The two functions Compliance and Anti-ML & TF Compliance are performed by the AML Compliance Officer (MLRO). The AML Compliance Officers carry out their functions independent from the activities and services that they monitor. The AML Compliance Officers report directly to the Board of Directors.
The Compliance function holds the following responsibilities:
The AML Compliance Officer is endowed with the following powers:
The AML Compliance Officer Duties:
The AML Compliance Officer shall continuously monitor the activities of the Firm and its customers for indications of money laundering, by reviewing trade blotters, account statements, exception reports, or other reports and documentation for indications of suspicious activity.
The AML Compliance Officer shall be responsible for cooperating with all regulatory money laundering investigations; providing all requested documentation and information to federal, state and self-regulatory organizations.
Receive Reports of Suspicious Activity
The AML Compliance Officer shall receive all staff reports of suspicious activity or suspected violations of the AML Program. The AML Compliance Officer shall accept all such reports in confidence from supervisors of departments, or from any employee directly.
The AML Compliance Officer shall perform a comprehensive investigation of each instance of reported suspicious behavior. The investigation process, as well as any data collected as a result thereof, together with the AML Compliance Officer’s final decision on the investigation shall be documented.
The Company shall take all reasonable measures to ensure that accounts are not used for the purpose of holding assets obtained as the result of, or for facilitating the commission of any criminal activity or for any purpose contrary to the Money Laundering (Prevention) Act and the Regulations. To minimize the risk of money laundering the company will not accept any cash deposits.
2.2.1 Implementation of Risk-Based Approach
The Company will apply appropriate measures and procedures, on a risk based approach, to focus its effort in those areas where the risk of Money Laundering & Terrorist Financing appears to be higher. A risk-based approach shall:
(a) Recognize that the money laundering or terrorist financing threat varies across customers, countries, services and financial instruments;
(b) Allow the board of directors to differentiate between the Company’s customers in a way that matches the risk of their particular business;
(c) Allow the board of directors to apply its own approach in the formulation of policies, procedures and controls in response to particular circumstances and characteristics;
(d) Help to produce a more cost effective system; and
(e) Promote the prioritization of effort and actions of the Company in response to the likelihood of money laundering or terrorist financing occurring through the use of services provided.
2.2.2 Duty on establishing business relationships
The Company may not carry out a one-off transaction or form a business relationship in the course of relevant financial business unless:
(i) it has money laundering procedures in place, meaning:
(ii) it makes its employees aware of the statutory duties and of the Company’s procedures; and
(iii) it maintains training procedures.
For these purposes, a one-off transaction is a transaction other than a transaction carried out in the course of an established business relationship.
The Company shall not conduct business with persons using obviously fictitious names or addresses and shall not keep anonymous accounts.
Media request – any request for a statement or information from the media or other source must be directed to the MLRO for handling.
2.2.3 Identification procedures
The Company must ensure as soon as reasonably practical after the first contact has been made, and in any event before transferring or paying any money out to a third party, that satisfactory evidence is produced or such other measures are taken as will produce satisfactory evidence of the identity of any customer or counterparty (an “applicant”). If a client appears to be acting on behalf of another, identification obligations extend to obtaining sufficient evidence of that third party’s identity. Where satisfactory evidence is not supplied, the firm will not proceed with any further business and bring to an end any understanding it has reached with the client. If there is knowledge or a suspicion of money laundering, it will be reported without delay as provided under these procedures to the MLRO.
Methods of identification
The Company will make sure that it is dealing with a real person or legal entity, and obtain sufficient evidence to establish that the applicant is that person or organization. When reliance is being placed on any third party to identify or confirm the identity of any applicant, the overall legal responsibility to ensure that the procedures and evidence obtained are satisfactory rests with the Company.
As no single form of identification can be fully guaranteed as genuine, or representing correct identity, the identification process will need to be cumulative, and no single document or source of data (except for a database constructed from a number or other reliable data sources) must therefore be used to verify both name and permanent address.
