Anti-Money Laundering

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Anti-Money Laundering Office of Foreign Assets
Control Training
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Welcome to Anti-Money Laundering (AML) and Office
of Foreign Assets Control (OFAC) Training

• The topics covered are
• Welcome
• Introduction
• AML and OFAC Overview
• AML and OFAC Compliance
• Summary
• Conclusion

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Welcome

• Course Description
• Welcome to the Anti-Money Laundering and Office
  of Foreign Assets Control course.
• This course was designed to provide you with an
  understanding of the Anti-Money Laundering (AML)
  and Office of Foreign Assets Control (OFAC)
  requirements that are applicable to CIGNA.

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Introduction

• Course Learning Objectives
• After completing this course, you will be able
  to
• Identify and appreciate the importance of AML and
  OFAC compliance
• List common activities money-laundering criminals
  use to carry out their illegal schemes
• Use effective techniques to prevent, detect, and
  report potential money laundering
• Identify the appropriate contact for business
  unit-specific AML and OFAC guidance
• Access additional AML and OFAC resources,
  information, and assistance

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Introduction

• Overview
• Today, the activities of criminals, terrorists,
  and terrorist organizations are increasingly more
  creative, complex, and intense. The insurance
  industry has become a target for money-laundering
  schemes because of the variety of products
  offered that can be used to hide monies related
  to criminal activity.
• Companies in the insurance industry, such as
  CIGNA, are obligated to aid in the prevention,
  detection, and reporting of
• Potential money-laundering activity
• Transactions with those individuals, entities,
  and countries that are prohibited by OFAC
  requirements

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AML and OFAC Overview

• Lesson Learning Objectives
• After completing this lesson, you will be able
  to
• Define money laundering
• Identify your responsibilities for recognizing
  and reporting suspicious money-laundering
  activities
• Describe CIGNA processes to assure CIGNA does not
  conduct business with OFAC prohibited parties
• Identify the appropriate communications process
  when a customer is confirmed to be on the
  Specially Designated Nationals (SDN) and Blocked
  Persons List
• Identify and appreciate the importance of AML and
  OFAC compliance

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AML and OFAC Overview

• AML Overview
• Money laundering is a process by which money,
  resulting from or related to illegal activity, is
  filtered through a series of transactions that
  eventually make the money appear to be obtained
  from clean legal activities.
• The goal of the criminal is to make the money
  obtained illegally (such as through drug
  trafficking, terrorism, and/or bribery) appear to
  be from a legitimate source, such as an insurance
  company like CIGNA. Activity of this type is
  purposely designed to be extremely complex so as
  to avoid detection. Therefore, identification of
  money laundering tends to be very challenging.

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AML and OFAC Overview

• AML Overview, Continued
• Many countries around the world are engaged in an
  intensive and concerted effort to combat money
  laundering and other financial crimes. For
  example, in response to mounting concern over
  money laundering, the Financial Action Task Force
  on Money Laundering (FATF) was established in
  1989. The FATF is an inter-governmental body that
  has the purpose of development and promotion of
  national and international level policies, to
  combat money laundering and terrorist financing.

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AML and OFAC Overview

• AML Overview, Continued
• Since its creation, the FATF has spearheaded the
  effort to adopt and implement measures designed
  to counter the use of the financial system by
  criminals. In order to meet its objective, the
  FATF published 40 Recommendations that outline
  actions that countries should consider as they
  continue their commitment to combat money
  laundering. A review of these recommendations
  provides helpful insights regarding how various
  AML initiatives are approached throughout the
  world.

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AML and OFAC Overview

• AML Overview, Continued
• Money laundering and conducting business with
  terrorists is an illegal criminal activity in
  almost every country. Preventing and detecting
  money laundering is a world-wide priorityone in
  which CIGNA must play a key role! Effective
  employee awareness is a critical component of a
  successful AML compliance program.

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AML and OFAC Overview

• Applicability to CIGNA
• In the past, AML requirements within the United
  States primarily applied to banks and brokers
  under the U.S. Bank Secrecy Act. This act was
  amended after the attacks of September 11, 2001.
• In October 2005, the Financial Crimes Enforcement
  Network, known as FinCEN, announced that
  insurance companies are required to comply with
  AML regulations. FinCEN is an organization within
  the U.S. Department of the Treasury (U.S.
  Treasury) responsible for, among other things,
  analyzing information about financial
  transactions in order to combat money laundering,
  terrorist financing, and other financial crimes.

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AML and OFAC Overview

• Applicability to CIGNA, Continued
• The following covered products are within the
  scope of AML requirements
• Permanent life insurance policies, other than
  group life insurance policies
• Annuity contracts, other than group annuity
  contracts
• Other insurance plans with cash value or
  investment features
• While AML risk may vary depending on the product
  portfolio and geographical territory within CIGNA
  businesses, it is critical that employees and
  those working on behalf of CIGNA have a
  heightened AML awareness and participate in the
  prevention, detection, and reporting of potential
  money-laundering activity.

