Biennial Training Program ForManhattanLife Annuity Insurance Producers

The USA Patriot Act (The Act) and the Department of Treasury Financial Crimes Enforcement Network issued regulations requiring insurance companies to establish anti-money laundering programs meeting certain requirements and to report suspicious transactions. Therefore, ManhattanLife has adopted policies, procedures and an Anti-Money Laundering (AML) program for its employees and insurance producers, based on the provisions of The ACT and other applicable laws and regulations and its risk of being exposed to money laundering.

In cooperation and compliance with ongoing training requirements, please take the time to read the following facts about The Act, AML and ManhattanLife policies and procedures.

Once you’ve read this training material, please complete, sign and submit the quiz to the Annuity Operations office. We will then send you the Certificate of Completion. By completing this training module you are certifying that you personally read all of the required material, and agree to comply with the government’s AML rules and regulations, and ManhattanLife’s Anti-Money Laundering Program.

We will accept training from other certified companies and carriers such as LIMRA, WebCE and United Insurance Educators. If you have completed this requirement through another source, please submit verification (screen shot, notification, certification, etc.) from that source.Courses of instruction are designed to address specific aspects of fraud associated with the Company's product lines and are designed to address the educational needs of the target personnel. In order to adequately cover the necessary subject matter, this course of instruction is at least 2 hours in duration.

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The USA Patriot Act (The Act) was signed into law in 2001. The Act’s name is an acronym for Uniting and Strengthening America (USA) by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT). The Act was established to better protect the financial services industry from potential abuse by criminals and terrorists. Its main purpose is to deter and punish terrorist acts in the United States and around the world.

Title III of the Patriot Act largely impacts financial institutions and addresses terrorist financing and money laundering by expanding existing anti-money laundering laws, primarily the Bank Secrecy Act. It also more broadly defines financial institutions so that the scope of money laundering regulations now applies not only to banking institutions but to all financial institutions including the insurance industry.

Insurance companies are required to implement a written AML program that is reasonably designed to prevent the insurance company from being used to facilitate money laundering. In addition, insurance companies are required to train employees and insurance producers on the AML program.

This training is designed to help you:

• Detect and prevent money laundering and terrorist financing;

• Comply with Anti-Money Laundering regulations;

• Identify suspicious activity and transactions;

• Recognize penalties of noncompliance.

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Money laundering is the act of moving illegally obtained money through the financial system to disguise its origin and make the source of the money appear legitimate.

Money laundering occurs in 3 stages:

• Placement - illegal money is converted into monetary instruments such as money orders or travelers checks, or deposits into accounts at financial institutions.

• Layering - Movement of funds into other accounts or other financial institutions to further disguise and hide its source.

• Integration - The funds are reintroduced into the economy and used to purchase legitimate assets to fund criminal or legitimate activities to give the appearance of it being legal.

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Example 1

A criminal has accumulated $100,000 from illegal activities. The criminal would like to put the money in the bank and/or spend it. However, the authorities would likely notice such activities and would question how the criminal obtained the money. To provide answers to their questions, the criminal will desire to “clean” the money through a money laundering scheme. A money laundering scheme occurs when the criminal makes it appear that the money was generated through lawful activity.

Typically, a criminal will associate with a cash business (e.g., laundromats, arcades, restaurants, bars, etc.) and put the illegal money into the business. The criminal will withdraw the money from the business as if it is a profit. If questioned, the criminal claims that the illegal money was generated from receipts of cash from customers.

In other words, the criminal will have laundered the illegal money so that it is now “clean” and can be put into a bank or spent.

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How does money laundering apply to the insurance business? Money laundering can work through the same concept. The criminal will attempt to clean dirty money through purchasing a life insurance product. The Financial Crimes Enforcement Network of the U.S. Department of Treasury has observed:

• The most significant money laundering and terrorist financing risks in the insurance industry are found in life insurance and annuity products because such products allow a customer to place large amounts of funds into the financial system and seamlessly transfer such funds to disguise their true origin. Permanent life insurance policies that have a cash surrender value are particularly inviting money laundering vehicles. Such cash value can be redeemed by a money launderer or can be used as a source of further investment of his tainted funds, for example, by taking loans out against such cash value. Similarly, annuity contracts also pose a significant money laundering risk because they allow a money launderer to exchange his illicit funds for an immediate or deferred income stream.

