Anti Money Laundering Manual GLOBAL POP

1. DEFINITIONS

For the purposes of this Manual, unless the context shall prescribe otherwise:

“Beneficial Owner” means the natural person or natural persons, who ultimately owns or control the Client and/or the natural person on whose behalf a transaction or activity is being conducted. The Beneficial Owner shall at least include:

1. In the case of corporate entities:

   1. the natural person or natural persons, who ultimately own or control a legal entity through direct or indirect ownership or control of a sufficient percentage of the shares or voting rights in that legal entity, including through bearer share holdings, a percentage of 10% plus one share be deemed sufficient to meet this criterion

   2. the natural person or natural persons, who otherwise exercise control over the management of a legal entity.

2. In the case of legal entities, such as foundations and legal arrangements, such as trusts, which administer and distribute funds:

   1. where the future beneficiaries have already been determined, the natural person or natural persons who is the beneficiary of 10% or more of the property of a legal arrangements or entity

   2. where the individuals that benefit from the legal arrangement or entity have not yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates

   3. the natural person or natural persons who exercise control over 10% or more of the property of a legal arrangement or entity.

“Business Relationship” means a business, professional or commercial relationship which is connected with the professional activities of the Company and which was expected, at the time when the contact was established, to have an element of duration.

“Client” means any legal or physical person aiming to conclude a Business Relationship or conduct a

single transaction with the Company.

“Company” means GLOBAL POP LIQUIDITY SOLUTIONS LTD which is incorporated in the Republic of Vanuatu with registration number 14808

“Law” means the Anti-money Laundering and Counter-terrorism financing Act No. 13 of 2014.

“Manual” means the Company’s Anti Money Laundering Manual.

“Money Laundering and Terrorist Financing” means the Act No. 13 of 2014

“Money Laundering Offences” means an offence against section 6 of the counter Terrorism and Transactional Organized Crime Act [CAP313].

“politically exposed persons” means the natural persons who are or have been entrusted with prominent public functions in the Republic of Vanuatu or any other country and their immediate family members or persons known to be close associates of such persons (see also Section 11.8.6 of the Manual).

“Republic” means the Republic of Vanuatu.

“Supervisory body means:

1. the Reserve Bank of Vanuatu or;

2. the Vanuatu Financial Services Commission or;

3. the registrar of Cooperatives or;

4. the inspector of casinos or;

5. a body outside Vanuatu with functions similar to the Reserve Bank of Vanuatu or the Vanuatu Financial Services Commission or;

6. such other persons prescribed for the purposes of this definition” “Unit means the Financial Intelligence Unit”

2. INTRODUCTION

GLOBAL POP LIQUIDITY SOLUTIONS LIMITED is committed to applying the FATF recommendations, the requirements of the Law and relative Directives of the Local Regulator concerning the fight against money laundering and terrorism financing.

The purpose of the Manual is to lay down the Company’s internal practice, measures, procedures and

controls relevant to the prevention of Money Laundering and Terrorist Financing.

The Manual is developed and periodically updated by the Money Laundering Compliance Officer (hereinafter the “MLCO”) based on the general principles set up by the Company’s Board of Directors (hereinafter the “Board”) in relation to the prevention of Money Laundering and Terrorist Financing.

All amendments and/or changes of the Manual must be approved by the Board.

The Manual shall be communicated by the MLCO to all the employees of the Company that manage, monitor or control in any way the Clients’ transactions and have the responsibility for the application of the practices, measures, procedures and controls that have been determined herein.

The Manual has been prepared to comply with the provisions of the Law and the Supervisory body.

3. LEGAL FRAMEWORK

The pillars of the Company’s AML Policy are the following:

• Anti-money Laundering and Counter-terrorism financing Act No. 13 of 2014

The purpose of this legal framework is to define and criminalize the laundering of proceeds generated from all serious criminal offences aiming at depriving criminals from the profits of their crimes.