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AML and OFAC Overview

• Red Flags
• Employee awareness and a solid understanding of
  specific red flag transactions are critical
  components of a successful AML compliance
  program. Red flags are suspicious activities that
  indicate a particular situation warrants caution,
  care, and consideration.
• While some AML red flags might appear to be
  common sense, others require more attention and
  diligence. After reviewing the list of suspicious
  activities that are considered red flag
  indicators for money laundering, take a moment to
  identify which scenarios you may be likely to
  encounter in carrying out your job, or think
  about other scenarios specific to your business
  that would raise an AML red flag for you.

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AML and OFAC Overview

• Red Flags, Continued
• A customer with a history of purchasing and then
  canceling policies
• A customer who is reluctant to provide
  identifying information when purchasing a policy,
  or who provides minimal or seemingly fictitious
  information
• A customer who shows little concern for the
  investment performance of a policy, but a great
  deal of concern about the early cancellation
  features
• A customer with a history of overpaying premiums
• A customer who conducts business under other
  unusual circumstances or during irregular hours
  of operation

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AML and OFAC Overview

• Red Flags, Continued
• Purchase of an insurance policy that is
  inconsistent with the customers needs
• Unusual payment methods, such as cash or cash
  equivalents
• Proposals to purchase a policy using a check
  drawn from an account other than that of the
  customer
• Early cancellation of an insurance policy
  (including cancellation during a trial period),
  especially at a cost to the customer or where
  payment is made by, or the refund check is
  directed to, an apparently unrelated third party

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AML and OFAC Overview

• Red Flags, Continued
• Substantial overpayment of a premium and a
  request that a company check be issued back to
  the customer for the difference (e.g., a 10,000
  check for a 1,000 premium)
• Refunds requested in a currency that is different
  from that used in the original premium payment
• Beneficiaries outside of the country where a
  policy is issued
• Change of beneficiary to an apparently unrelated
  third party

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AML and OFAC Overview

• Basics of CIGNAs Approach
• Because CIGNA is a global enterprise, there is
  potential exposure to money laundering.
  Therefore, it is important that we have solid
  money-laundering detection and reporting
  procedures. As an employee, you must comply with
  AML regulations and CIGNAs policies regardless
  of where you conduct business.

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AML and OFAC Overview

• Basics of CIGNAs Approach, Continued
• CIGNA is required to implement an effective AML
  compliance program that includes
• A compliance officer responsible for developing
  and maintaining an effective compliance program
• Policies and procedures that include standardized
  reporting and internal controls
• Ongoing training of employees and others working
  on behalf of CIGNA to raise awareness regarding
  everyones responsibilities under the program
• Independent testing to monitor the programs
  effectiveness
• Through this training course and other current
  AML-related activities, we want to enhance our
  detection capabilities and streamline our
  reporting processes.

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AML and OFAC Overview

• Detection of Suspicious Activity
• This training program is designed to increase
  CIGNAs overall awareness of potential
  money-laundering activity. In addition, it will
  assist those working for, or on behalf of, CIGNA
  (including brokers and agents) to increase the
  chance of identifying transactions that may
  appear suspicious.
• In accordance with CIGNAs Know Your Customer
  strategy, you must keep complete documentation of
  transactions and the identities of the account
  holder and/or purchaser of a policy. It is
  critical to obtain evidence of the customers
  identity and to know their typical activity. By
  knowing your customers identity and their
  typical activity, if a suspicious activity were
  to occur, identification of potential money
  laundering would be more easily facilitated.

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AML and OFAC Overview

• Report Potential Suspicious Activity
• Criminals rely on communication breakdowns to
  safely launder their illegally obtained money.
  Therefore, it is important that you know the
  reporting requirements related to possible
  money-laundering activity. Law enforcement
  agencies expect our full cooperation in
  collecting, centralizing, and evaluating the many
  pieces of information that are essential in the
  fight against money laundering. CIGNA is
  committed to cooperating with these agencies.

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AML and OFAC Overview

• Report Potential Suspicious Activity, Continued
• Suspicious activity (red flags) must be reported
  to your business unit Compliance Officer or AML
  lead.
• If the activity or transaction is suspected to be
  potential money laundering, your business unit
  Compliance Officer or AML lead notifies the
  Global AML and OFAC Compliance Officer of the
  suspicious transaction. He or she completes a
  Suspicious Transaction Memorandum and submits the
  form electronically to the AML Mailbox.
• The Global AML and OFAC Compliance Officer is
  responsible for reviewing the Suspicious
  Transaction Memorandum and notifying the business
  units Compliance Officer regarding whether to
  continue processing the transaction.
• The Global AML and OFAC Compliance Officer, in
  consultation with the Chief Compliance, Ethics
  and Privacy Officer as appropriate or necessary,
  is authorized to file a Suspicious Activity
  Report (SAR) to FinCEN within 30 days.

