POLICIES AND PROCEDURES TO DETECT AND PREVENT MONEY LAUNDERING, TERRORIST FINANCING AND CORRUPTION IN ACCORDANCE WITH RELEVANT SAINT VINCENT AND THE GRENADINES REGULATIONS
AREAS COVERED BY THIS MANUAL
The general areas covered by this Manual include the following:
- the purpose and importance of the compliance function;
- a description of the regulatory framework insofar as it is relevant to the Company and of the regulatory obligations of the Company;
- the role of the Anti-Money Laundering Compliance Officer (“Compliance Officer”) and a summary of how the compliance function is to be monitored and reviewed; and
- the procedures that will be used to test compliance and how breaches in compliance will be reported and rectified.
This Policies and Procedures Manual (the “Manual”) provides guidelines to the Company to implement Anti-Money Laundering and Counter-Financing of Terrorist policies and procedures pursuant to the Saint Vincent and the Grenadines Anti-Money Laundering and Terrorist Financing Regulations and the Anti-Money Laundering and Terrorist Financing Code, the Anti-Terrorist Financing and Proliferation Act, and the Proceeds of Crime Act (collectively, the “AML Legislation”).
It is the policy of Ultorex LLC, a Saint Vincent and the Grenadines limited liability company, (the “Company,” “our,” “us,” or “we”) to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities by complying with all applicable requirements under the AML Legislation of Saint Vincent and the Grenadines.
This Manual is designed to maintain effective prevention and detection measures to assist the law enforcement authorities to deter, detect, and disrupt financial crime. This Manual sets out the policies and procedures the Company adopted to meet its legal and regulatory obligations to combat money laundering and terrorism financing.
Money laundering threats are dynamic and criminals constantly devise new techniques and exploit the easiest targets in the financial services sector. To mitigate the risk of being used as a vehicle for financial crime, the Company will systematically assess, mitigate, and monitor these risks. It will seek to identify money laundering at an early stage of the client acceptance process, escalate this to senior management and take appropriate action.
The Company does not wish to be manipulated by money launderers or terrorists or to become associated with money laundering or terrorism in general. Its aim is not merely to comply with its legal obligations, but to minimise the risk of exploitation by criminals as effectively as possible. Thus the anti-money laundering, terrorist financing and corruption policies of the Company are based on the highest standards that are required, and apply to all employees.
The Company seeks to ensure that at all times, the following occurs.
- Clients’ identities are satisfactorily verified in accordance with the firm’s risk-based approach before the Company engages with the client.
- The Company knows its clients and understands their reasons for doing business with us both at the client acceptance stage and throughout the business relationship.
- Our staff is trained and made aware of both their personal legal and regulatory obligations and the Company’s legal and regulatory obligations.
- Our staff is trained to be vigilant for activities where there are reasonable grounds for suspicion that money laundering could be taking place and to make the reports to the Financial Intelligence Unit.
- The Company maintains sufficient records for the required period.
- The Company establishes, maintains, and implements appropriate procedures to achieve these objectives.
Money laundering is characterised by an attempt to conceal the illegal source of the funds and transform them into legitimate funds through complex transactions typically orchestrated through numerous entities. Money laundering is generally motivated by illegal or criminal activity, once laundered; funds derived from illegal means can more easily be used for other purposes.
Deception is the heart of money laundering and by its very nature it is a hidden activity, the general consensus amongst worldwide regulatory bodies is that there are three stages of money laundering:
- Placement: placing cash proceeds/assets of criminal conduct into the banking system;
- Layering: creating complex layers of transactions to conceal the origin of the funds; and
- Integration: proceeds now appear legitimate and are “integrated” into the financial system.
The AML Legislation criminalises terrorism and terrorist financing, following UN conventions and international standards. Dealing with property intended to be used for terrorist purposes, or being involved in any arrangement in support of terrorism, are serious criminal offences. The financing of terrorism is characterised by the solicitation and collection of funds or assets which are intended to be put to a terrorist purpose. Whilst similar to money laundering, terrorist financing can be distinguished by the fact that the funds involved are not necessarily “dirty”. Funds of a perfectly legitimate source become criminal property by virtue of the use to which they will be put.
Bribery is a criminal offence and corrupt acts expose the Company and its employees not only to reputational risk but to the risk of prosecution, fines and imprisonment. Bribery is often characterised by the offering or receiving of payment or some benefit in exchange for the exercise of influence, particularly with respect to the awarding of contracts. Domestic legislation in Saint Vincent and the Grenadines makes bribery and corruption a serious offence. The legislation of other jurisdictions, particularly the United States and England, has extra-territorial reach. As such, a “zero-tolerance” approach is taken to acts of bribery or corruption and care must be taken to comply with not only the letter but the spirit of the law.
THE PURPOSE AND IMPORTANCE OF THE COMPLIANCE FUNCTION
The overall objective of the compliance function is to ensure that the Company complies with its regulatory obligations under the anti-money laundering, terrorism and corruption legislation applicable in Saint Vincent and the Grenadines and any other jurisdiction in which the Company operates. The compliance function is also concerned with the Company’s ability to demonstrate the existence and effectiveness of our systems and controls.
