisors have a formal regulatory obligation to have their own training. The Company provides annual AML training at their Professional Development days. Attendance records are maintained for each session and it is expected that all contracted Advisors participate. Online access to AML training is available through the Company website for all contracted Advisors. The Company requires contracted Advisors to certify that they have completed the AML training annually. Additional training will be made available on an ad hoc basis and can consist of posted material on the Company’s website, generated by CLHIA, FINTRAC, Advocis, LIMRA on behalf of CAILBA, and other suppliers for use by Advisors and employees.

Programs designed and delivered by insurers and presentations the Company generate are also made available. Records of attendance at training are maintained in their files. Penalties For Non Compliance “Failure to comply with the compliance regime, reporting, record keeping or client identification requirements can lead to criminal charges against a reporting entity. Conviction of failure to retain records could lead to up to five years imprisonment, to a fine of $500,000, or both. Alternatively, failure to keep records or identify clients can lead to an administrative monetary penalty.” (For more information on penalties, consult the
Penalties for non-compliance section of FINTRAC’s Web site (www.fintrac-canafe.gc.ca)

4.8 Ongoing Review

 Proposed Procedures - From time to time, the Company program may be reviewed by external parties, with the results documented and reported within 30 days of the review to a senior manager for follow-up and corrective measures.

FINTRAC and CLHIA guidelines are used to prepare a review of the Company business. The Company’s self-assessment is to fit its business needs and reflect the nature, size and complexity of the organization. Weaknesses, proposed corrective actions, a timeline for implementing such actions and any follow-up actions are noted. Any deficiencies are identified and reported to the principal(s). The results of these reviews are documented and kept on file.