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AML and OFAC Overview

• Report Potential Suspicious Activity, Continued
• Note Insurance companies are required to file
  Form 8300 (report of cash payments over 10,000)
  by the 15th day after a cash transaction occurs
  for all transactions of cash greater than
  10,000, regardless of whether the transaction is
  suspicious. However, because CIGNA prohibits cash
  transactions in general, there should not be a
  need to initiate a Form 8300.

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AML and OFAC Overview
AML Scenario Susan Michael, how are you? Its
been a while since weve spoken. Michael
Everythings just fine and pretty much the same
as when we last talked. Same job, same familyyou
know Susan What can I do for you
today? Michael I just realized that I overpaid
my annual premium. Could you please check to see
if a refund has been issued? Susan Certainly,
just one minute. I see you are due a refund of
40,654. It looks like you overpaid by 3,000
last year as well, but I see that you did receive
last years refund. I can begin the paperwork for
this years refund right away.
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AML and OFAC Overview

• AML Scenario, Continued
• If you were Susan, would you be concerned?
• You should be.
• Some money launderers can be long-time customers,
  like Michael, with whom you have an ongoing (and
  even friendly) professional relationship.
• Do not just assume all money launderers will be
  new customers.

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Check Your Understanding

• Remember Susans scenario? Which red flags should
  she have identified?
• A customer who is reluctant to provide
  identifying information when purchasing coverage,
  or who provides limited or potentially false
  information
• A customer with a history of overpaying premium
• Beneficiaries outside of the country where the
  policy is issued
• Large overpayment of premium where a company
  check is issued back to the customer for the
  difference
• Make a note of all that apply. See the next page
  for the correct response.

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Check Your Understanding

• Remember Susans scenario? Which red flags should
  she have identified?
• A customer who is reluctant to provide
  identifying information when purchasing coverage,
  or who provides limited or potentially false
  information
• A customer with a history of overpaying premium
• Beneficiaries outside of the country where the
  policy is issued
• Large overpayment of premium where a company
  check is issued back to the customer for the
  difference
• Correct answer
• The overpayment and refund of premium is one way
  to wash illegally obtained money, making it
  appear clean because it is from a reputable
  company like CIGNA. There also was a previous
  refund requested. While the refund Michael
  requested last year was not a significant amount
  of money, multiple refunds in any monetary amount
  should alert you to a potential money-laundering
  red flag.

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AML and OFAC Overview

• Your Responsibility
• Now that Susan has detected a money-laundering
  red flag, and using your additional AML reporting
  knowledge, what would you advise she do about
  this potential money-laundering activity?
• Lets look at the proper reporting steps for this
  situation.

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AML and OFAC Overview

• Your Responsibility, Continued
• Report suspicious activity Suspicious activity
  (red flags) must be reported to your business
  unit Compliance Officer or AML lead.
• Complete Suspicious Transaction Memorandum If
  the transaction involves potential money
  laundering, your business unit Compliance Officer
  or AML lead notifies the Global AML and OFAC
  Compliance Officer through a Suspicious
  Transaction Memorandum.
• Review and notify The Global AML and OFAC
  Compliance Officer is responsible for reviewing
  the Suspicious Transaction Memorandum and for
  notifying the business unit Compliance Officer
  whether to continue processing the transaction.

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AML and OFAC Overview

• Your Responsibility, Continued
• Submit SAR The Global AML and OFAC Compliance
  Officer, in consultation with the Chief
  Compliance, Ethics and Privacy Officer, is
  responsible for submitting a Suspicious Activity
  Report (SAR), if necessary, to FinCEN within 30
  days.
• Do not notify the customer U.S. federal law
  prohibits CIGNA from notifying a customer that a
  SAR was filed.
• Federal law (31 U.S.C.5318(g)(2)) provides that a
  financial institution, and its directors,
  officers, employees, and agents who, voluntarily
  or by means of a suspicious activity report,
  notify the government of suspicious transactions,
  may not notify any person involved in the
  transaction that the transaction has been
  reported.
• Complete the transaction In order to avoid
  awareness of the companys suspicions, the
  transaction should be completed.

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AML and OFAC Overview

• Your Responsibility, Continued
• As in all of our compliance programs at CIGNA,
  business unit Compliance Officers, the Chief
  Compliance, Ethics and Privacy Officer, and other
  members of the Enterprise Compliance, as well as
  the Ethics Help Line (1-800-472-8348), are always
  available as resources for questions or concerns.
• Many countries around the globe are making
  concentrated efforts to combat money laundering.
  You can do your part by detecting and reporting
  all potential suspicious activity to your
  business unit Compliance Officer or AML lead. By
  doing so, CIGNA can be a key contributor to
  successful international efforts to prevent
  money-laundering activity.