The Company will take all required measures, according to applicable Money Laundering (Prevention) Act and Regulation, to establish the identity of its clients and beneficial owners. Without exception any potential new client shall have to be introduced by an existing client and/or must have an existing relationship with the Company.
Below are examples of suitable documentary evidence. Care should be taken to ensure that any documents offered are originals, or are true copies certified by a lawyer, Public Notary or authorised financial intermediary. All documents need to be from a reliable source, where it is difficult to amend or obtain them illegally. Photocopies of all identification documents must be taken in the Company’s premises and/or before an Executive Director and or the MLRO and or the person designated by the Company.
It is essential to collect and record information covering the following categories:
The identity will be established to the Company’s satisfaction by reference to official identity papers or such other evidence as may be appropriate under the circumstances including, without limitation: full name; date and place of birth; nationality; marital status; name of wife/husband, if married; name of parents; complete address, including phone number and city code; telephone and email, signature, occupation; information on the earnings and his/her financial situation. Identification documents must be current at the time of the opening.
The Company must also obtain separate evidence of the applicant’s permanent residential address. This should be from the best available source. One or more of the following steps is recommended to confirm addresses:
Identification documents which do not bear a photograph or signature and which are easily obtainable (e.g. birth certificate and driver’s license) are not acceptable as the sole means of identification.
Where the applicant company is listed on a recognised or approved stock exchange or where there is independent evidence to show that the applicant is a wholly owned subsidiary or subsidiary under the control of such a company, no further steps to verify identity over and above the usual commercial checks and due diligence will normally be required.
Where the applicant is an unquoted company where none of the principal directors or shareholders already has an account with us, the following documents will be obtained from an official or recognised independent source:
description and nature of business including:
The Company shall, as far as practicable, obtain the register of members or a list of the names and addresses of shareholders holding a controlling interest in the company and where necessary, shall obtain details which would be required of an individual client in respect of the beneficial owners of corporate shareholders shown to be holding ten percentum (10%) or more of the issued shares of a company.
Where the client is a trustee, the Company will ensure that it understands the structure of the Trust, based on the information and documentation provided by the client, sufficiently to determine the provider of funds (e.g. settlor), those who have control over the funds (e.g. trustees) and any persons or entities who have the power to remove the trustees. A trustee shall verify the identity of a settlor or any person adding assets to a trust in accordance with the procedures relating to the verification of identity of clients and the trustee shall recognise the purpose and the nature of the trust and the identity of the funds settled on it. The Company will make a reasonable judgment as to the need for further due diligence.
Due diligence must be done on all principal owners identified in accordance with the following principles:
Natural persons: where an applicant is an individual, the Company must clearly establish, based on information and documentation provided by the client, whether the client is acting on his/her own behalf.
Legal entities: where the client is a company, such as a private investment company, the Company must understand the structure of the company, based on information and documentation provided by the client, sufficiently to determine the provider of funds, principal owner(s) of the shares and those who have control over the funds, e.g. the directors and those with the power to give direction to the directors of the company. With regard to other shareholders the Company will make a reasonable judgment as to the need for further due diligence. This principal applies regardless of whether the share capital is in registered or bearer form.
2.2.4 High-risk countries
The Company will apply heightened scrutiny to clients and beneficial owners resident in and funds sourced from countries identified by credible sources as having inadequate anti-money laundering standards or representing high-risk for crime and corruption. The Company will apply more stringent standards to the transactions carried out by clients or beneficial owners domiciled in such countries.
Risks associated with entities organized in offshore jurisdictions are covered by due diligence procedures laid out in these guidelines. However, the Company will apply more stringent standards to the transactions carried out by clients or beneficial owners head-quartered in such jurisdictions.
Clients and beneficial owners whose source of wealth is derived from activities known to be susceptible to money laundering will be subject to heightened scrutiny.
Individuals who have or have had positions of public trust such as government officials, senior executives of government corporations, politicians, political party officials, etc. and their families and close associates will be subject to heightened scrutiny.
