Anti-Money Laundering and Know Your Customer Statement
It is important to note that the services you will be able to provide to your customers with our products, in relation to crypto currencies, may be regulated in your jurisdiction/country.
You as an operator you are likely to need an AML/KYC Policy designed to be as compliant with your government regulation. You must prevent money laundering by aiming to meet global legislation obligations, specifically referring to:
• Bank Secrecy Act (BSA)
• Complaint with FinCEN provisions and state level requirements (money transmitter license licence (MTL)/ money service business (MSB)).
• Directive 2019/843
• AML 5 – The fifth EU anti-money laundering directive.
• Autorité des Marchés Financiers (AMF) and Autorité de contrôle prudentiel et de resolution (ACPR)
• Digital Assets Services (DASP), under the conditions defined in Article L. 54-10-3 of the Monetary and Financial Code in accordance with the PACTE Law.
• MLTF Regulations 2019
• The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (SI 2017 No. 692)
• UK Statutory Instruments 2019 No. 1511, as required by the Financial Conduct Authority.
Rest of the World
• Compliant with most jurisdictions around the world.
• US The Money Laundering Control Act of 1986 (Public Law 99-570) and the European Anti Money Laundering Directive 5.
You need to have adequate systems and controls in place to mitigate the risk of your firm being used to facilitate financial crime. Your AML Policy needs to set out the minimum standards which must be complied with and include:
The appointment of a Money Laundering Reporting Officer (MLRO) who has sufficient level of seniority and who has responsibility for oversight of compliance with relevant legislation, regulations, rules and industry guidance;
Establishing and maintaining a Risk Based Approach (RBA) towards assessing and managing the money laundering and terrorist financing risks to the company;
Establishing and maintaining risk-based customer due diligence, identification, verification and know your customer (KYC) procedures,
including enhanced due diligence for those customers presenting higher risk, such as Politically Exposed Persons (PEPs);
Establishing and maintaining risk-based systems and procedures to monitor on-going customer activity;
Procedures for reporting suspicious activity internally and to the relevant law enforcement authorities as appropriate by sending the national crimes agency (NCA) a suspicious activity report (SAR);
The maintenance of appropriate records for the minimum prescribed periods;
Training and awareness for all relevant employees.
Your AML program should be subjected to an internal audit at least annually.
If in the EU, you will need to report and store certain customer and transaction records in accordance with GDPR, as required.
It is advised that you have sophisticated algorithms, which in part we will provide, which will detect and flag unusual transactions.
Enhanced Customer Due Diligence (ECDD)
If a client has been evaluated to be at a heightened risk to the company, you should begin the process of conducting ECDD and obtain senior management approval before establishing a relationship, and take reasonable measures to establish the source of wealth and the source of funds. Examples of higher risk customers/transactions include but not limited to:
Politically Exposed Person (PEP);
Customers who are positively identified to have adverse profiles on watch lists;
Customers located in high-risk locations;
Record keeping helps you understand the customer’s risk status over the entire relationship with a customer. Record keeping helps you deal with its reporting obligations in submitting documents to the local financial intelligence unit for suspicions on money laundering or terrorist financing. Any activity determined suspicious by you, should resort in the customer being blocked and should no longer be permitted to engage in any transactions with you. Furthermore, an SAR (Suspicious activity report) should be filed and reported to the relevant authoritative department.
Again, if in the EU, all personal customer information must be stored in compliance with GDPR and only shared, if necessary, with third parties for the purpose of AML & ID verification purposes.
You are prohibited from transacting with individuals, companies and countries that are on prescribed Sanctions lists. Where appropriate, you must therefore screen against United Nations, European Union, UK Treasury and US Office of Foreign Assets Control (OFAC) sanctions lists in all jurisdictions in which you operate. In the UK for example, the official UK Government sanctions list (https://www.gov.uk/government/publications/financial-sanctionsconsolidated-list-of-targets/consolidated-list-of-targets) and many bank-grade third party databases should be used to identify such persons.
Furthermore, you reserve the right to conduct enhanced due diligence on all clients given worldwide approved risk-based policies. You also reserve the right to refuse a transaction or deny operation on a client or account at any time should suspicion arise that it may be connected to money laundering, criminal activity or any other predicate offense to money laundering. You must not enter into any business arrangement with anyone or group suspected of or directly involved in money laundering, or where funds have been sources or ends of an illegal activity. Should we, White Edge™ Technology LTD become aware that our customer (you) or our customer’s customer (your customer – the end user) is, has or will be engaging with such parties, we will terminate with immediate effect our services to them unless the customer (you) or customer’s customer (your customer – the end user) can prove to us otherwise.
In the event that you receive, during our request for documentation, deceptive documentation, contact details, business description or other false information, you should terminate your relationship with that customer. You and WhiteEdge™ are legally bound to report such misdemeanours to the relevant authorities, and as such the subject, business and its owners may be the subject to a criminal investigation.
Providing false, doctored, or deceptive documents is considered as fraud and will be treated as such. Tax Evasion and Fraud is a predicate offense to money laundering, and therefore, all assets derived from fraudulent transactions or suspicious activity may be seized and forfeited.
Our Counter-Terrorism Financing
As part of the information that is collected during your customer verification and AML procedures, if using our integrated third-party services, screening is conducted through worldwide databases. At the forefront, they will include global sanctions reports and government watch lists and rigorous screening processes. At any time, due to a requirement to satisfy any of the above verification methods, a client, business entity or any of the business entity owners or affiliates may be asked a specific document or piece of information to confirm their identity or provide additional information regarding any transaction, operations or even business dealings with certain individuals, institutions and dealings in geographical locations. Should a situation arise where the nature of the business, geographical specific regulations or account activity fall in the scope of noncompliance in any applicable law or regulation, you must inform your customer, business unit or any of the business owners or affiliates of the event and occurrence. For such instances, pre-verification and enhanced due diligence should be required prior to regaining active account status. In cases, where compliance is not achieved pursuing remediation measures, you should see fit to terminate the account and may report the event and surroundings to the applicable law enforcement and regulatory authorities.
Disclaimer: The above does not constitute legal advice but is merely an opinion based on personal experience and expertise on this subject.
Updated: January 24st 2021
Sean Mobio, CGMA
Finance Director – White Edge Technology Ltd