In accordance with the Law, licenced companies are obliged to set out policies and procedures for preventing money laundering activities. Those procedures, which are implemented by the Company, as these are requested by the Law, are the following:

1. Identification and due diligence procedures of clients.

2. Record keeping procedures in relation to clients’ identity and their transactions.

3. Internal reporting procedures to a competent person (e.g. the MLCO) appointed to receive and consider information that give rise to knowledge or suspicion that a client is engaged in money laundering activities.

4. Appropriate procedures of internal control, risk management, with the purpose of preventing money laundering activities.

5. The detailed examination of every transaction that due to its nature is considered vulnerable to money laundering, and especially for complicated or unusually large transactions and transactions that are taken place without an obvious financial or legal purpose.

6. Measures for making employees aware of the above mentioned procedures to prevent money laundering and of the legislation relating to money laundering.

7. Provision of regular training to their employees in the recognition and handling of transactions suspected to be associated with money laundering.

Stages of Money Laundering

Money laundering, the process by which criminals attempt to conceal the true origin and ownership of the proceeds of criminal activities, is accomplished in three stages:

1. Placement – the physical disposal of cash proceeds derived from criminal activity

2. Layering – separating the illicit proceeds from their source by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity

3. Integration – the provision of apparent legitimacy to wealth derived from crime. If the layering process is succeeded, integration schemes place the laundered proceeds back into the economy in such a way that they re-enter the financial system appearing as normal business funds

4. RESPONSIBILITIES OF THE BOARD OF DIRECTORS

The responsibilities of the Board in relation to the prevention of Money Laundering and Terrorist Financing include the following:

1. to determine, record and approve the general policy principles of the Company in relation to the prevention of Money Laundering and Terrorist Financing and communicate them to the MLCO

2. to appoint the MLCO and, where is necessary, assistant MLCOs and determine their duties and responsibilities, which are recorded in this Manual

3. to approve the Manual

4. to ensure that all relevant requirements of the Law and of the Directive are applied, and assure that appropriate, effective and sufficient systems and controls are introduced for achieving the abovementioned requirement

5. to ensure that the MLCO and his assistants, if any, and any other person who has been assigned with the duty of implementing the procedures for the prevention of Money Laundering and Terrorist Financing (i.e. personnel of the Corporate/Administration Department(s)), have complete and timely access to all data and information concerning Clients’ identity, transactions’ documents (as and where applicable) and other relevant files and information maintained by the Company so as to be fully facilitated in the effective execution of their duties, as included herein

6. to ensure that all employees are aware of the person who has been assigned the duties of the MLCO, as well as his assistants (if any), to whom they report, according to point (e) of Section of the Manual any information concerning transactions and activities for which they have knowledge or suspicion that might be related to Money Laundering and Terrorist Financing

7. to establish a clear and quick reporting chain based on which information regarding suspicious transactions is passed without delay to the MLCO, either directly or through his assistants, if any, and notifies accordingly the MLCO for its explicit prescription in the Manual

8. to ensure that the MLCO and the Head Corporate/Administration Department(s) have sufficient resources, including competent staff and technological equipment, for the effective discharge of their duties

9. to assess and approve the MLCO’s Annual Report of Section 7 of the Manual and take all action as deemed appropriate under the circumstances to remedy any weaknesses and/or deficiencies identified in the abovementioned report

10. to decide the corrective measures that need to be taken, following any deficiencies detected in the Internal Auditor’s report, as described in Section 5 of the Manual.

5. MONEY LAUNDERING COMPLIANCE OFFICER

The Money Laundering Compliance Officer (MLCO) shall lead the Company’s Money Laundering Compliance procedures and processes and report directly to the Board of Directors of the Company. The MLCO shall also have access to all relevant information necessary to perform his duties.

Once a Company employee has reported his/her suspicion to the MLCO he/she shall be considered to have fully satisfied his/her statutory requirements, under the relevant Law.

The MLCO shall approve also the Client file before accepting a Client, together (but prior to) the Head of Corporate department or Corporate administrator.

