- Introduction and Scope
This document is the AML/CTF Policy (Policy) adopted by Netrios hereinafter the Company.
Money laundering (ML) is taking money from illegal services and making it appear to be legally obtained. It is the processing of criminal profits to disguise their illegal origin. Terrorism financing (TF) includes the financing of terrorist acts, terrorists, and terrorist organisations.
What is money laundering?
Money laundering is the process by which criminally obtained money or other assets (criminal property) are exchanged for “clean” money or other assets with no obvious link to their criminal origins.
Criminal property may take any form, including money or money’s worth, securities, tangible property and intangible property. It also covers money, however come by, which is used to fund terrorism.
What is Counter Terrorist Financing (CTF)?
Terrorist financing is the process of legitimate businesses and individuals that may choose to provide funding to resource terrorist activities or organisations for ideological, political or other reasons. Firms must therefore ensure that: (i) customers are not terrorist organisations themselves; and (ii) they are not providing the means through which terrorist organisations are being funded.
Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.
Netrios is an ethical and transparent company, and it takes the responsibility to ensure and maintain that its assets and resources are not used for money laundering, terrorism financing or corruption. The British Virgin Islands Government regulatory scheme does not explicitly include Liquidity Providers (such as the Company). However, despite not being explicitly required by local laws the Company commits to identifying their customers where possible before providing certain services.
The Policy and the procedures discussed hereunder apply to all employees and entities of the Company involved in the provision of Liquidity Providing services, including but not limited to senior management, front-line employees, back-office personnel, and compliance officers.
The Compliance Department (CD) shall :
- perform all functions specifically assigned to them under this Policy;
- monitor compliance and report any significant concerns to the Board;
- conduct ongoing assessments of the risks of money laundering and terrorist financing faced by the Company and develop strategies to manage and mitigate those risks.
- Receive internal reports of (suspicions of) money laundering
- Investigate reports of suspicious events
- Ensure the adequacy of arrangements made for the awareness and training of staff and advisers
- Report at least annually to the firm’s governing body on the operation and effectiveness of the firm’s systems and controls.
- Monitor the day-to-day operation of anti-money laundering policies in relation to: the development of new products; the taking on of new customers; and changes in the firm’s business profile.
Any contacts by law enforcement or regulatory agencies related to the Policy shall be directed to the Compliance Department.
- Compliance with FATF Guidelines
The Company acknowledges the importance of adhering to the Financial Action Task Force (FATF) requirements and maintaining a strong commitment to combating money laundering and terrorist financing. As a reputable financial institution, we are committed to upholding the highest standards of compliance and actively participating in global efforts to combat illicit financial activities.
The FATF is an intergovernmental organization that sets international standards and promotes the effective implementation of measures to combat money laundering, terrorist financing, and other related threats to the integrity of the global financial system. We recognize the significance of aligning our AML/CFT practices with the FATF recommendations to ensure a robust and effective compliance framework.
To ensure compliance with FATF requirements, the company has implemented the following measures:
- Risk-Based Approach: The Company has adopted a risk-based approach to its AML/CFT policies and procedures, which enables the Company to identify, assess, and mitigate the specific risks associated with money laundering and terrorist financing. Risk assessments are conducted regularly to stay updated on emerging risks and adjust our controls accordingly.
- Customer Due Diligence: The Company adheres to the FATF’s recommendations on customer due diligence (CDD) by conducting thorough verification and screening procedures for all customers. This includes obtaining and verifying the necessary identification and beneficial ownership information, as well as conducting ongoing monitoring of customer transactions and activities.
- Record Keeping: The Company maintains comprehensive and accurate records of customer transactions, due diligence activities, and internal AML/CFT controls as mandated by the FATF. These records are securely stored and made available for inspection by regulatory authorities when required.
- Training and Awareness: The Company provides regular training programs and awareness sessions to its employees who carry out functions that are prone to AML/CFT risks to ensure they have a thorough understanding of the relevant AML regulations and FATF recommendations, their obligations, and the importance of compliance in preventing money laundering and terrorist financing.
By complying with FATF requirements, the Company demonstrates its commitment to maintaining a robust AML/CFT program and contribute to the global efforts in combating financial crime. The Company regularly reviews and updates its policies and procedures to align with any changes in FATF recommendations, ensuring that its compliance measures remain effective and up to date.
- Risk assessment
As a part of the Risk Based Approach, the Company conducts and documents a risk assessment of the ML/TF risks it is exposed to and develop strategies to mitigate them.
The process of risk assessment involves analyzing possible threats and vulnerabilities related to money laundering and terrorist financing that the Company may face.
Assessment of designated services
The Company periodically assesses the potential ML/TF risks relating to its provision of Liquidity Providing services and presents the details of the Assessments to Company’s Board.
The CO conducts periodic reviews of ML/TF risks and passes on any recommendations to the Board if required.
- Customer Identification and Verification
Before the Company may provide designated services to a customer, it shall first:
- collect certain minimum customer identification information.
- verify that information using reliable, independent sources or a third-party provider if required.
- identify and verify the beneficial owner(s) of a customer;
- identify whether a customer (and any beneficial owners) is a PEP (or an associate of a PEP) and take steps to establish the source of funds for the transaction when necessary.
- obtain information on the purpose and intended nature of the business relationship or transaction(s) when required.