The objective of the compliance policies, systems and controls is to ensure that the Company can manage its compliance risk, i.e. the risk of legal and regulatory sanctions, material financial loss or reputational damage that the Company may suffer as a result of failing to comply with its regulatory and its anti-money laundering, terrorism and corruption obligations.
Compliance is the responsibility of the Company and, within the Company, ultimate responsibility for compliance lies with the Company’s Board of Managers.
REGULATORY FRAMEWORK APPLICABLE TO THE COMPANY
- PROCEEDS OF CRIME ACT (PCA)
The money laundering provisions in the PCA apply to “criminal conduct” (which includes drug and terrorist related financial crimes). Criminal conduct is defined as any conduct constituting an offence in Saint Vincent and the Grenadines or, where criminal conduct has taken place outside Saint Vincent and the Grenadines, would constitute an offence there, this concept is known as “dual criminality”.
There is no restriction on the type of offence committed i.e. drug trafficking, other crimes or terrorism offences. The Court will only need to consider whether a relevant business, that is, a Service Provider (“SP”) has benefited from any general or particular criminal conduct. General criminal conduct means any criminal conduct, wherever it has occurred and whether or not is has formed part of any criminal prosecution. Particular criminal conduct means the offence for which the defendant is being prosecuted.
Criminal conduct offences include the laundering of an offender’s own proceeds of crime as well as assisting in the laundering of someone else’s proceeds. Criminal offences fall into the following principal categories and a person commits an offence if he:
- conceals, disguises, converts or transfers criminal property or removes criminal property from Saint Vincent and the Grenadines;
- enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person;
- acquires, uses or has possession of criminal property;
- fails to disclose to a Money Laundering Reporting Officer (“MLRO”) or the Financial Intelligence Unit (“FIU”) suspicion or knowledge of another person engaging in a prohibited act. Disclosure of suspicion to the FIU is a defence, however, failure to disclose may be subject to a “negligence test” whereby the Courts may rule that a person had “reasonable grounds” for knowing or suspecting criminal conduct even if they did not actually know or suspect; and
- makes a disclosure (other than to the FIU) which is likely to prejudice an investigation being or about to be conducted by the FIU (tipping off).
- ANTI-MONEY LAUNDERING AND TERRORIST FINANCING REGULATIONS (REGULATIONS)
The Regulations have the force of law and lay down the general compliance requirements relating to conduct to be taken by an SP. The Regulations require that all “clients” and “beneficial owners” (“clients”) of SPs must be appropriately identified and their records appropriately monitored and maintained.
The Regulations also require that relevant SPs have in place anti-money laundering policies, procedures and practices to facilitate the SPs ability to comply with the anti-money laundering regime of Saint Vincent and the Grenadines. Specifically, the Regulations require that relevant SPs should not form business relationships or carry out one-off transactions with or for another person unless they:
- maintain procedures, which establish and verify the identity of clients;
- adopt a risk based approach to monitor financial activities and maintain adequate systems to identify risk in relation to persons, countries and activities;
- maintain procedures to screen employees to ensure high standards when hiring;
- maintain record-keeping procedures;
- establish internal reporting procedures;
- adopt appropriate internal controls and ongoing monitoring procedures;
- maintain and monitor record keeping in respect of client identification, accounts files and business correspondence in respect of the transactions of such clients;
- provide appropriate AML training in accordance with the Regulations (where applicable); and
- designate a Compliance Officer.
All of the above procedures are explained in detail under the Anti-Money Laundering Policies and Procedures in this Manual.
- ANTI-TERRORISM FINANCING AND PROLIFERATION ACT
The Anti-Terrorism Financing and Proliferation Act makes it an offence to solicit, receive or provide property intending that it be used, or having reasonable cause to suspect that it may be used, for the purposes of terrorism. It is also an offence for a person to use property for the purposes of terrorism or to possess property intending that it be used, or having reasonable cause to suspect that it may be used, for the purposes of terrorism. It is an offence for a person to enter into or become concerned with an arrangement as a result of which property is made available to another knowing or having reasonable cause to suspect that it will or may be used for the purposes of terrorism. Similarly, it is an offence to enter into or become concerned with an arrangement which facilitates the retention or control by or on behalf of another person of terrorist property by concealment, by removal from the jurisdiction or by transfer to nominees.
The reach of the legislation is wide. “Terrorist property” is defined as property which is “intended to be used” for the purposes of terrorism and proceeds from the commission of acts of terrorism. “Property” includes money and all other property, real or personal, including things in action and other intangible property.
INTERNAL REPORTING POLICIES AND PROCEDURES
The Company is committed to deterring money laundering and any activity that facilitates money laundering or the funding of terrorist activities. The dedication of the Company is reflected in its desire to comply with all laws and regulations designed to combat money laundering activity.