The duties of the MLCO shall include, inter alia, the following:

1. to design, based on the general policy principles of the Company mentioned in point (a) of Section 4 of the Manual, the internal practice, measures, procedures and controls relevant to the prevention of Money Laundering and Terrorist Financing, and describe and explicitly allocate the appropriateness and the limits of responsibility of each department that is involved in the abovementioned. It is provided that, the above measures and procedures for the prevention of the abuse of new technologies and systems providing financial services, for the purpose of Money Laundering and Terrorist Financing is appropriately considered and managed in the course of daily activities of the Company with regard to the development of new products and possible changes in the Company’s economic profile (e.g. penetration into new markets)

2. to develop and establish the Client Acceptance Policy and submit it to the Board for consideration and approval

3. to review and update the Manual as may be required from time to time, and for such updates to be communicated to the Board for their approval

4. to monitor and assess the correct and effective implementation of the policy mentioned in point (a) of Section 4 of the Manual, the practices, measures, procedures and controls of point (a) above and in general the implementation of the Manual. In this respect, the MLCO shall apply appropriate monitoring mechanisms (e.g. on-site visits to different departments of the Company) which will provide him with all the necessary information for assessing the level of compliance of the departments and employees of the Company with the procedures and controls which are in force. In the event that the MLCO identifies shortcomings and/or weaknesses in the application of the required practices, measures, procedures and controls, gives appropriate guidance for corrective measures and where deems necessary informs the Board

5. to receive information from the Company’s employees which is considered to be knowledge or suspicion of money laundering or terrorist financing activities or might be related with such activities. The information is received in a written report form (hereinafter the “Internal Suspicion Report”), a specimen of such report is attached in Appendix A of the Manual

6. to evaluate and examine the information received as per point (e) above, by reference to other relevant information and discuss the circumstances of the case with the informer and where appropriate, with the informer’s superiors. The evaluation of the information of point (e) above shall be done on a report hereinafter the “Internal Evaluation Report”, a specimen of such report is attached in Appendix B of the Manual

7. if following the evaluation described in point (f) above, the MLCO decides to notify the Money Laundering Combat Unit of the Republic (hereinafter the “Unit”), then he should complete a written report and submit it to the Unit the soonest possible. A template of such report (hereinafter the “MLCO Report to the Unit”), is attached in Appendix C of the Manual. It is provided that, after the submission of the MLCO Report to the Unit, the accounts involved and any other connected accounts, are closely monitored by the MLCO and following any directions from the Unit, thoroughly investigates and examines all the transactions of the accounts, as applicable and relevant to the Investment and Ancillary Services

8. if following the evaluation described in point (f) above, the MLCO decides not to notify the Unit then he should fully explain the reasons for such a decision on the MLCO's Internal Evaluation Report.

9. to act as a first point of contact with the Unit, upon commencement of and during an investigation as a result of filing a report to the Unit according to point (g) above

10. to ensure the preparation and maintenance of the lists of Clients categorized following a risk based approach, which contains, among others, the names of Clients, their account number and the dates of the commencement of the Business Relationship. Moreover, the MLCO ensures the updating of the said list with all new or existing Clients, in the light of any additional information obtained

11. to detect, record, and evaluate, at least on an annual basis, all risks arising from existing and new Clients, new financial instruments and services and update and amend the systems and procedures applied by the Company for the effective management of the aforesaid risks

12. to evaluate the systems and procedures applied by a third person on whom the Company relies for Client identification and due diligence purposes, according to Section 11.10 of the Manual, and approves the cooperation with it

13. to ensure that the branches and subsidiaries of the Company, if any, have taken all necessary measures for achieving full compliance with the provisions of the Manual, in relation to Client identification, due diligence and record keeping procedures

14. to provide advice and guidance to the employees of the Company on subjects related to money laundering and terrorist financing

15. to acquire the knowledge and skills required for the improvement of the appropriate procedures for recognizing, preventing and obstructing any transactions and activities that are suspected to be associated with money laundering or terrorist financing

16. to determine whether the Company's departments and employees need further training and education for the purpose of preventing Money Laundering and Terrorist Financing and to organize appropriate training sessions/seminars. In this respect, the MLCO prepares and applies an annual staff training program. Also, the MLCO assesses the adequacy of the education and training provided.

