AML and CFT Manual
1. GENERAL DEFINITIONS
For the purposes of this Manual, unless the context shall prescribe otherwise:
“Act” means Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014 as amended from time to time;
“Account” means any facility or arrangement in which a reporting entity does any of the following:
a) accepts deposits of funds;
b) allows withdrawals of funds;
c) pays negotiable or transferable instruments or cheques or payment orders drawn on behalf of any person, or collects negotiable or transferable instruments or cheques or payment orders on behalf of a person, and includes any facility or arrangement for a safety deposit box or for any other form of safe deposit or held in a cash management trust;
“Activity” means a series of transactions or an act or omission of an act;
“AML” means Anti-Money Laundering
“Beneficial Owner” means a natural person who is the ultimate owner or ultimate controller of a person or entity;
“Business Relationship” means a business, professional or commercial relationship which is:
a) connected with the professional activities of the reporting entity and
b) which is expected, at the time when the contact was established, to have an element of duration.
“Cash” means any coin or paper money that is designated as legal tender in the country of issue;
“Company” means Aollikus Limited which is incorporated in the Republic of Vanuatu with registration number 40131.
“Confidential information” Information is confidential information if it is supplied to or obtained by the Unit or a supervisor under the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014, but does not include information that:
a) can be disclosed under any provision of this Act; or
b) is already in the public domain; or
c) consists of aggregate data from which no information about a specific person or business can be identified.
“Controller” of a person or entity means a person who exercises influence, authority or power over decisions about the person’s or entity’s financial or operating policies, including as a result of, or by means of, a trust, agreement, arrangement, understanding or practice.
“Control” has a corresponding meaning;
“CTF” means Counter-Terrorism Financing;
“Customer” in relation to a transaction, business relationship or an account includes:
a) the person in whose name or for whom a transaction, relationship or account is arranged, opened or undertaken; or
b) a signatory to the transaction, relationship or account; or
c) any person to whom, a relationship or an account or rights or obligations under a transaction or relationship have been assigned or transferred;
d) or any person who is authorised to conduct the transaction or control the relationship or account; or
e) such other persons prescribed for the purposes of this definition.
“Data” means representations, in any form, of information or concepts;
“Director of a person or entity” means:
a) any person occupying the position of a director of the person or entity, regardless of the name given to the position; or
b) any person held out by the person or entity to be a director;
“Domestic electronic currency transfer” means an electronic currency transfer, or a chain of electronic currency transfers, where all of the parties to the transaction are located in Vanuatu;
“Domestic regulatory authority” means a body or agency established by or under a law of Vanuatu that:
a) grants or issues under that law or any other law licenses, permits, certificates, registrations or other equivalent permissions; and
b) performs any other regulatory function related to a matter referred to in paragraph (a), including developing, monitoring or enforcing compliance with standards or obligations prescribed by or under that law or any other law;
“Electronic currency transfer” means a transaction carried out on behalf of a person (the sender) through a reporting entity by electronic means with a view to making an amount of currency available to a person (the receiver who may also be the sender) at another reporting entity but excludes:
a) transfers and settlements between reporting entities if both the sender and the receiver are reporting entities acting on their own behalf; and
b) credit and debit card transactions if the credit or debit card number accompanies the transaction;
“Financing of terrorism offence” means an offence against section 6 of the Counter Terrorism and Transnational Organised Crime Act [CAP 313] as amended from time to time;
“Foreign government agency” means:
a) a body or agency established by or under a law of a foreign country; or
b) an arm, ministry, department, or instrumentality of the government of a foreign country; or
c) a body or agency of a foreign country set up by administrative act for governmental purposes;
“Foreign serious offence” means:
a) an offence against a law of another country that, if the relevant act or omission had occurred in Vanuatu, would be an offence against the laws of Vanuatu, for which the maximum penalty is imprisonment for at least 12 months; or
b) an offence prescribed by the Regulations;
“International electronic currency transfer” means an electronic currency transfer, or a chain of electronic currency transfers, where at least one party to the transaction is located outside Vanuatu;
“Key person” of a reporting entity means a beneficial owner, owner, controller, director or manager of the reporting entity;
“Manager” of a person or entity means:
a) an individual who occupies the position of the chief executive officer (however described) of the person or entity; or
b) an individual who under the immediate authority of the chief executive officer or a director of the person or entity, exercises the management functions of the person or entity
“Money laundering” means conduct which constitutes an offence of money laundering under section 11 of the Proceeds of Crime Act [CAP 284];
“Money laundering entity” means a person or group prescribed under subsection 53(2) of the Act as amended from time to time;
“Money laundering offence” means an offence against section 11 of the Proceeds of Crime Act [CAP 284] as amended from time to time;
“ML” means Money Laundering. The act of ML means the following activities carried out by a person who (a) knows or (b) at the material time ought to have known that any kind of property constitutes proceeds from criminal activity:
a) converts or transfers or removes such property, for the purpose of concealing or disguising its illicit origin or of assisting in any way any person who is involved in the commission of the predicate offence to carry out any of the above actions or acts in any other way in order to evade the legal consequences of his actions;
b) conceals or disguises the true nature, the source, location, disposition, movement of and rights in relation to, property or ownership of this property;
c) acquires, possesses or uses such property;
d) participates in, associates, co-operates, conspires to commit, or attempts to commit and aids and abets and provides counselling or advice for the commission of any of the actions referred to above;
e) provides information in relation to investigations that are carried out for laundering offences for the purpose of enabling the person who acquired a benefit from the commission of a predicate offence to retain the proceeds or the control of the proceeds from the commission of the said offence.