Money Laundering Reporting Officer (MLRO)
The Regulations provide a requirement that all SPs appoint an MLRO.
The MLRO is responsible for:
- considering, in light of all relevant information, any reports of suspicious activity made by employees of the Company for the purposes of determining whether or not the information contained in the report amounts to suspicious activity in accordance with the applicable legislation;
- ensuring that any incidents of suspicious activity are reported to the FIU and are filed in accordance with the applicable legislation; and
- maintenance of a register listing reports made to the FIU and inquiries received from the FIU.
The MLRO has a direct reporting line to the Board of Managers of the Company.
Suspicious Activity Reporting
All employees of the Company are required to be familiar with the anti-money laundering procedures and immediately report to the MLRO the occurrence of any suspicious activity. In the event that an employee receives any enquiry from a law enforcement agency, that inquiry shall immediately be referred to the MLRO.
If the MLRO determines that a suspicious activity report should be filed with the FIU the report, shall be made by hand/mail delivery or facsimile via the standard reporting form. The FIU’s address is P.O. Box 1826, Kingstown, St George, VC0100, St. Vincent and the Grenadines, the FIU’s facsimile is +1 784 457-2014. Copies of all reports submitted to the FIU will be maintained by the MLRO, for not less than five years.
Suspicious activity reports and all supporting documentation are confidential. Tipping off is an actual offence under the PCA and carries with it a monetary fine and jail term. Employees are prohibited from disclosing to anyone, including persons involved in the transaction, information in connection with a filing of a suspicious activity report. Violation of this policy will result in disciplinary action and termination of employment.
The Company develops, implements, and maintains an effective AML policy that is reasonably designed to prevent the Company from being used to facilitate money laundering and the financing of terrorist activities. The Company adopted an AML policy that identifies risks associated with its business, assesses those risks, and implements and updates its AML compliance program based on its ongoing risk assessment.
The purpose of the Company’s risk assessment is to evaluate the adequacy of the Company’s existing processes and, where required, to modify and update the Company’s risk management processes and this Program to more effectively identify and mitigate risk. When the Company conducts its annual Independent Review, the Company will evaluate how it identifies and mitigates its risk and update its risk assessment and this Program accordingly. The Company undertakes the following steps in its risk assessment:
- Conduct a formal and regular money laundering/terrorist financing risk assessment, including market changes, changes in products, client profiles, and the wider digital asset and virtual asset environment;
- Ensure that the Company’s internal procedures, systems, and controls, including staff training, adequately reflect the risk assessment;
- Ensure client identification and acceptance procedures reflect the risk characteristics of clients; and
- Ensure arrangements for monitoring systems and controls are robust and reflect the risk characteristics of clients.
Assessing the Company’s Risk
While we will, as far as reasonably practicable, ensure consistent application of our risk-based approach, we recognize that this approach cannot anticipate every eventuality. Therefore, in any given case the Compliance Officer may exercise their judgment in deciding whether or not to deviate from the written policies. In devising and implementing a risk-based approach, the Company considers the following major risks.
Legal structure and regulated status of the client
The Company will concentrate its resources on the verification of identify of unregulated clients with less transparent legal and ownership structures.
The Company pays particular attention to the identification of ultimate beneficial owners and controllers of corporate clients, including partnerships, trusts, foundations, charities, and endowments. The Company collects supporting evidence for each element of the corporate structures of such clients.
Business Activities of the Client
The Company will concentrate its resources on clients engaged in or associated with a business that involves significant amounts of cash or businesses that are associated with higher levels of corruption (e.g., arms dealing).
Delivery Channels for Deposits
For deposits made in virtual assets, the Company monitors the relevant blockchains in order to identify the connections of the such virtual assets transferred to the Company to the any illicit activities. All virtual asset deposits exceeding thresholds set as per client risk level are subject to the source of wealth checks.
Geographical Location of the Client and its Business.
The Company recognizes that it provides its services to clients with the following geographical risk profiles:
- Low risk – Clients from the European Union (“EU”), or equivalent jurisdictions with adequate anti-money laundering rules and regulations and whose business activities occur in these jurisdictions;
- Medium risk – Clients from the EU, or equivalent jurisdictions with adequate anti-money laundering rules and regulations whose business activities or sources of wealth funds derives from outside these jurisdictions; and,
- High risk - Clients from jurisdictions that do not have anti-money laundering rules and regulation comparable to those in the EU or clients from countries where:
- Cash is the normal medium of exchange;
- The regime is politically unstable with high levels of public or private sector corruption;
- The country is known to be a drug producing or drug-transit country; and
- The country is classified as having inadequate anti-money laundering rules and regulations.
If the Company engages with clients from high risk locations, it will more intensely and vigilantly review the client and discontinue the relationship as necessary to ensure compliance.
Politically Exposed Persons
The Company will concentrate its resources on clients identified as Politically Exposed Persons (“PEPs”).