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AML and OFAC Overview

• International AML Requirements
• We have focused here on U.S. AML requirements
  however, as mentioned previously, many countries
  around the world are also engaged in an intensive
  and coordinated effort to combat money laundering
  and other financial crimes. Below is a list of
  some of the countries/political entities in which
  CIGNA conducts its business and their applicable
  AML requirements
• For employees working in or with CIGNA
  International, please check with your business
  unit Compliance Officer or AML lead for more
  information on local (non-U.S.) AML requirements.

Belgium Indonesia Spain
China New Zealand Taiwan
European Union Singapore Thailand
Hong Kong South Korea United Kingdom
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Check Your Understanding

• You should inform a customer that a Suspicious
  Activity Report (SAR) has been filed alerting
  FinCEN of their suspicious activity.
• True
• False
• Which would you select? See the next page for
  the correct response.

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Check Your Understanding

• You should inform a customer that a Suspicious
  Activity Report (SAR) has been filed alerting
  FinCEN of their suspicious activity.
• True
• False
• Correct answer
• In accordance with U.S. federal law, you should
  never inform a customer that a Suspicious
  Activity Report (SAR) has been filed.

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Check Your Understanding

• If you receive an overpayment of 20,000 for a
  life insurance policy and the customer requests a
  refund and states that it was an oversight on
  their part, you should
• Immediately refund the money, as it was an
  obvious mistake on the policyholders part
• Contact the customer and inform him/her that the
  transaction appears to be suspicious
• Notify your business unit Compliance Officer or
  AML lead and wait for instructions whether or not
  to process the refund
• Submit SAR to FinCEN
• Which would you select? See the next page for
  the correct response.

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Check Your Understanding

• If you receive an overpayment of 20,000 for a
  life insurance policy and the customer requests a
  refund and states that it was an oversight on
  their part, you should
• Immediately refund the money, as it was an
  obvious mistake on the policyholders part
• Contact the customer and inform him/her that the
  transaction appears to be suspicious
• Notify your business unit Compliance Officer or
  AML lead and wait for instructions whether to
  process the refund
• Submit SAR to FinCEN
• Correct answer
• You should notify your business unit Compliance
  Officer or AML lead and wait for instructions on
  whether to process the transaction.

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AML and OFAC Overview

• Introduction to OFAC
• Now that you have a better understanding of AML,
  potential red flags of suspicious transactions,
  and reporting obligations, lets begin our
  discussion about OFAC requirements.
• The U.S. Department of the Treasurys Office of
  Foreign Assets Control (OFAC) maintains lists of
  terrorists, terrorist organizations, drug
  traffickers, diamond and weapons traders, and
  even countries, with which certain U.S. parties
  and their affiliates are not permitted to conduct
  business. Simply put, OFAC prohibits companies
  like CIGNA from conducting business with these
  parties.

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AML and OFAC Overview

• Introduction to OFAC, Continued
• As you have learned, the detection of money
  laundering requires detailed attention to all
  transactions, and identification and reporting of
  those that appear to be suspicious. So, knowledge
  of OFAC also may help enhance our
  money-laundering detection activities since,
  given the inherently secretive nature of their
  criminal activities, these parties may be more
  likely to be involved in money laundering.
• Lets learn more about OFAC so that we can ensure
  CIGNA does not do business with the wrong
  individuals and entities.

.
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AML and OFAC Overview

• Overview
• OFAC has long maintained lists of persons,
  entities and countries with prohibited export and
  import activity. As a result of the September 11,
  2001, terrorist attacks on the United States, the
  USA PATRIOT Act of 2001 (Uniting and
  Strengthening America by Providing Appropriate
  Tools Required to Intercept and Obstruct
  Terrorism Act of 2001) expanded the scope of the
  OFAC lists to include a large number of suspected
  terrorists and terrorist organizations.
• The most comprehensive list maintained by OFAC is
  known as the Specially Designated Nationals (SDN)
  and Blocked Persons List (better known as the SDN
  List). Companies like CIGNA are not permitted to
  conduct business with persons or entities
  included on the SDN List. Additionally, OFAC
  maintains a list of countries with which
  companies like CIGNA cannot conduct business.
  These designated countries are listed in the OFAC
  Countries Sanction Program (also known as the
  Blocked Countries List).