“Owner” of a person or entity means a person who has a legal entitlement of 25% or more of the person or entity by way of ownership of shares or otherwise, and “own” and “ownership” have a corresponding meaning;
“Person” means any natural or legal person and includes any statutory body, company or association or body of persons corporate or unincorporated;
“Politically Exposed Person” means an individual who is or has been entrusted with prominent public functions such as the Head of State, the Prime Minister, Ministers, senior politicians, senior Government officials, judicial or military officials, senior executive members of state-owned corporations or international organisations and officials of a political party;
“Proceeds of crime” has the same meaning as under section 5 of the Proceeds of Crime Act [CAP 284];
“Property” means assets of every kind, whether tangible or intangible, corporeal or incorporeal, moveable or immovable, however acquired, including:
a) currency and other financial assets; and
b) legal documents or instruments in any form, including electronic or digital, evidencing title to, or an interest in, such assets, including but not limited to bank credits, travelers’ cheques, bank cheques, money orders, shares, securities, bonds, drafts and letters of credit;
“Proliferation Financing” means the act of providing funds or financial service, which are used or will be used, in whole or in part:
a) for the manufacture, acquisition, possession, development, export, transshipment, brokering, transport, transfer, stockpiling of weapons; or
b) for the use of nuclear, chemical or biological weapons and their means of delivery and related materials (including both technologies and dual-use good used for non-legitimate purposes), that contravenes any laws of Vanuatu.
“Record” means any material on which information is recorded or marked and which is capable of being read or understood by a person, computer system or other device;
“Register” means the register of reporting entities established under section 9 of the Anti-Money
Laundering and Counter-Terrorism Financing Act No. 13 of 2014;
“Regulations” means the regulations made under the Anti-Money Laundering and Counter-Terrorism
Financing Act No. 13 of 2014;
“Regulatory law” means a law that provides for:
a) the grant or issue of licences, permits, certificates, registrations or other equivalent permissions; and
b) other regulatory functions related to a matter referred to in paragraph (a), including monitoring or enforcing compliance with standards or obligations prescribed by that law;
“Reporting entity” has the meaning given by section 2 of the Act as amended from time to time;
“Serious offence” has the same meaning as in the Proceeds of Crime Act [CAP 284];
“Supervisor” means the Unit or a domestic regulatory authority delegated supervisory functions under section 8B of the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014;
“Suspicious Activity Report” means a report prepared under Part 6 of the of the Anti-Money
Laundering and Counter-Terrorism Financing Act No. 13 of 2014 as amended from time to time;
“Suspicious Transaction Report” means a report prepared under Part 6 of the of the Anti-Money
Laundering and Counter-Terrorism Financing Act No. 13 of 2014 as amended from time to time;
“Transaction” means:
1. any deposit, withdrawal, exchange or transfer of fund whether:
a) in cash; or
b) by cheque, payment order or other instrument; or
c) by electronic or other non-physical means; or
d) in satisfaction, whether in whole or part, of any contractual or other legal obligation.
2. Without limiting subsection (1), a transaction includes the following:
a) the establishment and maintenance of a business relationship; or
b) the opening and maintenance of an account; or
c) the engagement of a service; or
d) any payment made in respect of a lottery, bet or other game of chance; or
e) the establishment, creation or maintenance of a legal person or legal arrangement; or
f) such other transactions as may be prescribed.
“TF” means Terrorism Financing. The act of TF means the provision or collection of funds, by any means, directly or indirectly, with the intention that they be used or in the knowledge that they are to be used, in full or in part, in order to commit any of the offences within the meaning of Article 4 of the International Convention for the Suppression of the Financing of Terrorism (Ratification and other provisions) and section 6 of the Counter Terrorism and Transactional Organised Crime Act [CAP 313] as amended from time to time.