2.2.5 Verification responsibility
It is the responsibility of the MLRO to verify the identity of each new applicant when taking on a new client. The verification procedures must be completed and satisfactory evidence of the new applicant’s identity must be obtained before the applicant is sent a customer agreement except in exceptional circumstances (as determined in writing by the Compliance Officer).
2.2.6 Verification procedures
The verification process should be documented by making a record of the relevant information on the Company’s Client Identification Questionnaire.
If in doubt as to which information must be obtained to verify an applicant’s identity staff must consult the MLRO for guidance without delay and prior to commencing any dealings.
2.2.7 AML Compliance Officer approval
Once completed, the Client Identification Questionnaire should be completed and signed by the employee or the person designated by the Company and must be handed over to the Compliance Officer for record keeping. For each applicant the Compliance Officer must also countersign the forms and will be responsible for deciding what further information, including documentation, is required prior to conducting business for the applicant.
2.2.8 Record keeping procedures
The Company must also keep all records for not less than 5 years from the date of completion of the transaction. These should include records verifying the identity of counterparty and a record of transactions with or for that client.
2.2.9 Monitoring and Periodic reviews
The Company will make a common sense judgment about what, if any, further due diligence steps are required to be taken in relation to existing clients into effect, and also implement the following system of periodic review of customer account activity:
Staff who handle or are managerially responsible for handling transactions which may involve money laundering will be made aware of:
All members of staff will have access to the Laws and any relevant Guidelines and will receive periodic training in addition to the information provided in this document. This is expected to include seminars organised by the Compliance Officer. Employees should ensure that they regularly update their knowledge of these procedures given the seriousness of the consequences of breaching the Act and the Regulations.
A record of anti-money laundering training supplied must be maintained and will include the dates, nature and names of recipients of such training.
There is a statutory and regulatory obligation on all staff to report information which comes to their attention, which gives rise to knowledge of suspicion or reasonable grounds for knowledge or suspicion of money laundering. Thus, even if a member of staff does not actually know or suspect but reasonably should have known or suspected, and does not report, he would be committing an offence. To this end, continuous surveillance for suspicious transactions must be carried out. Knowing its customers is the Company’s most important line of defense in preventing or detecting money laundering activities. It is important that the Company verifies the identity of new counterparties and ensures that they are involved in bona fide business activities and that they share the Company’s high standards of integrity and business practice.
Knowledge in relation to money laundering has been in the past defined widely and includes: willfully ignoring the obvious, willfully and recklessly failing to make inquiries as a reasonable and honest person would make, knowledge of circumstances which would indicate facts to such honest and reasonable person or put them on enquiry.
Suspicion is assessed on a subjective basis although goes beyond mere speculation. Reasonable grounds to suspect introduces an objective test rather than a subjective test of suspicion. It might therefore include willful blindness (i.e. turning a blind eye to the obvious), negligence (recklessly failing to make adequate enquiries) and failing to assess adequately the facts and information presented or available. It shall be noted that suspicion shall depend on the nature of the relationship and the transaction and the particular circumstances of each case.
The Company will therefore ensure that staff takes all reasonable steps in the particular circumstances to know the customer and the rationale for the transaction or instruction. The Company shall keep records of reports made by their staff and of reports made to the Supervisory Authority.
A suspicious transaction will often be one which is inconsistent with a customer’s known legitimate business. To facilitate the assessment of a suspicious transaction, emphasis will be made on the understanding of the client’s business and adequate record keeping. the customer’s business and his / her requirements and adequate record keeping to facilitate the assessment. It is the responsibility of all staff to report knowledge or suspicion of money laundering.
The following questions may help to determine whether a transaction is suspicious:
Suspicions of money laundering, however minor, should be discussed immediately with the MLRO. An internal form for making a report of a suspicion or knowledge of money laundering has been included in this manual.
Steps should also be taken to monitor accounts held on behalf of customers that hold positions of public trust such as government officials, politicians and any known connected accounts.