- a person who is or has been entrusted with prominent public functions by a foreign country, for example a Head of State or of government, senior politician, senior government, judicial or military official, senior executive of a state owned corporation and important political party official;
- a person who is or has been entrusted domestically with prominent public functions, for example a Head of State or of government, senior politician, senior government, judicial or military official, senior executives of a state owned corporation and important political party official; and
- a person who is or has been entrusted with a prominent function by an international organisation like a member of senior management, such as a director, deputy director and a member of the board or equivalent functions. The risks occur when these persons abuse their public powers and basically filter their ill-gotten funds to offshore jurisdictions or through opaque investments such as virtual currency investments.
The Company treats all PEP clients as high risk. The Company performs additional extensive due diligence on such clients and pays particular attention to the PEPs source of wealth and source of funds. The Company requires approval from the Board of Managers for onboarding a client identified as PEP. Employees must consult the Compliance Officer if they believe they are dealing with a PEP or a connected person.
The Regulations impose a requirement for entities to be vigilant in relation to PEPs and have risk management policies in place to:
- determine whether the client is a PEP, a family member (includes the spouse, parent, sibling, or child of a PEP) or close associate (includes any natural person who is known to hold ownership or control of a legal instrument or person jointly with a PEP, who maintains some other kind of close business or personal relationship with a PEP, or who holds the ownership or control of a legal instrument or person which is known to have established to the benefit of a PEP);
- obtain senior management approval for establishing business with a PEP, a family member or a close associate;
- take measures to obtain source of funds information; and
- conduct enhanced monitoring of the relationship.
The degree of scrutiny that the Company will apply will depend on various risk factors, including, but not limited to:
- proof that the clients source of funds or wealth do not emanate from criminal activity;
- whether the home jurisdiction of the PEP is one in which current or former political figures have been implicated in corruption; and
- the length of time that a former political figure has been in office.
If due diligence cannot be performed adequately, the Company should consider not opening the account, suspending the transaction activity, filing a report with the MLRO or closing the account.
Client Risk Assessment
The Company’s client base is divided into three risk categories: Low, Medium, and High. The Compliance Officer will assign each client a risk category. The Compliance Officer will base this determination on both a qualitative assessment and a quantitative risk assessment.
The following should be used as guidance when applying a risk-based approach to the assessment of money laundering risk posed by each client. Consideration of the overall information held may alter the risk profile of the client.
Examples of “low risk” clients include:
- Regulated financial institutions located in the EU, or Financial Action Task Force (FATF) member-nations;
- Government offices and agencies in all jurisdictions except for those offices in agencies located in FATF high-risk or other monitored jurisdictions;
- Reputable, well-known organizations, with long histories in their industries or large market capitalization and with substantial public information about them and their principals and/or controllers;
- Clients represented by those whose appointment is subject to court approval or ratifications (e.g. executors); and
- Retail (individual) clients from the EU, FATF member-nations.
Examples of “high risk” clients include:
- Clients with significant and substantial relationships with a PEP or its connected person (e.g. where the PEP is an advisor or employee of the client);
- Clients with complex business ownership structures, such as offshore special purpose vehicles, that make it easier to conceal underlying beneficial owners, especially where there is no legitimate commercial rationale for such a structure;
- Clients organized, domiciled, or located in FATF high-risk or other monitored jurisdictions (see footnote 2 for an explanation of FATF high-risk or other monitored jurisdictions);
- Clients that are nationals of FATF high-risk or other monitored jurisdictions;
- Client accounts that involve regular payments to or from unrelated third parties;
- Names that have been previously linked with financial crime;
- Clients engaged in higher risk business activities;
- Companies issuing bearer shares, especially if incorporated in higher risk jurisdictions;
- Clients that have been subject to a Suspicious Activity Report; and,
- Clients that have been subject to Office of Foreign Assets Control.
The Company considers all other clients that do not fall within either a low-risk category or a high-risk category to be “medium risk” clients including, but not limited to, the following:
- Subsidiaries of or entities associated with low risk clients; and,
- Private companies domiciled in the EU or equivalent jurisdictions with adequate anti-money laundering rules and regulations, provided they are not undertaking high risk business.
The Company will take the following additional considerations into account when determining the risk posed by a particular client. While these considerations will not determine the risk on their own, they will be considered alongside other factors in determining the overall money laundering risk posed by a particular client.
- Whether the client engages in a one-off transaction or an ongoing business relationship with the Company.
- In relation to introduced business, the effectiveness of the due diligence carried out by the person that introduced the client to the Company.
- The nature and length of any existing or previous relationship between either the Company or its employees and the client.
- The way in which information is obtained (e.g. from a government department, regulated firm, or other source).
- The nature and extent of any assurances given by other regulated firms on which the Company may rely.
- Any associations the client may have with other entities or jurisdictions, such as headquarters, operating facilities, branches, or subsidiaries and the individuals who may influence its operations.
- Other relevant considerations; such as whether the client has a regulated investment manager or adviser, a prime broker (who has performed due diligence on the client), and other considerations that the Compliance Officer may reasonably consider relevant to the client’s risk assessment.
