What action is required from an insurance agent if they suspect a client of engaging in suspicious activity?

The correct course of action when an insurance agent suspects that a client is engaged in suspicious activity is to file a Suspicious Activity Report (SAR). Filing a SAR is a requirement under the Bank Secrecy Act (BSA) and is critical for reporting potential money laundering or other financial crimes. By submitting a SAR, the agent provides crucial information to law enforcement and regulatory agencies, facilitating investigations about illicit activities.

The agent's responsibility is to ensure that any suspicious behavior is documented and communicated through this formal process. Filing a SAR helps protect the integrity of the financial system and complies with regulatory obligations. Additionally, it should be noted that agents should refrain from discussing their suspicions with the client or other parties, as this could compromise investigations or alert the individual to the scrutiny they are under.

This action is distinct from merely informing the compliance officer or assuming that the insurance company will take care of the report, as these steps could delay necessary reporting. While the compliance officer plays a crucial role in the organization's overall compliance program, the direct action of reporting through a SAR is paramount when there is a suspicion of illegal activity.