Reporting a suspicion is a defense to a claim for breach of a confidence. However, any statements to the press or other publicity must be routed through the MLRO or his deputy. A report made in good faith, shall exempt the persons involved from criminal, civil or administrative liability. Confidentiality whilst an investigation is ongoing is of the utmost importance and employees are reminded of the offence of “tipping-off”.
Employees must report any relevant money laundering suspicions to the MLRO.
The suspicion should be fully documented, including the name and location of the reporting employee, full details of the client, and an account of the information giving rise to the suspicion.
All internal enquiries made in relation to the report, and the reason behind whether or not to submit the report should also be documented.
The MLRO should remind the reporting employee to avoid “tipping off” the subject of the reported suspicion, and that information concerning a report should not be disclosed to any third parties.
The requirement to report also includes those situations where the business or transaction has not proceeded because the circumstances surrounding the application or proposal give rise to a suspicion of money laundering.
We will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancy in the identifying information. We will keep records containing a description of any document that we relied on to verify a customer's identity, noting the type of document, any identification number contained in the document, the place of issuance, the date of issuance and expiration date. With respect to non-documentary verification, we will retain documents that describe the methods and the results of any measures we took to verify the identity of a customer. We will maintain records of all identification information for five years after the account has been closed. We will retain records made about verification of the customer's identity for five years after the record is made.
The Company shall have the duty to certify that each Client has submitted a duly signed Know-Your-Client Questionnaire (hereinafter the “KYC”).
The Company shall have the duty to provide the Client with the appropriate assistance for the accurate completion of the KYC. The Company must inform all Clients of the significance that the precise completion of the KYC bears, so as to enable the Company to provide accurate service, protection and promotion of the Client’s interests.
Getting to know the Client’s experience with investments includes obtaining information as to transactions in financial instruments that the Client carried out in the past, the type and the quantities involved, as well as the frequency of the transactions.
With respect to the Client’s investment targets, the Company must obtain information primarily on the intended investment horizon (short-, medium-, long-term) as well as the Client’s risk appetite (low, medium or high).
Moreover, the Client’s financial holdings evaluation must include a broader view of the Client’s portfolio of assets, among others, the Client’s income, as well as the Client’s primary assets (real estate, financial assets, valuables, other significant assets), the Client’s monthly expenses and debt obligations.
The Company must bring to the attention of the Client the need to inform the Company of future changes in the Client details and financial condition.
There is an obligation on all staff to report knowledge or suspicions of money laundering in accordance with these procedures. An employee commits an offence if a reasonable ground for suspicion/knowledge of money laundering exists and he/she fails to report. Therefore, if you have a suspicion, no matter how small:
(a) Promptly inform the MLRO verbally and complete this reporting form. You are now absolved from any personal criminal liability. However, you must comply with the directions of the Compliance Officer and management in respect of the customer and transaction until the matter is resolved;
(b) You may not continue to manage the customer’s portfolio until clearance is given by the Compliance Officer;
(c) The Compliance Officer must promptly review the situation with senior management;
(d) The review will either sustain or negate the suspicion. A sustained suspicion will lead to the Company making a confidential report to the authorities who will direct the Company how to proceed;
(e) You must not tip-off the client or any other person that you or the Company has made a report;
(f) If in doubt, seek guidance from the Compliance Officer.
PLEASE COMPLETE THE FOLLOWING
6. Is the customer an existing customer
8. Suspicion aroused or knowledge gained during identification procedure:
(a) How was the customer introduced to us?
(b) Is verification of identity complete?
(c) Has obtaining verification of the customer’s identity been unusually difficult?
If yes please specify:
9. Please detail in the space below the knowledge or suspicion(s) of money laundering, why you are suspicious and any other relevant information. Please give as much information as possible. The following points may be of assistance:
(a) Is the role of any fiduciary involved in the management of the portfolio usual?
(b) Is payment into the account by means of a third party cheque without any apparent connection with the prospective investor?
(c) Is payment by cheque into the account where there is a variation between the account holder, the signatory and prospective investor?
(d) Other suspicious circumstances:
10. MLRO: please add any further relevant information to support or negate the suspicion.