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AML and OFAC Overview

• Overview, Continued
• CIGNA and the whole insurance industry have been
  called upon to aid in the prevention, detection,
  and reporting of transactions with these parties.
  If we identify a party that is included on the
  SDN List, we are required to report the
  transaction to OFAC within 10 days and, if
  confirmed, block or reject the funds of that
  party (e.g., insurance policies, annuities).
• Both the SDN and the Blocked Countries Lists are
  updated as often as daily. The responsibility
  within CIGNA for checking these lists is assigned
  to specific persons already identified within
  each business unit. Regardless of this assignment
  of responsibilities, it is important for all of
  us to know the OFAC basics.

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AML and OFAC Overview

• Basics to CIGNAs Approach
• The USA PATRIOT Act mandates that insurance
  companies such as CIGNA be held responsible for
  preventing, detecting, and reporting potential
  money laundering and financing of terrorist
  activities. As a result and in addition to a
  solid enterprise AML compliance program, OFAC
  recommends implementing an OFAC compliance
  program.

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AML and OFAC Overview

• Basics to CIGNAs Approach, Continued
• OFAC Compliance Program
• An effective OFAC compliance program includes
• A compliance officer who is responsible for
  developing and maintaining an effective program
• Policies and procedures that include standardized
  reporting and internal controls
• Ongoing training and communication of
  responsibilities to employees and those working
  on behalf of CIGNA
• Independent testing to monitor the programs
  effectiveness

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AML and OFAC Overview

• Basics to CIGNAs Approach, Continued
• OFAC Enforcement
• A strong OFAC compliance program not only helps
  to avoid violations, but also can be a major
  consideration in mitigating the consequences when
  a violation has occurred. While OFAC imposes
  strict liability for failure to comply with its
  requirements, if an organization is found to have
  committed an OFAC violation, its compliance
  efforts could be taken into consideration during
  OFACs penalty decision-making process. In past
  enforcement actions, OFAC has viewed the strength
  of the target companys commitment to compliance
  as a major factor in assessing the appropriate
  severity of penalty to be imposed.

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AML and OFAC Overview

• Basics to CIGNAs Approach, Continued
• CIGNA Actions
• If CIGNA discovers a U.S. Treasury-confirmed
  Specially Designated National (SDN) or Blocked
  Person, we must report the matter to OFAC and
  wait for confirmation and further instructions
  from the regulators, which could include blocking
  the assets for the SDN or Blocked Person. By
  September 30 of each year, CIGNA must file with
  OFAC an annual report of property that has been
  blocked as of June 30 of the same year.

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AML and OFAC Overview
Basics to CIGNAs Approach, Continued

• Who Does CIGNA Check?
• Any stakeholder with whom CIGNA does business is
  checked against the SDN List. For our purposes, a
  stakeholder can include, but is not limited to,
  health care professionals and groups, vendors,
  producers/brokers, employers, dependents,
  beneficiaries, banks, employees, policyholders,
  intermediaries, charitable organizations, and any
  person, organization or group we issue payment
  to, receive payment from, or to which we provide
  services.

• How Does CIGNA Check?
• CIGNA uses software, known as i/Lytics, that
  automatically compares CIGNA stakeholders to
  OFACs current SDN List.
• When Does CIGNA Check?
• Before payments to stakeholders are issued
• Before entering into new business
• On a routine basis for our existing stakeholder
  population

45
AML and OFAC Overview

• Your Responsibility
• Under the best circumstances, CIGNA would never
  do business with a person, entity, or country
  that appears on the SDN or Blocked Countries
  Lists. However, criminals count on breakdowns in
  communication and information flow to conduct
  their illegal activity and this, unfortunately,
  could happen to us.
• CIGNA has a robust communication process to try
  to reduce our risk of violating OFAC
  requirements. In the event we do identify a
  potential SDN, this communication process is as
  follows on the next pages.

46
AML and OFAC Overview

• Your Responsibility, Continued
• Step 1
• Immediately notify your business units
  Compliance Officer or OFAC lead. (Some business
  units have designated OFAC leads to oversee OFAC
  compliance initiatives.)
• Step 2
• The business units Compliance Officer or OFAC
  lead reviews the potential hit and notifies the
  Global AML and OFAC Compliance Officer.
• Step 3
• The Global AML and OFAC Compliance Officer, in
  consultation with the Chief Compliance, Ethics
  and Privacy Officer and with cooperation from the
  business unit, notifies OFAC.
• Step 4
• Assets of the SDN are blocked by CIGNA if OFAC
  confirms the SDN.

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AML and OFAC Overview

• Your Responsibility, Continued
• Step 5
• The Global AML and OFAC Compliance Officer
  notifies all business unit Compliance Officers
  and OFAC leads of the confirmed SDN. The business
  units Compliance Officer or OFAC lead checks
  their respective information systems for the
  confirmed SDN and notifies the Global AML and
  OFAC Compliance Officer if the SDN is identified
  as having active assets maintained by CIGNA
  within their business unit.
• Step 6
• The Global AML and OFAC Compliance Officer, in
  consultation with the Chief Compliance, Ethics
  and Privacy Officer, must file a Blocked Asset
  report with OFAC within 10 days of blocking
  assets.