“Unit” means the Financial Intelligence Unit established under section 4 of the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014;
2. INTRODUCTION
This Manual is developed and periodically updated by the Money Laundering Compliance Officer (hereinafter the “AML and CFT Compliance Officer”, “AMLCO”) based on the general principles in relation to the prevention of Money Laundering and Terrorist Financing.
The Manual is applicable and shall be communicated by the AMLCO to all the employees and business units of the Company that manage, monitor or control in any way the Clients’ transactions and have the responsibility for the application of the practices, measures, procedures and controls that have been determined herein as well as to appointed introducers and other partners and related parties of the Company. Any questions regarding the Manual should be addressed to the AMLCO.
The Manual has been prepared to comply with the provisions of the respective Act, the Regulations and any other National Legislation of the Republic of Vanuatu and as these are amended from time to time.
When Company’s personnel become aware of breaches of law, internal and or external regulations including this Manual, in relation to Money Launder and Terrorist Financing they should immediately bring this to the attention of the AMLCO.
3. AML/CFT COMPLIANCE OFFICER
3.1 General
The AMLCO shall belong hierarchically to the higher ranks of the Company’s organizational structure (i.e., management of the Company) so as to command the necessary authority. The AMLCO shall be a high-ranking Company officer (i.e. senior officer) either on a full time or part time basis, who is skilled, knowledgeable and experienced in the financial services or other business activities, as applicable. Furthermore, the AMLCO leads the Company’s Money Laundering Compliance procedures and processes and report to the Senior Management. The AMLCO shall also have the resources, expertise as well as access to all relevant information necessary to perform his duties adequately and efficiently.
Where it is deemed necessary due to the volume and/or the geographic spread of the services/activities, assistants of the AMLCO are appointed, by geographical district or otherwise for the purpose of assisting the AMLCO and passing internal suspicion reports to him.
The Company communicates in writing immediately to the Unit, of its AMLCO’s appointment or any change of appointment or termination of appointment.
3.2 Duties of AMLCO
The duties of the AMLCO shall include, inter alia, the following:
a) responsible for ensuring compliance with the requirements Act and Regulations;
b) responsible for reporting suspicious transactions and activities to the Unit;
c) report financial transactions exceeding the prescribed threshold to the Unit;
d) design the Company’s AML Manual, implement effective policies, processes and procedures for customer due diligence, record keeping, transaction monitoring, transaction reporting and reporting suspicious transactions and activities in line with the Act as amended from time to time;
e) to receive information from the Company’s employees which is considered to be knowledge or suspicion of money laundering or terrorist financing activities or might be related with such activities.
f) to evaluate and examine the information received as per point (e) above, by reference to other relevant information and discuss the circumstances of the case with the informer and where appropriate, with the informer’s superiors;
g) to act as a first point of contact with the Unit, upon commencement of and during any investigations as a result of filing a report to the Unit according to point (g) above;
h) to monitor and assess the correct and effective implementation of the policies, the practices, measures, procedures and controls of point (a) above and in general the implementation of the Manual. In this respect, the AMLCO shall apply appropriate monitoring mechanisms (e.g. on-site visits to different departments of the Company) which will provide him with all the necessary information for assessing the level of compliance of the departments and employees of the Company with the procedures and controls which are in force. In the event that the AMLCO identifies shortcomings and/or weaknesses in the application of the required practices, measures, procedures and controls, gives appropriate guidance for corrective measures and where deems necessary informs the Company;
i) to provide advice and guidance to the employees of the Company on subjects related to money laundering and terrorist financing;
j) to acquire the knowledge and skills required for the improvement of the appropriate procedures for recognizing, preventing and obstructing any transactions and activities that are suspected to be associated with money laundering or terrorist financing as applicable and relevant to the services being offered by the Company;
k) to determine whether the Company's departments and employees need further training and education for the purpose of preventing Money Laundering and Terrorist Financing and organizes appropriate training sessions/seminars. In this respect, the Compliance Officer prepares and applies an annual staff training program. Further, the Compliance Officer assesses the adequacy of the education and training provided.
4. ENGAGING AUDITORS. OBLIGATIONS OF AUDITORS
4.1 Engagement of independent auditors
The Company engages an expert or a firm to audit efficiency of the Company’s compliance policies, processes, and procedures. It is the duty of the Compliance Officer to find a suitable candidate or a firm.
4.2 Obligations of auditors
The Company’s Auditors must report an STR if they have reasonable grounds to suspect that a transaction or an attempted transaction, or information that they have in their possession involves proceeds of crime or is related to terrorist financing.
Internal audit plays an important role in independently evaluating the risk management and controls, through periodic evaluations of the effectiveness of compliance with KYC policies and procedures, including related staff training.
Engaged auditors also have an important role to play in monitoring the Company’s internal controls and procedures, and in confirming that they are in compliance with the requirements of the AML&CTF Act. Entities must ensure that their internal controls and procedures are assessed by independent auditors on a regular basis.