- The type of products or services that the Company provides to the client.
On-Going Risk Assessment
Risk management is a continuous process. The Compliance Officer is responsible for ensuring the Company’s risk assessment is up to date and appropriate. This is done by means of an on-going risk assessment to identify changes in the Company’s risk profile, as necessary (e.g. when new products and services are introduced, existing products and services change, higher-risk clients open and close accounts, or the Company expands through mergers and acquisitions). Even in the absence of such changes, the Company will periodically reassess the risk assessment every 12 months.
CLIENT IDENTIFICATION POLICIES AND PROCEDURES
The Company has an obligation to determine, that money-laundering activities are not being conducted. The first line of defence against any money laundering activity is to KNOW YOUR CLIENT. In effect, this means that enhanced client identification must be collected on every client. There are some exceptions to this requirement and the Company will apply a “Risk-Based” analysis as required under the Regulations to determine whether simplified client due diligence measures should be applied to the client.
The primary objective of a client identification program is to obtain reasonable assurances that the Company knows with whom it conducts business, and to verify that the person that holds shares in the Company or opens an account with the Company is whom that person claims.
On-Boarding Private Individuals
To identify an individual and verify identity of clients the Company has a comprehensive on-boarding process. The on-boarding process is outlined below.
- The client must provide first name, last name, email address, phone number, and country of current residence.
- The Company verifies the residential address, and identity.
A complete list of client identity and address verification documents is provided in following sections.
- Finally, the client data is checked against the following databases:
- PEP List,
- OFAC SDN List,
- The U.S. Department of Commerce’s Denied Persons List,
- The HM Treasury, Office of Financial Sanctions Implementation’s Financial Sanctions Targets List,
- The E.U.’s Common Foreign and Security Policy’s Consolidated Financial Sanctions Database,
- Australian Government, Department of Foreign Affairs and Trade Consolidated List,
- U.S. Department of State, Directorate of Defense Trade Controls’ Debarred Parties List,
- The Government of Canada, Office of the Superintendent of Financial Institutions’ Individuals and Entities Watch List,
- The UN Security Council’s Consolidated List, and
- The requisite INTERPOL database.
The positive results of the searches may result in:
- Raising the risk score of the client;
- Sending the client for processing in conformance with this Manual; or,
- Denial of the account opening.
- Address (if possible).
On-Boarding Entity Clients
When an entity client wants to do business with the Company, the entity client representative must provide the following information to the Company:
- Basic information such as the entity’s name, any alias or “doing business as” names, jurisdiction, business address, web address, contact information¸ and description of the business;
- The entity’s incorporation, formation, or registration documents (e.g., certificate of incorporation or certificate of formation);
- The entity’s governing document (e.g., articles of association, bylaws or operating agreement);
- Documentary evidence of registered offices and business addresses;
- A document that confirms the authority of the representative to open the account on behalf of the entity;
- The names and email addresses of all directors, if applicable, and all principals;
- The names and email addresses of all the beneficial owners holding a 20% or more interest in the entity; and,
- Any additional documents the Company requests (e.g., accounts or organization chart).
A complete list of client identity and address verification documents is provided in following sections.
No business may be done with or on behalf of an entity client until the Compliance Officer approves the client. In some cases, additional information may be requested from a potential client before the client account may be opened. When all required information is obtained, the Compliance Officer will assess the relationship again before the account is opened.
Listed below are categories, under which it will not normally be necessary to collect enhanced due diligence (“exempted client”). However, best practice, common sense and judgment should be used in each case. A client is an exempted client if it is:
- a central or local government organisation, statutory body or agency of government in a country specified in the list published by the Anti-Money Laundering Steering Group (“List”);
- a regulated financial institution which has “equivalent anti-money laundering legislation” and is based in a country specified in the List;
- a company quoted or a fund listed on a Stock Exchange or other market or exchanges approved by the Saint Vincent and the Grenadines Financial Services Authority and which is subject to disclosure requirements which impose requirements to ensure adequate transparency of beneficial ownership;
- regulated by the Saint Vincent and the Grenadines Financial Services Authority;
- a majority owned subsidiary of a company or structure as referred to in (b), (c) and (d) above (in such cases verification of the common ownership must be recorded);
- a pension fund for a professional association, trade union, or for employees of an entity referred to above. Satisfactory evidence that the fund falls within this category may be provided by a copy of a certificate of registration, approval or regulation by a government, regulatory or fiscal authority in the jurisdiction in which the fund is established
Simplified client due diligence measures will be unacceptable in specific high risk scenarios, these may include (but are not limited to):
- where the prospective client is from a foreign country that has been identified by credible sources as having serious deficiencies in its anti-money laundering or counter terrorist financing regime or a prevalence of corruption;
- where a risk assessment reveals a higher risk of money laundering or terrorist financing; or
- in the event of any unusual or suspicious activity.
Where an SP is required to maintain procedures to identify its clients and has doubts about the accuracy of any evidence of client identity, then satisfactory additional evidence of identity must be obtained.
