Guidelines on Anti-Money Laundering and Combating the Financing of Terrorism Procedures for Bridge Tech Ltd. (hereinafter “the Company”), based on the guideless Issued by the
Seychelles Financial Intelligence Unit December, 2007
1. Purpose and Introduction
The purpose of this policy is to provide guidance on the Anti-Money Laundering and Know your Client Policy which is followed by the Company in order to achieve full compliance with the relevant anti-money laundering legislation.
1.2 Legal Framework
These notes provide guidance as to how the provisions of the Seychelles Anti-Money Laundering Act 2006 and the Prevention of Terrorism Act 2004 can be implemented in line with internationally recognized principles.
1.3 What is Money Laundering and the Financing of Terrorism
Money laundering is a process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities. Money laundering enables criminals to maintain control over their illicit proceeds and ultimately to provide legitimate cover for the illegal source of the illicit proceeds. This means that proceeds from criminal activities is converted into assets that gives it an appearance of legitimate money. Money laundering is an international scourge and the failure by the authorities to prevent the laundering of the proceeds of crime will enable criminals to benefit from their illegal activities, thereby making crime a viable proposition. The Financing of Terrorism is defined as an offence established when a person “by means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they will be used in full or in part, in order to carry out a terrorist act or activity”.
1.3 The Need to Combat Money Laundering and Financing of Terrorism
It is recognized throughout the world that it is essential that criminals be prevented from making the proceeds of their criminal activities legitimate by converting funds from ‘dirty’ to ‘clean’ money. Criminals will seek to make use of the international financial system if they are to benefit from the proceeds of their crime.
Like money launderers, terrorists misuse the financial system. In order to achieve their objectives, they have to obtain and channel money in an apparently legitimate way. However, while the money involved in the money laundering process always stems from a crime and is therefore always “dirty”, money channeled to terrorist groups or individuals may originate from crime or from legitimate sources. Regardless of the origin of the money, terrorist organizations will use the financial system in a similar way as criminal organizations in order to obscure both the source and the destination of their money.
The Seychelles’ Anti-Money Laundering Act 2006 was enacted to prevent, detect and combat the use by criminals of financial and non-financial institutions for the purpose of the laundering of criminal proceeds or the financing of terrorist acts, activities or groups.
The overriding principle is that reporting entities should follow and apply the provisions of the law which reflect the Financial Action Task Force’s (FATF) international standards to prevent detect and combat money laundering and terrorist financing. These notes are designed to provide guidance to reporting entities on how to comply with the provisions of the law.
These notes will reassure the reporting entities that the application of the “Know Your Customer” principle does not call for major variations in their practice but would, nevertheless, reinforce the need for vigilance and reassure employees that they would be implementing the law. It is, therefore, imperative that the Company understand the nature of money laundering and terrorism financing, and take the necessary measures to protect itself from being implicated in a scandal which will put their reputation at risk.
2. The Anti-Money Laundering Act 2006 & Prevention of Terrorism Act 2004
The Act requires the Company to verify a customer’s identity, maintain records, monitor transactions, ensure that accounts are in true names, and ensure that money transmissions include originator information, report suspicious transactions and appoint a compliance officer.
2.1 The Offence of Money Laundering the AML Act (Sec.3) extensively defines the offence of money laundering
“(1) A person who –
(a) converts or transfers property knowing or having reason to believe that the property is the proceeds of a crime with the aim of concealing or disguising the illicit origin of that property, or of aiding any person involved in the commission of the offence to evade the legal consequences thereof;
(b) Conceals or disguises the true nature, origin, location, disposition, movement or ownership of the property knowing or 4 having reason to believe that the property is the proceeds of a crime;
(c) Acquires, possesses or uses property knowing or having reason to believe that the property is the proceeds of a crime, commits the offence of money laundering.
(2) Every person who –
(a) Organizes or directs others to commit;
(b) Attempts to commit;
(c) Conspires to commit;
(d) participates as an accomplice to a person committing, or attempting to commit,
an offender under subsection (1) commits the offence of money laundering.
(3) Knowledge, intent or purpose required as an element of any act referred to in subsection (1) may be inferred from surrounding facts.
(4) Where it is necessary in the case of an offence of money laundering alleged to have been committed by a body corporate to establish the state of mind of the body corporate, it shall be sufficient to show that a director, officer, employee or agent of the body corporate, acting in the course of employment or agency as the case may be, had that state of mind.
3. Company’s reporting Obligations
The Anti-Money Laundering Act defines a reporting entity as those persons that carry out certain businesses and activities which can be either financial or non-financial in nature.