Engaged auditors shall be entitled to request any documents and information related to performance of the Company’s compliance duties; interview employees of the Company and interact with the Company’s stakeholders. Engaged auditors shall be entitled to review and take copies of such documents and information. Employees and management of the Company must fully cooperate with the external auditors and assist them with performance of their audit.
5. REPORTING REQUIREMENTS
5.1 AML and CFT Compliance Report
The AML and CFT Compliance Report of the AMLCO is a significant tool for assessing the Company’s level of compliance with its obligation laid down in the applicable Act and Regulations as amended.
The AML and CFT Compliance Officer’s Annual Report must be:
a) made in the form, prescribed by Vanuatu law; and
b) sent/lodged to the Unit within a prescribed time frame.
5.2 Suspicious Transaction Report (STR)
The Company must make a report of the transaction or attempted transaction to the Unit not later than 2 working days if the reporting entity suspects or has reasonable grounds to suspect that a transaction or attempted transaction involves proceeds of crime or is related to terrorist financing.
5.3 Suspicious Activity Report (SAR)
The Company must make a SAR of the activity or attempted activity to the Unit not later than 2 working days if a reporting entity suspects or has reasonable grounds to suspect that an activity or attempted activity involves proceeds of crime or is related to terrorist financing.
5.4 Transaction Conducted By Money Laundering Entities
The Company must report a STR if a money laundering entity conducts or seeks to conduct a transaction through or by using the Company and such transaction is deemed to be a suspicious transaction. The report must be submitted to the Unit as soon as possible, but no later than 2 working days after forming the suspicion.
5.5 Transaction Involving Terrorist Property
The Company must report a STR if it has information in its possession concerning any transaction or attempted transaction which it suspects to involve terrorist property, property linked to terrorist or terrorist organization. The report must be submitted to the Unit as soon as possible, but no later than 2 working days after forming the suspicion.
5.6 Certain Transaction with no Legitimate Purpose
The Company must report a STR if there is suspicion that a transaction or attempted transaction:
a) is complex, unusual or large and does not have any apparent or visible economic or lawful purpose; or
b) is part of an unusual pattern of transactions that does not have any apparent or visible economic or lawful purpose.
The report must be submitted to the Unit as soon as possible, but no later than 2 working days after forming the suspicion.
5.7 Method of Submission
The reports specified in sections above, must be sent to the Unit by way of fax or electronic mail or hand delivery.
5.8 Report of Large Cash Transaction
The Company must report a Cash Transaction Report (CTR) to the Unit on a transaction of an amount of cash that exceeds the prescribed threshold or its equivalent in foreign currency, whether the transaction is conducted as a single transaction or two or more transactions that appear to be linked.
A reporting of large cash transaction must be made and submitted to the Unit within the following timeframe:
a) In the case of transaction or transfer in Vanuatu, within 10 working days after the transaction or transfer is made; and
b) In the case of transaction or transfer in a foreign currency, within 2 working days after the transaction or transfer is made.
When working with Customers, the Company neither accepts cash deposits nor disburses cash under any circumstances.
5.9 Report of International Currency Transfers
The Company must report a International Funds Transfer Report (IFTR) to the Unit:
a) on any electronic transmission of currency or other currency transfer out of Vanuatu that exceeds the prescribed threshold or its equivalent to foreign currency in the course of a transaction, whether conducted as a single transaction or by way of two or more transactions that appear to be linked; or
b) on any electronic receipt of currency or other currency receipts from outside Vanuatu that exceeds the prescribed threshold or its equivalent to foreign currency in the course of a transaction, whether conducted as a single transaction or by way of two or more transactions that appear to be linked or
c) if the Company uses a service of a third party to receive or transmit electronic transaction or other currency transfer that exceeds the prescribed threshold or its equivalent to foreign currency in the course of a transaction, whether conducted as a single transaction or by way of two or more transactions that appear to be linked.
5.10 Obligation to Submit Additional Information
The Unit may request any further information from the Company if the Company has made a report on a transaction, attempted transaction, activity or attempted activity or has provided information under this section to the Unit.
5.11 Prohibition of Tipping Off/Alerting Customers
Directors, officers and employees, agents and contractors of reporting entities are prohibited from disclosing the fact to the Customer that an STR, SAR or related information is being reported to the Unit.
In case the Company forms a suspicion that transactions relate to proceeds of crime or terrorist financing, it should take into account the risk of tipping off when performing the customer due diligence (CDD) process. If the Company reasonably believes that performing the CDD process will tip-off the Customer or potential Customer, it may choose to postpone payout process for further investigation at the discretion of AML Department for the period up to 10 days in order to conduct full investigation and should file an STR or SAR.