Example 2

A narcotics trafficker based in a foreign jurisdiction purchase a term policy from a U.S. insurer with one large, up-front premium made up of illicit funds using an elderly or ill front person as the insurer, and then collects the “Clean” proceeds when the insured dies.

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ManhattanLife is a group of affiliated life, annuity, and health insurance companies operating under the ManhattanLife umbrella:

• ManhattanLife Assurance Company

• Family Life Insurance Company

• Manhattan Life Insurance Company

• Western United Life Assurance Company

The ManhattanLife group of operating companies does not and will never knowingly participate in money laundering activities. No employee or insurance producer shall knowingly, or through reckless disregard, be involved in, or intentionally assist in, any money laundering activity or transactions.

Employees and insurance producers will make reasonable efforts to determine the true identity of the customer purchasing life insurance and annuity products.

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• No employee or insurance producer shall consider doing a financial transaction with the knowledge that the transaction is furthering a crime or that the source of funds was from illegal activities.

• No employee or insurance producer shall support or assist customers who provide false, altered, incomplete or missing information with the intention to deceive law enforcement agencies.

• Employees and insurance producers will comply with anti-money laundering laws and regulations.

• Employees and insurance producers will take appropriate measures to report any suspicious transaction to the AML Compliance Officer, Corporate Counsel, Human Resources or a member of management.

• Report any violations of the policy to the AML Compliance Officer, Corporate Counsel, Human Resources or a member of management.

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The objective of KYC guidelines is to prevent the company from being used, intentionally or unintentionally, by criminal elements for money laundering activities.

Know your customers (KYC)

• Is the process of a business verifying the identity of its clients

Know and follow the ManhattanLife Anti-Money Laundering Program

• Employees - found on the Company's Intranet

• Insurance Producers - found on ManhattanLife.com

Watch for suspicious activity

• Activity that is outside the normal course of business that does not have any legitimate purpose.

Watch for "Red Flags"

• Actions that point to and monitor for suspicious activities

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• The customer purchases an insurance product inconsistent with the customer's needs

• The customer attempts to use cash equivalents just under $10,000 to avoid government reporting requirements

• The customer seems to exhibit an unusual lack of concern regarding the amount of premium or costs associated with the insurance product

• The customer has difficulty describing the nature of his business

• A customer shows greater interest in the early surrender or cancellation provisions of a product rather that its investment performance/return

• Lack of apparent relationship between the owner and the insured or annuitant

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• A customer seems to be overly concerned with secrecy

• A customer is reluctant to give identifying information

• A customer account has unexplained or sudden extensive wire activity, especially in accounts that had little or no previous activity

• A customer borrows the maximum amount available soon after purchasing the product

• There's a pattern of "Not Taken" policies during the free-look period

• The customer attempts to use multiple cash equivalents for premium payments (money orders, traveler's checks, etc.)

Please keep in mind that if an individual engages in any conduct on this list, that fact does not mean that the individual is engaging in illegal activities. Instead, it means only that the individual and the surrounding circumstances should be scrutinized more carefully. If a reasonable inference is then drawn that money-laundering activities are present, you are to contact the AML Compliance Officer or Corporate Counsel. or a member of management immediately.

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• Report all suspicious activity or “red flags” to the AML Compliance Officer, Corporate Counsel, Human Resources or a member of management immediately.

• Assist the AML Compliance Officer and/or Corporate Counsel in compiling all information and reports needed to timely file a Suspicious Activity Report (SAR).

• All information relating to our anti-money laundering efforts and compliance with the Patriot Act must be kept confidential. If we suspect an individual of engaging in money laundering, we must “not” inform that individual of our suspicions. We cannot let the individual know we are reporting their suspicious activity.

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The penalties for money laundering vary greatly depending on the circumstance and the amount of funds involved. The penalties may also vary if the acts occurred in more than one jurisdiction. In addition to imprisonment, punishment for money laundering may include large fines, restitution, and community service.

Typically, the more money involved, the harsher the punishment.

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Now that you’ve read this training material, please click the link below to complete, sign and submit the quiz to the Annuity Operations office. We will then send you the Certificate of Completion.

AMLQuiz_Producer

By completing this training you are certifying that you personally read all of the required material, and agree to comply with the government’s AML rules and regulations, and ManhattanLife’s Anti-Money Laundering Program.

Annuity Operations Office929 W Sprague AvePO Box 2290Spokane WA 99210-2217

Toll Free: 800.247.2045Local: 509.835.2500Fax: 509.835.3190Email: AnnuityServices@wula.comWebsite: ManhattanLife.com

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