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48
AML and OFAC Overview

• Your Responsibility, Continued
• Step 7
• While CIGNA is permitted to inform the SDN of
  U.S. Treasury-confirmed SDN status, CIGNAs
  policy requires all written notifications to an
  SDN regarding this status be approved by the
  Global AML and OFAC Compliance Officer, with
  additional guidance, if needed, from OFAC.

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AML and OFAC Overview

• OFAC Scenario
• Lets look at an example of what can happen when
  the basics of OFAC compliance are not in place.
• AZ Insurance has decided to outsource a portion
  of their claims processing work to ClaimIT, Inc.,
  a company that specializes in claim processing
  services. Margo, manager of AZ Insurance vendor
  contracting, completed the required due
  diligence, including an OFAC SDN check, before
  the final vendor contract was signed with
  ClaimIT, Inc.
• The OFAC check did not identify ClaimIT, or any
  of its principals, as an SDN.

50
AML and OFAC Overview

• OFAC Scenario, Continued
• Everything seemed to go smoothly with this vendor
  relationship for the next 2 years until OFAC
  contacted George, Chief Compliance Officer of AZ
  Insurance. OFAC informed George that ClaimIT,
  Inc. is an identified SDN. George was further
  informed that his company, AZ Insurance, was now
  being investigated by OFAC regulators since they
  have been conducting business with the SDN
  (ClaimIT, Inc.).
• George immediately contacted Margo in vendor
  contracting to see how this could have happened.
  The impacts to AZ Insurance are significant,
  starting with the possibility of unfavorable
  coverage by the media and publication of the
  investigation of a potential violation by AZ
  Insurance on OFACs website.
• What do you think AZ Insurance should have done
  to prevent this OFAC violation?

51
AML and OFAC Overview

• OFAC Scenario, Continued
• With the right compliance program basics in
  place, this scenario is preventable. AZ Insurance
  needed to have a process in place to conduct
  ongoing, routine OFAC checks of existing
  stakeholdersin this case, its vendors. Remember,
  the U.S. Treasury continually updates the SDN
  List, sometimes as frequently as daily, but
  generally every 3 to 5 days. This means that in
  addition to initial OFAC checks before engaging
  in new business, routine, periodic OFAC checks
  are needed to identify newly added terrorists,
  terrorist organizations, and drug traffickers.
• We would not want this to happen at CIGNA, which
  is why initial and ongoing OFAC
  checks/validations are so important to the
  effectiveness of our OFAC compliance program.
  These OFAC checks help prevent an event, similar
  to the AZ Insurance scenario, from occurring here
  at CIGNA.

52
Check Your Understanding

• After we receive validation from OFAC that our
  suspected SDN is confirmed, CIGNA is permitted to
  inform a customer that OFAC requires that we
  block their accounts.
• True
• False
• Which would you select? See the next page for
  the correct response.

53
Check Your Understanding

• After we receive validation from OFAC that our
  suspected SDN is confirmed, CIGNA is permitted to
  inform a customer that OFAC requires that we
  block their accounts.
• True
• False
• Correct answer
• CIGNA is permitted to inform a customer that
  their accounts have been blocked as a result of
  the U.S. Treasurys instructions through OFAC.
  This communication must be coordinated, however,
  by the business unit Compliance Officer Global
  AML and OFAC Compliance Officer Chief
  Compliance, Ethics, and Privacy Officer and if
  necessary, OFAC.

54
Check Your Understanding

• Ongoing OFAC SDN List checks are not necessary
  for existing clients and customers because OFAC
  regulations require that we must perform this
  check only before entering into new business.
• True
• False
• Which would you select? See the next page for
  the correct response.

55
Check Your Understanding

• Ongoing OFAC SDN List checks are not necessary
  for existing clients and customers because OFAC
  regulations require that we must perform this
  check only before entering into new business.
• True
• False
• Correct answer
• While it is important to complete an OFAC check
  before entering into a new business arrangement,
  it is equally important to conduct ongoing OFAC
  checks because the SDN List data is updated as
  frequently as daily.

56
AML and OFAC Compliance

• Lesson Learning Objectives
• After completing this lesson, you will be able
  to
• Identify and appreciate the importance of AML and
  OFAC compliance
• Identify the actions required by CIGNA to comply
  with regulations
• Identify important contacts for compliance
  information and assistance

57
AML and OFAC Compliance

• Importance of AML and OFAC Compliance
• CIGNA could experience damage to its
  reputationnot to mention heavy financial
  penaltiesif our AML or OFAC compliance programs
  are not effective. Companies that violate AML and
  OFAC regulations have had a difficult time
  recovering from the impact on shareholder value
  and damage to reputation.
• AML Penalties
• Fines may be twice the amount of the transaction,
  up to 1 million.
• Property involved in the transaction also may be
  seized and forfeited.
• Employees can be fined individually and sentenced
  to up to 20 years of imprisonment for knowing or
  being willfully blind to the fact that a
  transaction involves illegal funds.