The Company should ensure and take measures so that its employees, staff and agents are aware of and are sensitive to these issues when conducting CDD.
6. RECORD-KEEPING PROCEDURES
The Company and in particular the AMLCO must keep records of all transactions in such a manner as to enable the transactions to be readily reconstructed at any time by the Unit to the extent that it is available, without undue delay.
In line with the requirements outlined in the AML&CTF Act and the AML&CTF Regulation, the Company shall maintain records including but not limited, of the following:
Transaction:
a) its transactions and related documentation;
b) the nature of the transaction;
c) the amount of the transactions and the currency in which it was denominated;
d) the date on which the transaction was conducted;
e) the name, address and occupation, business or principal activity of the person conducting the transaction and person for whom the transaction is conducted and for whose ultimate benefit the transaction is being conducted;
f) the type and identifying number of any account/service with the entity involved in the transaction;
g) if the transaction involves a negotiator instrument, the names of the drawer, the drawing institution, the payee and the amount and date of instrument and detail of endorsement;
h) the name and address of the entity, and of each officer, employee or agent who prepared the relevant record;
i) account files, business correspondence and findings of CDD analysis relating to the transaction;
j) any other information relating to the transaction.
In relation to the transaction, the records must be kept for a minimum period of 6 years from the date on which the transaction was made and in such a manner as to enable the transactions to be readily reconstructed at any time by the Unit. Further to this, the said records must contain the prescribed information as defined in this Manual.
Identification-Verification:
If evidence of a customer’s identity and verification is obtained under the CDD processes, the Company must maintain a record that indicates the kind of evidence that was obtained and either a copy of the evidence or information that enable a copy of it to be obtained.
The records must be kept for a minimum of 6 years after the closure or termination of the account, service or business relationship.
Reports made to Unit:
a) a record of any suspicious transaction, suspicious activity or other report made to the Unit as per section 5 of this Manual;
b) a record of any enquiry relating to money laundering or the financing of terrorism made to the Unit; and
c) a record of a finding referred to under subsection 18(2) of the Act as amended from time to time which relates to documentation and information obtained in relation to intermediaries or third-party introducers
A reporting entity must keep records of the reports mentioned in this section for a period of 6 years after the date on which the report or the enquiry was made.
AML and CFT Manual:
• a record of the adoption of an AML and CFT Procedure Manual; and
• retain the AML and CFT Procedure Manual for a period of 12 months.
7. EMPLOYEES’ OBLIGATIONS, EDUCATION AND TRAINING
7.1 Employees’ Obligations
a) The Company’s employees shall be personally liable for failure to report information or suspicion, regarding money laundering or terrorist financing.
b) The employees must cooperate and report to the AMLCO, without delay, anything that comes to their attention in relation to transactions or any activity in a Client’s accounts for which there is a slight suspicion that are related to money laundering or terrorist financing.
c) The Company’s employees shall fulfil their legal obligation to report their suspicions regarding Money Laundering and Terrorist Financing, after they submit the Internal Suspicion Report to the AMLCO.
7.2 Employee’s Education and Training Policy
The Compliance Officer shall ensure by introducing a complete employee’s education and training program that all employees are fully aware of their legal obligations according to inter alia:
a) The systems and procedures in accordance to this Manual and/or group-wide procedure manual;
b) The AML/CTF Act and the relevant AML/CFT Regulations as amended from time to time;
The timing and content of the training provided to the employees of the various departments will be determined according to the needs of the Company. The frequency of the training can vary depending on the amendments of legal and/or regulatory requirements, employees’ duties as well as any other changes in the financial system.
The training program aims at educating the Company’s employees on the latest developments in the prevention of Money Laundering and Terrorist Financing, including the practical methods and trends used for this purpose.
The training program will have a different structure for new employees, existing employees and for different departments of the Company according to the services that they provide. On-going training shall be given at regular intervals so as to ensure that the employees are reminded of their duties and responsibilities and kept informed of any new developments. Although Directors and Senior Managers may not be involved in the day-to-day procedures, it is important that they understand the statutory duties placed on them, their staff and the entity itself. Some form of high- level general awareness training is therefore suggested for those staff that may not be involved in dealing with customers on a day-to-day basis.
The Compliance Officer provides advice and guidance to the employees of the Company on subjects related to Money Laundering and Terrorist Financing.
7.3 Compliance Officer’s Education and Training Program
Compliance Officer shall be obliged to attend external training. Based on his/her training, the AMLCO will then provide training to the employees of the Company.
The main purpose of the AMLCO’s training is to ensure that relevant employee(s) become aware of inter alia:
• the AML/CFT Act and the AML/CFT Regulations as amended from time to time;
• the Company’s Anti-Money Laundering Policy and Procedures;
• the statutory obligations of the Company to report suspicious transactions;
• the employees own personal obligation to refrain from activity that would result in money laundering;
• the importance of the Customers’ due diligence and identification measures requirements for money laundering prevention purposes.