In accordance with the Anti-Money Laundering Act, list the reporting obligations of the Company includes the following:
§ The Company needs to identify and verify the identity of a customer when establishing a business relationship;
§ The Company shall take reasonable measures to ascertain the purpose of any transaction in excess of R 100,000 or of R 50,000 in the case of cash transactions and the origin and ultimate destination of the funds involved in the transaction;
§ In relation to its cross–border banking and other similar relationships adequately identify the identity of the person, gather sufficient information about the nature of the business, assess the AML/CFT controls and obtain senior management’s permission before entering into a new relationship;
§ The Company shall not proceed with a transaction if there is no satisfactory evidence of a customer’s identity;
§ The Company shall maintain records on a customer’s identity for a minimum period of 7 years from the date of any transaction or correspondence or on which the business relationship ceases;
§ The Company shall maintain accounts in their true name;
§ The Company shall ensure that money transmission includes accurate originator information on electronic funds transfers and that the information shall remain with the transfer;
§ The Company monitor complex, unusual or large transactions with no apparent economic or lawful purpose as well as ongoing monitoring of business relationships/transactions undertaken throughout the course of the relationship;
§ The Company shall report any transaction or attempted transaction that may be related to the commission of an offence of ML/FT to the FIU. Reporting entities should therefore ensure that their staff are fully aware of their obligations and abide by them so as to ensure compliance.
4. Internal Controls, Policies and Procedures
The Company must take appropriate measures to make sure that its employees engaged in dealing with customers or processing business transactions maintain the identification and record-keeping procedures laid down in the Act.
The Company appointed a Compliance officer with the necessary qualifications and experience who shall be responsible for the following:
1. Establishing and maintaining a manual of compliance and procedures in relation to its business;
2. Ensuring that staff comply with the provisions of the Act and any other law relating to money laundering or financing of terrorism and the provisions of any manual of compliance and procedures;
3. Acting as a liaison between the reporting entity and the supervising authority and the FIU in matters relating to compliance with the provisions of the Act or any law relating to money laundering or financing of terrorism;
4. Introducing training procedures for staff likely to be concerned with transactions which could constitute an offence.
5. Establishing an audit function to test its anti-money laundering and financing of terrorism procedures and systems.
6. Screen persons before recruiting them as employees.
5. Identification Requirements Reporting
The Company must identify prospective customers at the time of opening of an account or entering into a business relationship is established.
Unless satisfactory evidence of identity is obtained “as soon as is reasonably practicable” the reporting entity must not proceed any further with the transaction unless directed to do so by the FIU. The Company shall also require to report the attempted transaction to the FIU Thus, the Company can open an account or begin the business relationship provided that it promptly takes appropriate steps to verify the customer’s identity.
5.1. When must Identity be verified?
Whenever an account is to be opened or a continuing business relationship is entered into, the identity of the prospective customer must be verified. The Company is required to obtain information on the purpose and nature of the business relationship. Thereafter as long as records are maintained, no further evidence of identity is needed unless the Company has any reason for suspicions, for instance if there is a marked change in the nature or volume of business passing through the account. The Company shall develop a customer profile based on the information obtained. A customer profile will assist the reporting entity in identifying suspicious transactions and facilitate the monitoring of accounts and transactions. Also, when a transaction is undertaken when there is no business relationship, or an electronic funds transfer is carried out, the reporting entity is required to take the identity of the customer. Furthermore, identity must be verified in all cases where money laundering or the financing of terrorism is suspected, or where there are doubts as to the veracity or adequacy of the identification information obtained.
5.2. Enhanced Identification Requirements
The Company is under the obligation to take reasonable measures to ascertain the purpose of a transaction in excess of R 100,000 or of R 50,000 in the case of cash transactions. In these cases the origin and ultimate destination of the funds should be established.
The Company has the proper risk management system to determine if a person is a Politically Exposed Person (PEP). If the customer is a Politically Exposed Person, the Company must adequately identify the person and verify his or her identity, take reasonable measures to establish the source of wealth and the source of property, and regularly monitor the account.
Approval of senior management should be obtained before establishing a business relationship with the customer. Politically Exposed Persons are only persons holding prominent public positions in a foreign country. The Company shall in its cross-border correspondent banking and other similar relationships undertake enhanced measures when identifying and verifying the identity of the person with whom it conducts such a business relationship. These measures include gathering sufficient information about the nature of the business, use publicly available information to determine the reputation of the correspondent and the quality of supervision to which it is subject, assess the correspondent’s AML/CFT controls. Approval of senior management should be obtained before establishing a new correspondent relationship.
Where the Company relies on an intermediary or third party, it shall immediately obtain the identification data and ensure that copies are made available upon request without delay.
7. Verification Procedures
The Company shall comply with the following:
1. Keep the records of the supporting evidence and methods used to verify identity should be retained for a minimum of seven years from the date on which evidence of a party’s identity is obtained; of any transaction or correspondence; or on which the business relationship ceases.