58
AML and OFAC Compliance
Importance of AML and OFAC Compliance, Continued

• AML Case 1
• After a 3-year investigation, American Express
  Co. paid 65 million in 2007 to resolve
  allegations that one of its subsidiaries had
  violated the U.S. governments anti-money
  laundering laws. Investigators believe some
  American Express accounts were used to launder
  more than 55 million of drug proceeds through
  unregulated transfers of U.S. and South American
  currency.

• AML Case 2
• In February 2003, a major narcotics trafficking
  investigation revealed that a network of
  insurance brokers in the U.S., soliciting clients
  in South America, deposited drug proceeds into
  investment accounts on behalf of narcotics
  traffickers. The investigation resulted in the
  seizure of approximately 9.5 million from a
  number of parties.

59
AML and OFAC Compliance

• Importance of AML and OFAC Compliance, Continued
• OFAC Penalties
• The maximum civil and criminal penalties for OFAC
  violations recently increased. Civil fines now
  include up to 250,000 or twice the value of the
  transaction at issue, whichever is greater even
  if the person had no knowledge of the violation.
• Willful violations of OFAC regulations could
  trigger criminal fines as high as 1 million and
  imprisonment up to 20 years.

59
60
AML and OFAC Compliance

• Importance of AML and OFAC Compliance, Continued
• OFAC Case 1
• In January 2009, Lloyds TSB Bank agreed to
  forfeit 350 million to resolve its liability for
  violating OFAC sanctions.
• OFAC Case 2
• In November 2007, Chevron Corporation paid 2
  million to OFAC as part of a 30 million
  multi-agency settlement of alleged OFAC
  violations. Although Chevron took certain steps
  designed to prevent its dealing with OFAC
  prohibited parties, OFAC alleged that such
  procedures proved inadequate. In addition,
  Chevron did not voluntarily disclose this matter
  to OFAC.

61
AML and OFAC Compliance

• CIGNA Policies
• In addition, CIGNAs policies state that
  employees who are knowingly involved, or are
  aware of the involvement of others, in potential
  AML or OFAC violations are subject to
  disciplinary action up to and including
  termination of employment. CIGNA also may report
  the incident to the proper legal authorities.
• Why should you comply? By now, the answer should
  be clear
• With our reputation and integrity serving as the
  cornerstone of the companys long-term viability
  and success, it is very important that we ensure
  compliance with AML and OFAC regulations. More
  personally, you should comply to ensure that your
  professional role at CIGNA remains in good
  standing.

62
AML and OFAC Compliance

• Potentially Costly ErrorsLessons Learned
• There are a number of common mistakes companies
  make in regard to AML and OFAC compliance.
  Recognizing the past mistakes of other
  businesses, consider these examples (on the next
  page) of common errors that CIGNA should avoid.

63
AML and OFAC Compliance

• Potentially Costly ErrorsLessons Learned,
  Continued
• AML Errors
• Informing the party involved that a Suspicious
  Activity Report (SAR) was filed, which should
  never be done
• Communication breakdowns, such as identifying an
  unusual transaction but not bringing this
  transaction to the attention of your business
  unit Compliance Officer or AML lead
• Lack of centralized reporting, resulting in
  executive leadership being unaware of multiple
  business units filing Suspicious Transaction
  Memorandums on the same party

64
AML and OFAC Compliance

• Potentially Costly ErrorsLessons Learned,
  Continued
• OFAC Errors
• Not performing periodic, ongoing SDN List checks
  in addition to the initial new business OFAC
  check
• Relying on other third parties to perform OFAC
  checks. Note This could expose us to penalties
  as it may be perceived that we are involved with
  the illegal transaction (which is the reason why
  CIGNA performs its own OFAC checks).
• Payments to Cuban nationals living in another
  country
• Business accounts with offices in sanctioned
  countries
• Accidental release of wire transfers that should
  have been blocked
• Not retaining federal reports properly. While the
  regulation requires record retention of five
  years, we must follow CIGNAs Record Retention
  Schedule that requires permanent retention for
  federal reporting (CR-CA-1).

64
65
AML and OFAC Compliance

• Your Responsibilities
• What you can do
• Know your business unit Compliance Officer.
• Read CIGNAs AML and OFAC Policies.
• Frequently visit the AML and OFAC web pages on
  the Enterprise Compliance intranet site for
  updates.
• Identify, share, and discuss AML red flags
  specific to your business unit.
• Always Know Your Customer and keep complete
  documentation of transactions and the identities
  of the policy or account holder and/or purchaser
  of plans.
• Understand the AML and OFAC reporting
  requirements should you identify suspicious
  activity or an SDN.