7.4 Disclosure of information
The Company in accordance with sections 40 AA, 40 A, and 40 B of the Act records the following information for the purpose of its lawful disclosure to relevant authorities in accordance with the Act:
a) any suspicious transaction report or suspicious activity report;
b) any information the disclosure of which will identify, or is reasonably likely to identify, any person:
i. as a person who, in his or her capacity as an officer or employee of the Company, has handled a transaction in respect of which a suspicious transaction report or suspicious activity report was made; or
ii. as a person who has prepared a suspicious transaction report or suspicious activity report; or
iii. as a person who has made a suspicious transaction report or suspicious activity report;
c) any information that discloses, or is reasonably likely to disclose, the existence of a suspicious transaction report or suspicious activity report.
In addition, report templates if the Company established herein contain places for signature to be made by a relevant person in order to confirm her / his awareness that the relevant information could be disclosed for the purposes of the law enforcement or by order of the court of law. The Company also informs its employees during the trainings of provisions and legal effect of article 40 B of the Act.
8. RISK-BASED APPROACH
8.1 General Policy
The Company shall apply appropriate measures and procedures, by adopting a risk-based approach, so as to focus its effort in those areas where the risk of Money Laundering and Terrorist Financing appears to be comparatively higher.
8.2 Risk-Based Approach Adopted
The adopted risk-based approach that is followed by the Company, and described in the Manual, has the following general characteristics:
• recognizes that the money laundering or terrorist financing threat varies across Customers, countries, services and financial instruments;
• allows to differentiate between Customers of the Company in a way that matches the risk of their particular business;
• allows to apply its own approach in the formulation of policies, procedures and controls in response to the Company’s particular circumstances and characteristics;
• promotes the prioritization of effort and actions of the Company in response to the likelihood of Money Laundering and Terrorist Financing occurring through the use of the Investment and Ancillary Services provided by the Company.
8.3 Specific Measures
The risk-based approach adopted by the Company, and described in the Manual, involves specific measures and procedures in assessing the most cost effective and appropriate way to identify and manage the Money Laundering and Terrorist Financing risks faced by the Company.
Such measures include:
• identifying and assessing the Money Laundering and Terrorist Financing risks emanating from particular Customers or types of Customers, financial instruments, services, and geographical areas of operation of its Customers;
• documenting the policies, measures, procedures and controls to ensure their uniform application across the Company by persons specifically appointed for that purpose
• by the board of directors;
• managing and mitigating the assessed risks by the application of appropriate and effective measures, procedures and controls;
• continuous monitoring and improvements in the effective operation of the policies, procedures and controls.
The application of appropriate measures and the nature and extent of the procedures on a risk- based approach depends on different indicators.
Such indicators include the following:
• the scale and complexity of the services offered;
• geographical spread of the services and Customers;
• the nature and economic profile of Customers as well as of financial instruments and services offered;
• the distribution channels and practices of providing services;
• the volume and size of transactions;
• the degree of risk associated with each area of services;
• the country of origin and destination of Customers’ funds;
• deviations from the anticipated level of transactions;
• the nature of business transactions.
8.4 General Practice
The Company uses a graded risk-based approach taking into consideration the following factors:
1. The severity of an action/activity or omission of the Customer,
2. The weight of evidence gathered by the Company,
3. Balanced measures which correspond the potential breach.
The Company acknowledges that early identification of a breach is a key tool in its ability to properly fight illicit and violating activities. In order to do so the Company uses various techniques and monitoring tools to identify Customers’ unauthorized activities and hence the Company’s modus operandi shall be divulged to Customers on a need-to-know basis only.
The AMLCO shall be responsible for the development of the policies, procedures and controls on a risk-based approach. Further, the AMLCO shall also be responsible for the adequate implementation of the policies, procedures and controls on a risk-based approach. The Auditors shall be responsible for reviewing the adequate implementation of a risk-based approach by the AMLCO, at least annually.
8.5 Identification of Risks
a) General Principles
The risk-based approach adopted by the Company involves the identification, recording and evaluation of the risks that have to be managed.
The AMLCO has the responsibility to identify, record and evaluate all potential risks of money laundering and terrorist financing.
The Company shall assess and evaluate the risks it faces.
b) Company Risks
The following, inter alia, are sources of risks which the Company faces with respect to Money Laundering and Terrorist Financing:
1. Risks based on the Customer’s nature:
• PEPs;
• Customers from high-risk countries or countries known for high level of corruption or organized crime or drug trafficking.
2. Risks based on the Customer’s behavior:
• Customer transactions where there is no apparent legal financial/commercial rationale;
• Customer engaged in transactions which involves significant deposit and withdrawals; • situations where the origin of wealth and/or source of funds cannot be easily verified.
