KYC-AML Policy
Take a few Minutes to Understand a few basic information.
Know your client “KYC”, Let’s Know each other.
The KYC process is a process that facilitates greater levels of trust, transparency, and collaboration between Us while mitigating risk. “KYC” involves several steps for Us to know you: establish who you are and your identity, understand the nature of your activities, and qualify that the source of funds and source of wealth is legitimate.
What is the source of funds? The source of funds (SOF) is the origin of a person’s money.
We seek to understand where funds came from (in terms of the account from which they were transferred), but the activity that was involved in generating those funds – for example, a source of employment, the sale of a house, or an inheritance.
It’s a pain, we know, but keep always your answer ready for Us or for any other of your banks
Let’s see a few examples of sources of funds: Personal savings, Pension releases, Share sales and dividends, Property sales, winnings, Inheritances, and gifts, Compensation from legal rulings.
What is the source of wealth?
So-called (SOW) is how you have acquired your entire wealth. In establishing the source of wealth, financial institutions must ascertain why the client has the assets they do and how they came to accumulate them: inheritance investments, Business ownership interests, and Employment income.
This process is also important see below, the AML/CFT compliance is when We establish a customer’s potential involvement in criminal activity.
When a customer is flagged as ‘high risk’ and an inquiry into the origin of their funds is initiated, SOW may be used to support a decision about SOF.
Legislative References:
The relevant law and regulations in the actual and/or last version, as below described and explained to all our customers are fully applicable as a term to your services as an integral part of our services “Marchand” agreement Proceeds of Crime Act 2002 – This defines the money laundering offenses and gives law enforcement agencies far-reaching powers to deal with them.
List of the regulations:
The Proceeds of Crime Act also creates offences of failing to make a report about suspicious activity, and tipping off any person that you’ve made, or intend to make such a report. This applies to nominated officers and employees of businesses in the regulated sector, such as money service businesses.
Money Laundering Regulations 2007 – These regulations set out the detailed requirements for organizations and individuals engaged in regulated activities. Terrorism Act 2000 – This defines the primary offences related to terrorist funding and requires regulated businesses to report knowledge or suspicion of offences. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (referred to in this guidance as “the Regulations”) – make important amendments to the Proceeds of Crime Act, the Terrorism Act and the Anti-terrorism Crime and Security Act. It extends the powers of law enforcement to seek further information, recover the proceeds of crime and combat the financing of terrorism. Terrorist Asset-Freezing etc. Act 2010 – The Terrorist Asset-Freezing etc. Act 2010 gives HM Treasury power to freeze the assets of individuals and groups reasonably believed to be involved in terrorism, whether in the UK or abroad, and to deprive them of access to financial resources. Anti-terrorism, Crime and Security Act 2001 – is to ensure the security of dangerous substances that may be targeted or used by terrorists and allows for freezing orders to be made against national security threats and the civil asset seizure regime for terrorism. Counter-terrorism Act 2008, Schedule 7 – gives powers to HM Treasury to issue directions to firms in the financial sector about customer due diligence, ongoing monitoring, systematic reporting and limiting or ceasing business and merchant AML/ CTF Policy & Procedure Manual at least annually.
You have probably heard from banks or financial the words “money laundering or terrorist financing”. But what is money laundering?
The Money Laundering Regulations require a fundamental understanding of the processes that can be involved in money laundering and require that you respond appropriately to any knowledge or suspicions that these processes may be taking place. This section of the policy explains what money laundering is, the offenses, and the penalties.
Money laundering is any process whereby funds derived from criminal activity including terrorist financing are given the appearance of being legitimate by being exchanged for ‘clean’ money.
Participating in the handling of such funds is illegal, and it can also be illegal to become involved in them with knowledge or suspicion.
For Example, Money transmission can involve placing illegal cash with a money service business or enabling the transfer of value by netting off transactions in different countries without moving any money. A common practice is to split transactions into small sums or to deposit cash into somebody else’s bank account, or make a transfer of funds on behalf of somebody else.
Money Laundering Regulations 2007 – These regulations set out the detailed requirements for organizations and individuals engaged in regulated activities. Terrorism Act 2000 – This defines the primary offences related to terrorist funding and requires regulated businesses to report knowledge or suspicion of offences. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (referred to in this guidance as “the Regulations”) – make important amendments to the Proceeds of Crime Act, the Terrorism Act and the Anti-terrorism Crime and Security Act. It extends the powers of law enforcement to seek further information, recover the proceeds of crime and combat the financing of terrorism. Terrorist Asset-Freezing etc. Act 2010 – The Terrorist Asset-Freezing etc. Act 2010 gives HM Treasury power to freeze the assets of individuals and groups reasonably believed to be involved in terrorism, whether in the UK or abroad, and to deprive them of access to financial resources. Anti-terrorism, Crime and Security Act 2001 – is to ensure the security of dangerous substances that may be targeted or used by terrorists and allows for freezing orders to be made against national security threats and the civil asset seizure regime for terrorism. Counter-terrorism Act 2008, Schedule 7 – gives powers to HM Treasury to issue directions to firms in the financial sector about customer due diligence, ongoing monitoring, systematic reporting and limiting or ceasing business and merchant AML/ CTF Policy & Procedure Manual at least annually.
In basic terms, the criminal wants to:
Place money in the financial system, without arousing suspicion; Move money around, often in a series of transactions crossing multiple jurisdictions, so it becomes difficult to identify its source, and then; Move the money back into the financial and business system, so that it appears as legitimate funds or assets.
Money transmission can involve placing illegal cash with a money service business or enabling the transfer of value by netting off transactions in different countries without moving any money. A common practice is to split transactions into small sums, deposit cash into somebody else’s bank account, or make a transfer of funds on behalf of somebody else.
Money laundering involves three stages:
PLACEMENT – Placement is the first stage of the money laundering process. This process aims to introduce unlawful proceeds, aka “dirty money”, into the financial system without attracting the attention of financial institutions or law enforcement.
Placement techniques often include structuring (dividing large amounts of currency into less conspicuous smaller sums) currency deposits into amounts.
LAYERING – Layering is the second stage of the money laundering process. It is the process by which the proceeds of illegal activities, i.e. the “dirty money”, are separated from their origins. It is done by moving funds around the financial system through a series of transactions. Create confusion and complicate the audit trail by making numerous transactions; these transactions may reasonably appear to have a legitimate purpose or may appear to have no reasonable, la
INTEGRATION – Integration is the third step of the money laundering process. It may be performed individually or in conjunction with the Placement and Layering stages. Once the origin of the funds has been hidden through sufficient ‘layering’, the funds are imported back into the financial system.
Money transmission can involve placing illegal cash with a money service business or enabling the transfer of value by netting off transactions in different countries without moving any money. A common practice is to split transactions into small sums, deposit cash into somebody else’s bank account, or make a transfer of funds on behalf of somebody else.
Being involved in any of these three stages is potentially a criminal activity.
What is Terrorist Financing?
A person or an entity commits an offense of Terrorist Financing if they; fund-raise or are involved in fund-raising, using or possessing money or other property for terrorism conceal, transfer or remove from jurisdiction, any money or other property used to finance terrorism facilitate the retention or control of money, which is destined for, or is the proceeds of terrorism do not comply with a prohibition imposed by a freezing order or enable any other person to contravene the freezing order deal with, or make available funds or economic resources that are owned, controlled by or benefitting a designated person (under the Office of Financial Sanctions Implementation List).
Please be aware that service of our Merchant has systems in place to help identify prevent and detect money laundering and terrorist financing, always ensure that its policies, procedures, and controls are implemented and kept up to date.