- Transaction Monitoring
The Company routinely collects and monitors customer transactional activity on an ongoing basis in order to detect activity or behaviour that may be indicative of suspicious matters or other abnormal or atypical activity that may be suggestive of:
- circumstances that indicate the Customer may not be who they initially had claimed to be;
- circumstances that directly indicate the Customer may be seeking the delivery of services:
- in connection with the commission of a ML or TF offence;
- the existence in relation to a prospective Customer of one or more of the following risk indicators:
- The Customer engages, or seeks to engage, in transactions that appear to be structured.
- The Customer provides incomplete, incorrect or misleading identification information or documents.
- The Customer indicates, or otherwise makes it known, that the Customer is transacting for another party, and refuses to give any information relating to that other party.
- The Customer indicates, or otherwise acts in a way that raises the Company’s suspicions that, the Customer is or may be the target of fraud.
- The Customer uses, or attempts to use, multiple customer profiles.
In the above situations the Company applies Enhanced Due Diligence measures in order to mitigate the ML/TF risks associated with the customer.
- Know Your Customer (KYC)
The standard KYC requirement for customers who are private individuals are generally governed by the circumstances relating to the customer and the product type that is being dealt in, i.e. the level of risk attributed to the product whether it is a reduced risk, intermediate risk or an increased risk product. Taking that into account for reduced risk and intermediate risk products the following pieces of information are required as a standard for identification purposes:
- Full Name
- Residential Address
Verification of the information obtained must be based on reliable and independent sources – which might either be documents produced by the customer, or electronically by the firm, or by a combination of both. Where business is conducted face-to-face, firms should see originals of any documents involved in the verification.
If documentary evidence of an individual’s identity is to provide a high level of confidence, it will typically have been issued by a government department or agency, or by a court, because there is a greater likelihood that the authorities will have checked the existence and characteristics of the persons concerned.
If the identity is to be verified from documents, this should be based on:
- A government issued document which incorporates:
- The customer’s full name, and
- Their residential address
- Photographic Government Issued Identity Documents:
- Valid passport
- National Identity card
Alternatively, this can be done by a non-photographic government issued document which incorporates the customer’s full name, supported by a second document, which incorporates:
- The customer’s full name, and
- Their residential address.
- Government and Sanction List Screening
The Company is committed to complying with all applicable laws, regulations, and sanctions related to AML/CTF. To this end, the Company screens all customers against government and sanctions lists to ensure compliance.
The government and sanctions lists are maintained by various authorities, such as the European Union (EU), the U.S. Office of Foreign Assets Control (OFAC), and the United Nations (UN). The lists contain the names of individuals and entities that are subject to financial sanctions or other restrictions due to their involvement in terrorism, money laundering, or other criminal activities.
The Company screens all customers against the relevant government and sanctions lists at the time of customer onboarding and on an ongoing basis. If a customer is found to be on one of the aforementioned lists, the Company takes appropriate actions in accordance with applicable laws and regulations, which may include suspending their account, adding them to the Monitoring List, or terminating the business relationship.
- Politically exposed persons (PEPs)
The Company recognizes that politically exposed persons (PEPs) can pose a higher risk of ML and TF by virtue of their public positions and influence. Therefore, the Company has procedures in place to identify and conduct enhanced due diligence on PEPs.
The Company conducts PEP screening on all new customers during the onboarding process and also periodically screens existing customers to identify any changes in their PEP status.
If a customer is identified as a PEP, the Company conducts enhanced due diligence to gather additional information about the customer’s source of wealth, source of funds, transactions, and beneficial ownership (where applicable). The Company’s PEP screening process is regularly reviewed and updated by the CO to ensure its efficiency in identifying and mitigating ML/TF risks posed by PEPs.
- Due Diligence
The Company recognizes the importance of conducting thorough due diligence on its customers to ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Due diligence involves the collection and verification of customer information to assess the risks associated with money laundering and terrorist financing.
Customer Due Diligence (CDD):
Customer Due Diligence is a standard procedure that applies to all customers of the Company. It involves the collection and verification of essential customer information, such as their identity, address, and beneficial ownership. CDD helps establish the identity of the customer and assess their risk profile. All customers are required to undergo CDD to establish their legitimacy and integrity.
Enhanced Due Diligence (EDD):
Enhanced Due Diligence is an additional level of scrutiny that applies to customers who are deemed to pose a higher risk based on predetermined criteria. The decision to subject a customer to EDD is based on factors such as their risk profile, the nature of their business, jurisdictional risks, or other red flags. EDD procedures are more comprehensive and rigorous than regular CDD measures.
Additional Documentation for Source of Funds and Source of Wealth:
In certain cases, the Company may request additional documentation from customers to establish the source of funds and source of wealth. Source of Funds refers to the origin of the financial resources used in a customer’s transactions, while Source of Wealth refers to the origin of the customer’s overall wealth. These additional documents provide a deeper understanding of the customer’s financial activities, ensuring compliance with AML/CFT regulations and mitigating the risk of money laundering or terrorist financing.
The Company is committed to conducting thorough due diligence on all customers and ensuring compliance with AML/CFT regulations. Its procedures are designed to accurately identify customers, assess their risk levels, and obtain necessary information, including the source of funds and source of wealth. Regular training and updates are provided to employees to enhance their understanding of due diligence requirements and their role in maintaining a strong AML/CFT program.
- Restricted countries
The Company prohibits the provision of its services to customers in countries that are subject to economic and trade sanctions, as well as countries that are considered high-risk for ML/TF activities. The CO periodically reviews and updates the list of restricted countries as necessary and taking into account the aforementioned factors.
Additionally, the Company deems the customers from countries that are considered high risk for ML/TF activities as higher risk customers and conduct enhanced due diligence on them.