66
Check Your Understanding

• In order to comply with AML and OFAC regulations,
  CIGNA must
• Implement and maintain policies and procedures
  that include standardized reporting and internal
  controls
• Establish and maintain ongoing training of
  employees and others working on behalf of CIGNA
  to raise awareness regarding everyones
  responsibilities under the program
• Operate a monitoring plan to ensure program
  effectiveness
• Designate a Compliance Officer responsible for
  developing and maintaining an effective
  compliance program
• Make a note of all that apply. See the next page
  for the correct response.

67
Check Your Understanding

• In order to comply with AML and OFAC regulations,
  CIGNA must
• Implement and maintain policies and procedures
  that include standardized reporting and internal
  controls
• Establish and maintain ongoing training of
  employees and others working on behalf of CIGNA
  to raise awareness regarding everyones
  responsibilities under the program
• Operate a monitoring plan to ensure program
  effectiveness
• Designate a Compliance Officer responsible for
  developing and maintaining an effective
  compliance program
• Correct answer
• CIGNA must perform all of these tasks to comply
  with AML and OFAC regulations.

68
Summary

• Important Contacts for Information and Assistance
• Compliance with all laws and regulations
  applicable to CIGNAs business is important.
  However, given the nature of the post-9/11 world
  in which we now conduct our global operations,
  AML and OFAC compliance have a particularly high
  level of visibility with regulators and the
  public.

69
Summary

• Important Contacts for Information and
  Assistance, Continued
• You should escalate AML and OFAC issues to your
  designated business units Compliance Officer or
  AML and OFAC lead. However, CIGNA has several
  other resources and tools for you to obtain
  clarification, information, and assistance with
  AML or OFAC issues and questions. These include

AML and OFAC Policy Enterprise Compliance Chief Compliance, Ethics and Privacy Officer Georgia Dodds Foley, Esq.1-(215)-761-2029
Global AML and OFAC Compliance OfficerLuis Eduardo Henriquez1-(215)-761-1711 AML web page AML mailbox AMLCompliance_at_CIGNA.com
OFAC Lead Luis Henriquez1-(215)-761-1711 OFAC web page OFAC mailbox OFACCompliance2_at_CIGNA.com
Ethics Help Line1-800-472-8348 Printable contact list
70
Conclusion

• Summary
• This concludes the Anti-Money Laundering and
  Office of Foreign Assets Control course.
• You should now be able to
• Identify and appreciate the importance of AML and
  OFAC compliance
• List common activities money-laundering criminals
  use to carry out their illegal schemes
• Use effective techniques to prevent, detect, and
  report potential money laundering
• Identify the appropriate contact for business
  unit-specific AML and OFAC guidance
• Access additional AML and OFAC resources,
  information, and assistance

71
Annual Affirmation Statement

• As an employee or other individual working for or
  on behalf of CIGNA, its subsidiaries or
  affiliated companies, I am responsible for
  knowing, understanding and complying with CIGNA's
  Anti-Money Laundering ("AML") and Office of
  Foreign Assets Control ("OFAC") Policies. More
  specifically
• I acknowledge and affirm that I have completed
  CIGNA's AML/OFAC training module, and that I will
  comply with the requirements outlined in the
  module.
• I acknowledge and affirm my awareness of the
  availability of information related to AML/OFAC
  on the CIGNA Central Website. In order to ensure
  my familiarity with this resource, I agree to
  review and maintain my awareness of policies,
  procedures, guidelines, and any other pertinent
  AML/OFAC information on this site, as well as
  participate in additional training on these
  topics, required by CIGNA.
• I acknowledge and affirm my commitment that in
  the event I have any questions or concerns
  regarding AML/OFAC requirements, or if I become
  aware of a potential incident or violation, to
  ask for help and/or report a concern using the
  contacts outlined for me in the guidelines and
  training.
• I acknowledge and affirm my understanding that
  violating or disregarding AML/OFAC requirements
  may result in disciplinary action up to and
  including termination.
• Call the Ethics Help Line, 1.800.472.8348, if you
  would like to contact the Ethics Office now.

72
Wrap Up

• In order to get credit for taking the Anti-Money
  Laundering Office of Foreign Assets Control
  Training course, you must provide the following
  information to EthicsCompliance_at_cigna.com
• Name
• Email Address
• Course Name
• Date you completed this training
• Company Name
• Please make sure the subject line of your email
  is
• CIGNA.com AML and OFAC training.
• Note By submitting this email you agree to abide
  by requirements contained in the affirmation
  statement on the previous screen.
• Thank you.