17. to respond to all requests and queries from the Unit and Supervisory Body, provide all requested information and fully cooperate with the Unit and Supervisory Body.

18. to maintain a registry which includes the reports of points (e), (f) and (g), and relevant statistical information (e.g. the department that submitted the internal report, date of submission to the MLCO, date of assessment, date of reporting to the Unit), the evaluation reports of point (d) and all the documents that verify the accomplishment of his duties. The MLCO shall be expected to avoid errors and/or omissions in the course of discharging his duties and, most importantly, when validating the reports received on money laundering suspicions, as a result of which a report to the Supervisory Body may or may not be filed. He shall be also expected to act honestly and reasonably and to make his determination in good faith. In this connection, it should be emphasized that the MLCO's decision may be subject to the subsequent review of Supervisory Body which, in the course of examining and evaluating the anti-money laundering procedures of financial services firms and their compliance with the provisions of the Law, is legally empowered to report to the Attorney General a financial services firm which, in its opinion, does not comply with the provisions of the Law, or to the Supervisory Body where it forms the opinion that actual money laundering has been carried out.
    
    

6. RISK BASED APPROACH & THE RISK SCORING PROGRAM

6. 1. Scope & Application

GLOBAL POP LIQUIDITY SOLUTIONS LIMITED (“the Company”) has developed a program in order to be able to trace areas where the risk of money laundering and terrorist financing appears to be higher so as to apply the appropriate measures and procedures.

The Company, fully committed to effort and actions against the probability of money laundering and terrorist financing occurring through the use of its services, recognises that the money laundering and terrorist financing threat varies across clients, countries, services and financial instruments.

For the above reasons, the Company has developed this Risk-Scoring Program, which assesses in a qualitative and quantitative way the money laundering and terrorist financing risks faced. A risk-based approach involves the following measures and procedures:

1. identifying and assessing the money laundering and terrorist financing risks emanating from particular clients, financial instruments, services, and geographical areas of operation of the Company and its clients;

2. documenting in the Company’s AML Policy all the measures, procedures and controls to ensure their uniform application by persons specifically appointed for that purpose by the Board of Directors;

3. managing and mitigating the assessed risks by the application of appropriate and effective measures, procedures and controls;

4. continually monitoring and improving the effective operation of the policies, procedures and controls.

6. 2. Identification, Recording and Evaluation of Risks

It is the MLCO’s responsibility to identify, record and evaluate all potential risks. The successful establishment of measures and procedures on a risk-based approach requires all measures, procedures and mechanisms to be implemented effectively, weaknesses to be promptly identified and improvements to be made wherever necessary.

The Risk Scoring Program involves the identification, recording and evaluation of the risks that have to be managed. The Company assesses and evaluates the risks it faces, for usage of the services provided for the purpose of money laundering or terrorist financing.

The identification, recording and evaluation of risks that the Financial Organisation faces presupposes the finding of answers to the following questions:

1.  What risk is posed by the Company’s clients? For example:

   1. complexity of ownership structure of legal persons

   2. companies with bearer shares

   3. companies incorporated in offshore centres

   4. politically exposed persons

   5. clients engaged in transactions which involve significant amounts of cash

   6. clients from high risk countries or from countries known for high level of corruption or organized crime or drug trafficking (please refer to appendix D - Risk scoring depending on Jurisdictions).