Not every Government should be regarded as being in an exempted category, generally, those Governments whose countries are subject to sanctions by the United Nations, FATF, OECD, Financial Stability Forum, FinCEN, US State Department (INSCR), Foreign and Commonwealth Office or similar prohibition from any other official body should be considered as high risk.
Corporate Group Introductions
Where the prospective client is introduced by one part of a group to another, the identity of the client must be verified by the introducing group, parent, branch, subsidiary or affiliate in a manner compatible with the Regulations. Written confirmation must be obtained that the introducing party will provide client identification upon request.
In the event that a client of the Company is not exempted or has not been introduced by an “eligible introducer” it will be necessary to conduct full client identification procedures as set out below.
Client Identification Documentation
The following lists of client identification documentation represent standard best practice requirements for SPs.
- full name, permanent address, date and place of birth, nationality and occupation;
- notarised or certified copy of or video-verified photographic identification (i.e. passport or driving licence);
- document verifying place of residence (i.e. original utility bill, copy of bank or credit card statements etc.);
- professional reference addressed to the Company (i.e. from a lawyer or accountant) verifying the client’s name and address with a contact name, address and telephone and number of the person giving the reference;
- bankers or brokers reference from an institution in a country specified in the List addressed to the Company showing a relationship of at least two years and containing a contact name, address and telephone number of the person giving the reference; and
- details of business background, activities and source of funds or wealth.
- copy of the certificate of incorporation and constitutional documents (i.e. Memorandum and Articles of Association or equivalent);
- copy of the register of directors or equivalent, certified as a true and correct copy by a notary public;
- in respect of each director and each beneficial owner holding 10% or more of the corporation’s issued shares, the individual evidence of identity documents set out at (a) above;
- evidence of the trading address of the corporation and a copy of the latest financial statements (where available); and
- details of business background and activities of the company.
- copy of Certificate of Registration and Partnership Agreement;
- in respect of the general partner, the evidence of identity documents set out at (a) or (b) above i.e. if the general partner is an individual, the documents at 1, if the general partner is a company, the documents at (b);
- evidence of the trading address of the partnership and a copy of the latest financial statements (where available); and
- details of business background and activities of the partnership.
- copy of the Trust Deed and constitutional documents;
- in respect of the Settlor or Primary Beneficiaries, the individual evidence of identity documents set out at (a) above; and
- evidence of the trading address of the trustee.
Non-Profit Organisations (including charities)
There may be a potential risk of money laundering, as there are some difficulties in verifying the source of funds (in some cases there may have been anonymous donations). There is a clear distinction between the risks involved with local not for profits and those that make distributions overseas. The Company should:
- treat the identification process on not for profit organisations as they would for any other corporate entity or trust;
- obtain an explanation of the proposed purpose and operation of the organisation;
- obtain the identification documents on at least two of the signatories of the organisation;
- where the organisation is registered in an overseas jurisdiction,the SP contact the appropriate charity commission or equivalent body to confirm registration of the charity; and
- undertake a basic vetting of foreign organisations in relation to known money laundering and terrorist activities.
Corruption and Bribery Prevention Procedures
The due diligence procedures outlined above are vital not only in relation to anti-money-laundering and terrorist financing concerns, but to anti-bribery and corruption as well. In the context of bribery and corruption legislation, it is essential to know your business partners. The robust take-on procedures described above for potential clients (particularly the PEP procedures) operate to identify situations of high risk for bribery and corruption at the initial stages of the relationship. However, it is possible that the Company or its staff may become indirectly involved with bribery and corruption later in the relationship, or by way of association with third parties. Therefore, consideration should be given as to whether it is necessary to carry out due diligence on certain associates, agents, contractors, facilitators and others with whom the Company has a business relationship where there may be a risk of bribery and corruption.
If during the course of their duties a member of staff becomes suspicious of any client, business partner or staff member being involved in any way in bribery or corruption, they should immediately inform the MLRO. The reporting process in place to report a suspicion of money-laundering should be used. The MLRO will determine whether further action including reporting to the authorities is appropriate and should document the decision and keep a log of any such reports.
Care must be taken to ensure that the Company’s legitimate business promotion initiatives do not fall afoul of the bribery and corruption legislation or this policy. Such initiatives include:
- The giving of gifts or tokens of appreciation to clients or business partners;
- Client entertainment and hospitality;
- Invitations to events, functions or other social gatherings in connection with matters related to our business.
These kinds of activities are recognised as an established and important part of doing business provided they fall within reasonable bounds of value and occurrence. A variety of cultural factors such as customs, currency and expectations may influence the level of acceptability.
A reasonable level of discretion is permitted with respect to such activities. Giving gifts to clients must be reasonable and proportionate. Unduly lavish gifts are prohibited as they could give rise to the inference of impropriety. Care is to be taken in relation to the timing of gifts as there must be no inference that the gift relates to the recipient being involved in a pending decision affecting the Company. (For the avoidance of doubt, a gift also includes the provision of free services.) It is the policy of the Company that any proposed gift of a value of $125 or more must be approved by the MLRO in advance.