2. The Company shall establish to its satisfaction that it is dealing with a real person (natural, corporate or legal) and verify the identity of those persons who wish to open an investment account or to conduct any other financial or business relationship.
3. Whenever possible, the prospective customer should be interviewed personally. In the case of a person identified as a Politically Exposed Person, the approval of senior management should be obtained before establishing a business relationship with the customer.
4. The best possible identification documents should be obtained from the prospective customer. However no single form of identification can be fully guaranteed as genuine or representing correct identity. The identification process will generally need to be cumulative. For practical purposes a person’s address is an essential part of his or her identity and verification of the prospective customer’s current permanent address is required.
5. Documents issued by reputable sources (e.g. identity cards, passports or other applicable official identifying document) should be required. Where practical, file copies of the supporting evidence should be retained. Alternatively, the reference numbers and other relevant details should be recorded.
6. In respect of joint accounts where the surname and/or address of the account holders differ, the name and address of all account holders, not only the first named, should normally be verified in accordance with the procedures set out below.
The Company may develop its own procedures to comply with the law.
8. Account Opening for Personal Customers
(i) The following information should be obtained from prospective customers:
– True name and/or names used;
– Correct permanent address, including post box number;
– Date of birth.
– Occupation of the person
– Source of wealth
9. Clients Identification and Due Diligence Procedures
Any non-face-to-face transactions or contact between the Company and customers inevitably poses difficulties for customer identification. Clearly in such situations the Company should apply equally effective customer identification procedures and ongoing monitoring standards for non-face-to-face customers as for those available for interview. Photographic evidence of identity is inappropriate as there is a greater difficulty in matching the customer with the documentation in the case of non-face-to-face customers which becomes more difficult with telephone and electronic banking. In accepting business from such customers, the Company apply equally effective customer identification procedures and apply specific and adequate measures to mitigate the higher risk.
9.1 Clients Categorization
The Company has adopted all requirements of the Law in relation to client identification and due diligence procedures. The client categorization, identification and due diligence are as follows:
a. Low Risk
b. Normal Risk
c. High Risk
1. Clients with the following criteria are classified as High risk due to the following conditions:
§ Non face to face customers
§ Accounts in the names of companies whose shares are in bearer form
§ Trusts Accounts
§ ‘Client accounts’ in the name of a third person
§ ‘Politically exposed persons’ accounts
§ Electronic gambling /gaming through the internet
§ Customers from countries which inadequately apply FATF’s recommendations
§ Cross-frontier correspondent banking relationships with credit institutions – Clients from third countries
§ Any other Clients that their nature entail a higher risk of money laundering and terrorist financing
§ Any other Client determined by the Company itself to be classified as such.
§ Simplified Client Due Diligence
2. Simplified procedures may apply for lower risk clients. More detailed client due diligence measures for lower risk clients shall apply when there is no suspicion of money laundering, regardless of any derogation, exemption or threshold, and not whenever a business relationship is established.
3. Enhanced Client Due Diligence
The Company should apply enhanced client due diligence measures in situations which by nature can present high risk of money laundering or terrorist financing.
More specifically, where the client has not been physically presented for identification purposes, the Company shall take specific and adequate measures to compensate for the high risk, by applying one or more of the following measures:
§ Ensuring that the client’s identity is established by additional documents, data or information.
§ Supplementary measures to verify or certify the documents supplied, or requiring confirmatory certification by a credit or financial institution.
§ Ensuring that the first payment of the operations is carried out through an account opened in the client’s name with a credit institution which operates in a country of his residency.
10. Monitoring of Transactions
The Company shall pay special attention to any complex, unusual or large transactions, unusual pattern of transactions, with no apparent economic or lawful purpose. They should also pay special attention to business relations and transactions with persons in jurisdictions that do not have adequate systems in place to prevent or deter money laundering or financing of terrorism. Extra care should also be paid to electronic funds transfers that do not contain complete originator information. The Company shall monitor its business relationships and the transactions undertaken throughout the course of the relationship to ensure that its identification obligations are met and that the transactions conducted are consistent with the information that the reporting entity has of its customer and the profile of the customer’s business.
11. Education and Training
Statutory Requirements Under Section 15(1)(d) of the Act, the Company is responsible to train the officers, employees and agents to recognize suspicious transactions, trends and risks in money laundering and the financing of terrorism within its products, services and operations. Staff must be aware of their responsibilities and that they could be personally liable for willfully making false or misleading statements or unauthorized disclosures. All staff should be encouraged to co-operate fully and to provide a prompt report of any suspicious transaction. Timing and content of training for various sectors of staff will need to be adapted by individual institutions for their own needs. These Notes do not specify the nature of the training to be given nor what steps Reporting Entities should take to fulfill this requirement.