2.  What risk is posed by a client’s behaviour? For example:

   1. client transactions where there is no apparent legal financial/commercial rationale

   2. situations where the origin of wealth and/or source of funds cannot be easily verified

   3. unwillingness of clients to provide information on the beneficial owners of a legal person

3.  How did the client communicate the Financial Organisation? For example:

   1. non face to face client

   2. client introduced by a third person

4.  What risk is posed by the services and financial instruments provided to the client? For example:

   1. services that allow payments to third persons

   2. large cash deposits or withdrawals
      

6. 3. The extent of the Risk Scoring Program

The extent of the Risk Scoring Program takes into account the following:

1. the future, upcoming scale of the Company’s services

2. the fact that the foreign exchange provided for trading reasons is considered a complex product (risk associated with the Company’s services)

3. the wide geographical spread of the Company’s clients

4. the fact that the vast majority of the Company’s clients are non-face to face

5. the clients’ economic profile

6. the volume and size of clients’ transactions

7. deviations from the anticipated level of transactions

8. the country of origin and destination of clients’ funds

9. the nature of business transactions

6. 4. Measures for Risk Management and Mitigation

The Company adopts measures and control procedures that are proportionate to the risk it faces for the use of services provided for the purpose of money laundering or terrorist financing.

When the Company identifies the risks it faces, then it implements the appropriate measures and procedures for their correct management and mitigation, which involve the verification of the clients’ identity, the collection of information for the construction of their economic profile and the monitoring of their transactions and activities.

Taking into consideration the assessed risk, the Company determines the type and extent of measures it adopts, to manage and mitigate the identified risks cost effectively. These measures and procedures may, for example, include:

1. adaptation of the client due diligence procedures in respect of clients in line with their assessed money laundering and terrorist financing risk

2. requiring the quality and extent of requisite identification data for each type of client to be of a certain standard (e.g. documents from independent and reliable sources, third person information, documentary evidence )

3. obtaining additional data and information from the clients, where this is appropriate for the proper and complete understanding of their activities and source of wealth and for the effective management of any increased risk emanating from the particular business relationship or the occasional transaction; and

4. on-going monitoring of high risk clients’ transactions and activities

The risk assessment and the implementation of the measures and procedures described above lead to the categorisation of clients to (a) Low Risk Category, (b) High Risk Category, and c) Medium Risk Category for the rest of the clients.

The said categorisation is based on criteria which reflect the possible risk causes and each category is accompanied with the relevant due diligence procedures, regular monitoring and controls, as described in the Company’s Client Acceptance Procedure.

The Company keeps lists for the three categories of clients – as described above – which contain, inter alia, the clients’ names, their account numbers and the date of commencement of business relationship. These lists are promptly updated with all new or existing clients, following the Company’s categorization.

7. CLIENT ACCEPTANCE POLICY

7. 1. Introduction

The present Client Acceptance Policy, has been developed according to the Law.

This Policy has been developed in alignment with the various risks faced by the Company by its clients

and its products and according to the Company’s Risk Scoring Program.

The Policy defines:

• the criteria for accepting new Clients,

• the categories of Clients who are not acceptable, and

• the criteria for categorization of clients on a risk basis in the following three categories:

  • Low Risk,

  • Normal Risk and

  • High Risk

The MLCO shall be responsible for applying all the provisions of the Policy. In this respect, the Head of the Corporate/Administration Department(s) shall also be assisting the MLCO with the implementation of the Policy, as applicable.

The Internal Auditor shall review and evaluate the adequate implementation of the Policy and its relevant provisions, at least annually.

A Client’s account is activated and the business relationship starts only after all Due Diligence and Identification procedures have been finalized, according to Section 8 of this Manual.

No account shall be opened in anonymous or fictitious names and no account shall be opened unless the prospective Client is approved by:

• the MLCO and

• the Managing Director

7. 2. Criteria for Accepting New Clients (based on their respective risk)

This Section describes the criteria for accepting new Clients based on their risk categorization. Low Risk Clients

The Company shall follow the Simplified Client Identification and Due Diligence Procedure for low risk Clients, according to Section 8.7.

Normal Risk Clients

The Company shall accept Clients categorized as normal risk ones, according to the provisions mentioned in Section 7.1 and will follow the Normal Client Identification and Due Diligence Procedure for normal risk Clients, according to Section 8.8.

High Risk Clients

The Company shall follow the Enhanced Client Identification and Due Diligence Procedure for high risk Clients, according to Section 8.8.