3. Risks based on the Customer’s initial communication with the Company:
• Customer introduced by a third person.
8.6 Design and Implementation of Measures and Procedures to Manage and Mitigate the Risks
When the AMLCO identifies the risks the Company faces, then designs and implements the appropriate measures and procedures for the correct management and mitigation, especially of high-risk clients.
Taking into consideration the assessed risks, the Company shall determine the type and extent of measures it will adopt in order to manage and mitigate the identified risks in a cost-effective manner. These measures and procedures include:
• adaptation of the Client Due Diligence Procedures in respect of Customers in line with their assessed Money Laundering and Terrorist Financing risk;
• requiring the quality and extent of required identification data for each type of Client to be of a certain standard (e.g., documents from independent and reliable sources, third person information, documentary evidence);
• obtaining additional data and information from the Customers, where this is appropriate for the proper and complete understanding of their activities and source of wealth and for the effective management of any increased risk emanating from the particular Business Relationship or the Occasional Transaction;
• ongoing monitoring of high-risk Customers’ transactions and activity/activities, as and when applicable.
Determine the category of low-risk customers and determine the category of high-risk customers.
In this respect, it is the duty of the AMLCO to develop and constantly monitor and adjust the Company’s policies and procedures with respect to the Client Acceptance Policy and Client Due Diligence and Identification Procedures of the Manual, respectively, as well as via a random sampling exercise as regards existing Customers.
8.7 Dynamic Risk Management
Risk management is a continuous process, carried out on a dynamic basis. Risk assessment is not an isolated event of a limited duration. Customers’ activities change as well as the services and financial instruments provided by the Company change. The same happens to the financial instruments and the transactions used for money laundering or terrorist financing.
In this respect, it is the duty of the AMLCO to undertake regular reviews of the characteristics of existing Customers, new Customers, services and financial instruments and the measures, procedures and controls designed to mitigate any resulting risks from the changes of such characteristics. These reviews shall be duly documented, as applicable, and form part of the Annual Money Laundering Report.
9. CLIENT ACCEPTANCE POLICY
A clear Client Acceptance Policy (hereinafter the “CAP”) is developed and established, which is in line with the provisions of the Act and the Regulations as amended from time to time. The CAP is prepared after detailed assessment of the risks faced by the Company from its customers and/or their transactions and/or their countries of origin or operations.
The CAP, defines the criteria for accepting new Customers and defines the Customer categorization criteria which shall be followed by the Company and especially by the employees which shall be involved in the Customer Account Opening process.
The AMLCO shall be responsible for applying all the provisions of the CAP. In this respect, the Back Office Department together with the Sales and Support Department shall also be assisting the AMLCO with the implementation of the CAP, as applicable.
9.1 General Principles of CAP
The General Principles of the CAP are the following:
a) the Company shall classify Clients into various risk categories and based on the risk perception decide on the acceptance criteria for each category of Customer (i.e. Low Risk, Normal Risk and High Risk);
b) all documents and data described in Section 11 of the Manual must be collected in accordance with the Risk Based Approach.
c) no account shall be opened in anonymous or fictitious names(s).
9.2 Customer Identification, Know Your Client (KYC) and Due Diligence Procedures
The Company applies customer identification procedures, KYC and customer due diligence measures in the following cases:
• When establishing a business relationship;
• When carrying out occasional transactions that exceeds the prescribed threshold specified in the Act whether conducted as a single transaction or by way of two or more transactions that appear to be linked;
• When there is a suspicion of money laundering or terrorist financing, regardless of the amount of the transaction;
• When there are doubts about the veracity or adequacy of previously customer identification data.
9.3 Customer Acceptance Policy on a Risk Based Approach
The Company’s customer’s acceptance policy on a risk-based approach is prepared by the AMLCO after detailed assessment of the risks faced by the Company. In this regard the Company applies appropriate measures and procedures, on a risk-based approach, so as to focus its effort in those areas where the risk of money laundering and terrorist financing appears to be higher.
9.4 Criteria of Accepting New Customers
The Company applies customer identification procedures and customer due diligence measures in the following cases:
• When establishing a business relationship;
• When carrying out occasional transactions that exceed the threshold set by the Company or specified in the Act;
• When there is a suspicion of money laundering or terrorist financing, regardless of the amount of the transaction;
• When there are doubts about the veracity or adequacy of previously customer identification data.
The Customers are requested to provide the following documents.
• Identification and verification of the customer (e.g., proof of identity and proof of residential address),
• Identification and verification of the beneficial owner(s),
• Obtaining information on the purpose and intended nature of the business relationship.