Occasionally staff members will be offered a gift from a client or other business partner to show gratitude for the work that they have done. No gift and/or favour of whatever kind may be accepted from any client or supplier of the Company that would in any way influence or reasonably be considered to influence the staff member to act inappropriately. In the event of a gift, benefit or inducement of any kind being offered to a member of staff by a client or business partner with a value likely to be more than US$125, the details must be reported to the MLRO.
If a member of staff feels uncertain at any time regarding acceptability of gifts, entertainment or hospitality, please consult the CO or MLRO.
INTERNAL CONTROLS AND ONGOING MONITORING PROCEDURES
Responsibility of the Compliance Officer
The Company is satisfying the Compliance Officer requirements in accordance with Regulation 3 of the Regulations. The Compliance Officer will be responsible for the following:
- development of internal AML policies, procedures and controls;
- employee screening (where applicable);
- anti-money laundering training (where applicable); and
- ensuring that anti-money laundering systems and procedures for compliance are audited (where applicable).
In addition to the above, there are further anti-money laundering precautions that need to be taken into consideration, the Compliance Officer will ensure:
- implementation and monitoring of the day-to-day operations and internal controls of the anti-money laundering programme;
- appropriate reporting to the Board of Managers on anti-money laundering and compliance issues;
- reflection in the supervisory policies and procedures of the Company any applicable changes in the law, reporting rules, and industry best practices; and
- an annual review and monitoring of client information.
The Compliance Officer is also responsible for ensuring that the anti-money laundering programme is reviewed on an annual basis. The Compliance Officer of the Company will monitor a sufficient amount of account activity to permit identification of patterns of unusual size, volume, pattern or type of transactions, geographic factors such as whether jurisdictions designated as “non-cooperative” are involved, or any of the “red flags” identified below.
The Compliance Officer will look at transactions, including trading and wire transfers, in the context of other account activity to determine if a transaction lacks financial sense or is suspicious because it is an unusual strategy for that client. The Compliance Officer will be responsible for this monitoring, will document when and how it is carried out, and will report suspicious activities to the MLRO.
The Compliance Officer shall ensure that processes are in place to allow him to:
- identify, measure and assess the compliance risks associated with the Company’s business, including the compliance risks associated with the material changes in, or the development of new, products, types of business or client relationships;
- keep the regulatory obligations of the Company and the compliance systems and controls under review, identifying any deficiencies, making regular assessment reports to the Board of Managers and senior management and making recommendations for any updates or revisions;
- maintain a register of compliance breaches containing information on the date, nature and extent of each compliance breach and whether the breach has been reported to SVGFSA (if required);
- ensure that the staff of the Company are aware of the need for and the objectives of compliance and that they are familiar with, and understand, to the extent necessary to undertake their responsibilities, the regulatory regime, and any changes to it and this Manual;
- ensure that the Company complies with its reporting obligations to SVGFSA, including that returns submitted to SVGFSA are accurate, complete and filed within the relevant time period (if required); and
- establish and maintain procedures for the monitoring and handling of complaints, and keeping the complaints procedures under review.
The Compliance Officer has responsibility for:
- immediately reporting to SVGFSA any serious compliance breach that he becomes aware of (if required);
- preparing and submitting to SVGFSA, on behalf of the Company, an annual compliance report in the approved form (if required); and
- preparing and submitting to the Board of Managers an annual compliance report.
Selection of the Compliance Officer
In selecting a Compliance Officer, it is important that the Company ensures that the Compliance Officer shall:
- possess sufficient independence to perform his role objectively and, without limiting this section, the Compliance Officer shall not be:
- involved in the performance of services or activities that he is responsible for monitoring; placed in a position where he is expected to perform functions that conflict with his role as compliance officer; or
- subjected to any undue influence or pressure with respect to the carrying out of the compliance function;
- have sufficient seniority in the organisational structure of the Company to:
- effectively undertake the compliance function;
- communicate freely with the regulatory authorities such as SVGFSA concerning compliance matters on his own initiative; and
- ensure that his requests, where appropriate, are acted upon by the Company and its staff and his recommendations properly considered by the Board of Managers and by senior management;
- have sufficient resources to perform the compliance function effectively.
For the purposes of undertaking the compliance function, the Compliance Officer shall have unrestricted access to:
- the directors, senior management and auditor of the Company;
- the staff of the Company, in order to seek information and explanations concerning compliance matters; and
- documents and information relating to the business of the Company and its clients.
COMPLIANCE PROCEDURES: CHECKS AND BALANCES
Compliance, Risk Management and the overall ethical culture of the Company are the direct responsibility of the Board of Managers of the Company.
The Company adheres to proper procedures. Senior management must practice high standards of ethics, compliance and proper risk management themselves and within their respective area of responsibility.