7. 3. Not Acceptable Clients

The following list predetermines the type of Clients who are not acceptable for establishing a Business Relationship or an execution of an Occasional Transaction with the Company:

• Clients who fail or refuse to submit, the requisite data and information for the verification of his identity and the creation of his economic profile, without adequate justification

• Shell Banks

7. 4. Client Categorisation Criteria

This Section defines the criteria for the categorization of Clients based on their risk. The MLCO shall be responsible for categorizing Clients in one of the following three (3) categories based on the criteria of each category set below:

Low Risk Clients

The following types of Clients can be classified as low risk Clients with respect to the Money Laundering and Terrorist Financing risk which the Company faces:

• credit or financial institution covered by the EU Directive

• credit or financial institution carrying out one or more of the financial business activities as these are defined by the Law and which is situated in a country outside the EEA, which:

  • in accordance with a decision of the Advisory Authority, imposes requirements equivalent to those laid down by the EU Directive and

  • it is under supervision for compliance with those requirements

• listed companies whose securities are admitted to trading on a Regulated Market in a country of the EEA or in a third country which is subject to disclosure requirements consistent with community legislation

• domestic public authorities of countries of the EEA

It is provided that, in the cases mentioned above, the Company has to gather sufficient information to establish if the Client qualifies as a low-risk Client. In this respect, the MLCO shall be responsible to gather the said information. The said information shall be duly documented and filed, as applicable, according to the recording keeping procedures described in Section x.

Normal Risk Clients

The following types of Clients can be classified as normal risk Clients with respect to the Money Laundering and Terrorist Financing risk which the Company faces, reflected in the Company’s Risk Scoring Program:

any Client who does not fall under the ‘Low Risk Clients’ or ‘High Risk Clients’ categories.

High Risk Clients

The Company, complying with the Law, has a Risk Scoring Program in place which is not only is integrated in the Client Acceptance Procedure, but is also part of a Dynamic Risk Management. As said, the Company will assess each client in terms of risk, by means of use of a Client Risk Scoring Card, in order to categorize him into one of the three categories (Low-Normal-High).

Nevertheless, there are some categories, pertained as well in the Risk Scoring Card for each Client that will directly classify him as High Risk:

• Clients who are not physically present for identification purposes (non face-to-face Clients)

• Clients whose own shares or those of their parent companies (if any) have been issued in bearer form

• trust accounts

• ‘Client accounts’ in the name of a third person

• PEPs’ accounts

• Clients who are involved in electronic gambling/gaming activities through the internet

• Clients 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 or terrorist financing

• any other Client determined by the Company itself to be classified as such

8. CLIENT DUE DILIGENCE AND IDENTIFICATION PROCEDURES

8. 1. Application of Client Due Diligence and Identification Procedures

The Company will ensure that the Client identification records remain updated with all relevant identification data and information, throughout the business relationship.

The Company shall duly apply Client identification procedures and Client due diligence measures in the following cases:

1. when establishing a Business Relationship

2. when carrying out Occasional Transactions amounting to USD 10,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked

3. when there is a suspicion of money laundering or terrorist financing, regardless of the amount of the transaction

4. when there are doubts about the veracity or adequacy of previously Client identification data.

5. during account monitoring –as described in Section 12 and as detailed in the Company’s Internal Operations’ Manual, where the relative timeframes for a regular review, examination and update of Client Identification are included. The outcomes of such reviews shall be kept in the respective Client file.

The MLCO shall:

1. ensure that the Client identification records remain completely updated with all relevant identification data and information throughout the Business Relationship.

2. examine and check, on a regular basis, the validity and adequacy of the Client identification data and information that he maintains, especially those concerning high risk Clients.

8. 1. 1 Responsibilities

The MLCO has the responsibility to apply the relevant Client Due Diligence Identification Procedures for the cases listed above, by using Template Checklists (Appendix E for Natural Persons and Appendix F for Legal Entities) according to the requirements of the Law.

