Which type of insurance product is particularly vulnerable to being used for money laundering?

Whole life insurance is particularly vulnerable to money laundering due to its unique characteristics that can facilitate the placement and layering stages of money laundering. This type of insurance not only provides a death benefit but also accumulates cash value over time.

The cash value aspect is significant because it allows the policyholder to access funds without triggering substantial scrutiny, which is a critical component for those looking to disguise illicitly obtained funds. Individuals can make premium payments with dirty money and then borrow against or withdraw the cash value, effectively layering the funds and removing them from their illicit origins.

Additionally, the long-term nature of whole life insurance can provide a stable vehicle for the laundering process. Changes to beneficiaries or the surrender of policies can also be executed with relative ease, further complicating the tracking of funds. In contrast, other forms of insurance, such as term life, health, or property insurance, do not share these characteristics to the same extent, making them less attractive for money laundering activities.