Suspicious Activity Indicators
During the course of a relationship with a client, the Company, employees, the Compliance Officer and
The MLRO should be wary of certain risk indicators, these generally fall into two categories:
- suspicious client behaviour, and
- suspicious transactions.
Examples of client behaviour suspicious activity indicators include:
- activity that is inconsistent with the business or financial background, investment strategy or stated business strategy;
- refusal or delays in producing requested client identification documentation;
- no concern for investment risks, performance, commissions or other transaction costs;
- where the client has been the subject of significant regulatory or governmental inquiries;
- where the client source of funds information is false, misleading, or substantially incorrect; and
- where the client appears to be acting as an agent for an undisclosed principal but declines to provide information regarding that person’s identity.
Examples of transactional suspicious activity indicators include:
- frequent large purchases or movement of funds, especially to or from foreign banks or virtual asset wallets;
- investing a significant amount of money into a virtual asset and then liquidating it within a short time period at a loss, this demonstrates a lack of concern for losses; and
- conducting a transaction with the goal of moving along funds or virtual assets, rather than obtaining a favourable return.
The Company must conduct an independent review of this Manual and its implementation to find weaknesses and provide opportunities for improvements. The Board of Managers of the Company is responsible for ensuring that an independent review is conducted at least once every twelve (12) months. A senior level employee, independent third-party, or the Company’s attorney or accountant may conduct the review, as long as this person is familiar with the AML legislation in Saint Vincent and the Grenadines.
Upon completion of the independent review, the person conducting the review will report its findings to the Company’s Board of Managers who will promptly address each of the resulting recommendations and keep a record of how each noted deficiency was resolved.
RECORD KEEPING POLICIES AND PROCEDURES
The Company retains client records, including but not limited to, client identification, account opening information, transactional records, relevant account files and business correspondence for a period of five years following the closing of the account, or termination of the business relationship. These records are stored at the principal office of the Company and will be made available to governmental regulatory agencies upon request.
OFAC Search Record
Before engaging in a transaction of any amount with any client, the Company will search the client’s name and the individual presenting the transaction’s name on the OFAC SDN List. The Sanctions List is available at https://sanctionssearch.ofac.treas.gov/. The Company shall record that it conducted the search and the results of the search. If the client or its representative continues to conduct business with the Company, the Company shall conduct ongoing searches of the client’s name and the individual presenting the transaction’s name on the SDN List approximately every three months. The Company will record that it conducted these ongoing searches and the results of each search. The Company will not transact any business with a client or individual presenting the transaction who appears on the Sanctions List.
Funds Transfer Record
The Company must record any client request or order that the Company transmit funds (including virtual assets) in an amount of $3,000 USD or more to another financial institution or virtual asset wallet.
The Company shall record the following information with respect to each client request or order:
- The name and address of the client;
- The amount of the request or order;
- The execution date of the request or order;
- Any additional instructions the client sent to the Company;
- The identity of the recipient financial institution or the recipient virtual asset custodian;
- Any form relating to the transmittal of funds that is completed or signed by the client; and
- The following additional information:
- The name and address of the recipient,
- The recipient’s account number or the recipient’s virtual asset wallet address, and
- Any other specific identifier of the recipient.
The Company shall retain a copy of the record for at least five years from the date of the transmission. The Company may either keep the record in its original or electronic form.
ANTI-MONEY LAUNDERING TRAINING POLICIES
Where an SP has staff, the Compliance Officer is responsible for implementing a programme to train employees in connection with:
- anti-money laundering policies and procedures;
- current Saint Vincent and the Grenadines anti-money laundering regulation; and
- rules and guidelines with respect to money laundering. Anti-money laundering training will be conducted on at least an annual basis.
The Compliance Officer should pay particular attention to the following:
- the necessity to be pro-active in training employees to recognise money laundering activities;
- the severity of the regulatory exposure due to lack of such a pro-active stance;
- the suspicious activity indicators to look for and the procedures in place regarding the vigilance required when establishing a new relationship; and
- any other anti-money laundering issues that the Compliance Officer believes would be educational.
The Company will develop an ongoing training program under the leadership of the Compliance Officer and the Board of Managers. The training will occur at least annually will be updated to reflect any new developments in the law. At a minimum, the training will include:
- How to identify red flags and signs of money laundering, terrorist financing, and bribery and corruption that arise during the course of the employees’ duties;
- What to do once the risk is identified (including how, when and to whom to escalate unusual client activity or other red flags for analysis and, where appropriate, the filing of Suspicious Activity Reports);
- What employees' roles are in the firm's compliance efforts and how to perform them;
- The Company’s record retention policy; and
- The disciplinary consequences (including civil and criminal penalties) for non-compliance with the AML Legislation.
The training may include educational pamphlets, videos, intranet systems, in-person lectures and explanatory memos. The Company will maintain records to show the persons trained, the dates of training and the subject matter of their training.
The Company has circulated all of the aforementioned policies as part of its anti-money laundering efforts and the policies and procedures are designed to enable the Company to satisfy the anti-money laundering regulations currently in force in Saint Vincent and the Grenadines.