9.4 Criteria for Not Accepting Customers
Categories of Customers who are not acceptable for establishing a business relationship or an execution of an occasional transaction with our Company are the following:
• Customers who fail or refuse to submit, the requisite data and information for the verification of their identity and the creation of their economic profile, without adequate justification;
• Potential Customers that require to open anonymous account;
• Potential new Customers that do not appear to be legitimate are declined;
• High-ranked PEPs;
• Watch lists Customers;
• Customers residing or having citizenship in the countries from the of prohibited jurisdictions under Company’s Service Agreement.
9.5 Dormant Accounts Policy
The Company has adopted the Dormant Account Policy under which an account is classified as Dormant if it remains inactive or non-operational by its holder for a minimum of period of 180 business days.
If an account is classified as Dormant then:
(a) The Company charges positive balance Customer’s accounts with a monthly inactivity fee and notifies the Customers about the charges;
(b) The accounts with zero balance will be closed immediately and the Customer will not be permitted to undertake any further transaction in such an account.
(c) The AMLCO or other person of compliance function ascertains reasons for non-operation and requests Customer to close the accounts if they are no longer required.
(d) In case the Customer doesn’t respond to requests, the account is being closed automatically.
9.6 Customer Category
This Section defines the criteria for the categorization of Customers based on their risk. The AMLCO shall be responsible for categorizing Customers in one of the following three (3) categories based on the criteria of each category set below:
i. Low Risk Customers
The following types of Customers can be classified as low risk Customers with respect to the Money Laundering and Terrorist Financing risk which the Company faces provided that the risk for money laundering and terrorist financing is low and there is no suspicion for legitimating income from illegal revenue or terrorism financing:
a) the Customers having citizenship or residing not in the countries from the list of countries in which the Company does not do business according to its Services Agreement;
b) the Customers whose on-going monitoring activity do not trigger the Company’s AML red flags.
ii. Normal Risk Customers
Customers can be classified as normal risk Customers with respect to the Money Laundering and Terrorist Financing risk when they do not fall under the ‘low risk Customers’ or ‘high risk Customers’.
iii. High Risk Customers
The following types of Customers can be classified as high-risk Customers with respect to the Money Laundering and Terrorist Financing risk which the Company faces:
• Politically Exposed Persons (PEPs) – individuals (domestic and foreign) entrusted with prominent public functions, senior executive members of state-owned corporations or international organizations and officials of a political party including their immediate family and close associates;
• Customers who are from countries or regions or industries where a high level of crime is known to exist;
• The Customers from countries which inadequately apply FATF’s recommendations or identified by the FATF as non-co-operative countries and territories;
• The Customers who are identified as being persons or entities which support terrorist activity or are named in government lists or with credible sources in respect of corruption and/or criminal activity;
• Accounts in the name of a third person, in which the beneficiary is different from the account’s holder;
• High deposits Customers.
• Customers that work in certain industries or occupations where crime is known to exist;
• Any other Customers that their nature entails a higher risk of money laundering or terrorist financing;
• Any other Customers determined by the Company itself to be classified as such based on ‘Red flags’;
• Any other Customers determined by the Company itself to be classified as such on the basis of its CAP.
9.7 On-Going Monitoring Process
a. General
The Company aims to have a full understanding of normal and reasonable account activity of its clients as well as of their economic profile and has the means of identifying transactions which fall outside the regular pattern of an account’s activity or to identify complex or unusual transactions or transactions without obvious economic purpose or clear legitimate reason. Without such knowledge, the Company shall not be able to discharge its legal obligation to identify and report suspicious transactions to the appropriate bodies.
The constant monitoring of the Customers’ accounts and transactions is an imperative element in the effective controlling of the risk of Money Laundering and Terrorist Financing. The monitoring system relies both on automated monitoring and where appropriate, manual monitoring by the staff of the compliance function.
b. Procedures
The procedures and intensity of monitoring accounts and examining transactions are based on the level of risk and, as a minimum, achieve the following:
(a) Identifying all high-risk Customers, as applicable;
(b) Detecting of unusual or suspicious transactions that are inconsistent with the economic profile of the Client for the purposes of further investigation.
(c) The investigation of unusual or suspicious transactions from the employees who have been appointed for that purpose; the results of the investigations are recorded in a separate memo and kept in the file of the customer concerned;
(d) All necessary measures and actions must be taken, based on the investigation findings of point (c), including any internal reporting of suspicious transactions/activities to the AMLCO;
(e) Ascertaining the source and origin of funds credited to accounts;
(f) Identifying transactions which, as of their nature, may be associated with money laundering or terrorist financing.
Transactions executed for the customer are compared and evaluated by AMLCO and staff of compliance function against:
▪ The anticipated account’s turnover;
▪ The usual turnover of the activities/operations of the customer;
▪ The data and information kept for the customer’s economic profile.