The Head of Corporate Department or Corporate administrator has the responsibility to collect and file the relevant Client identification documents, according to the Recording Keeping Procedure.

8. 2. Transactions that Favour Anonymity

In the case of Clients’ transactions via internet, phone, fax or other electronic means where the Client is not present so as to verify the authenticity of his signature or that he is the real owner of the account or that he has been properly authorised to operate the account, the Company applies reliable methods, procedures and control mechanisms over the access to the electronic means so as to ensure that it deals with the true owner or the authorised signatory of the account.

8. 3. Failure or Refusal to Submit Information for the Verification of Clients’ Identity

Failure or refusal by a Client to submit, before the establishment of a Business Relationship or the execution of an occasional transaction, the requisite data and information for the verification of his identity and the creation of his economic profile (Section 8.5), without adequate justification constitutes elements that may lead to the creation of a suspicion that the Client is involved in money laundering or terrorist financing activities. In such an event, the Company shall not proceed with the establishment of the Business Relationship or the execution of the occasional transaction while at the same time the MLCO considers whether it is justified under the circumstances to submit a report to the Supervisory body, according to Section 6 (g).

If, during the Business Relationship, a Client fails or refuses to submit, within a reasonable timeframe, the required verification data and information according to Section 8, the Company shall terminate the Business Relationship and archives all the accounts of the Client while at the same time examines whether it is justified under the circumstances to submit a report to Supervisory body, according to Section 6 (g).

8. 4. Timing of Application of the Due Diligence and Client Identification Procedures

The MLCO shall be responsible for the application of the following provisions:

1. The verification of the identity of the Client and the Beneficial Owner shall be performed before the establishment of a Business Relationship or the carrying out of a transaction.

2. By way of derogation from point (1) above, the verification of the identity of the Client and the Beneficial Owner shall be completed during the establishment of a Business Relationship if this is necessary not to interrupt the normal conduct of business and where the risk of money laundering or terrorist financing occurring is low. In such situations these procedures shall be completed as soon as possible after the initial contact and before any transactions are conducted.

3. In cases where the Company is unable to comply with points 1(a) to 1(e) of Section 8.5 of the Manual, the Company shall not carry out any transaction through a bank account (as applicable), establish a Business Relationship or carry out an Occasional Transaction and consider making a report to the Supervisory body.

4. Identification procedures and Client due diligence requirements shall be applied not only to all new Clients but also to existing Clients at appropriate times, depending on the level of risk of being involved in money laundering or terrorist financing (Section 8.1 (b) to (d)).
   

8. 5. Construction of an Economic Profile and General Client Identification and Due Diligence Principles

1. The construction of the Client’s economic profile needs to include/follow the principles below:

   1. the Company shall be satisfied that it’s dealing with a real person and, for this reason, the Company shall obtain sufficient evidence of identity to verify that the person is who he claims to be. Furthermore, the Company shall verify the identity of the Beneficial Owner(s) of the Clients’ accounts. In the cases of legal persons, the Company shall obtain adequate data and information so as to understand the ownership and control structure of the Client. Irrespective of the Client type (e.g. natural or legal person, sole trader or partnership), the Company shall request and obtain sufficient data and information regarding the Client business activities and the expected pattern and level of transactions. However, it is noted that no single form of identification can be fully guaranteed as genuine or representing correct identity and, consequently, the identification process will generally need to be cumulative.

   2. the verification of the Clients’ identification shall be based on reliable data and information issued or obtained from independent and reliable sources, meaning those data, and information that are the most difficult to be amended or obtained illicitly

   3. a person’s residential and business address will be an essential part of his identity

   4. the Company will never use the same verification data or information for verifying the Client’s identity and verifying its home address

   5. the data and information that are collected before the establishment of the Business Relationship, with the aim of constructing the Client’s economic profile and, as a minimum, shall include the following:

      1. the purpose and the reason for requesting the establishment of a Business Relationship

      2. the anticipated account turnover and the nature of the transactions

      3. the Client’s size of wealth and annual income and the clear description of the main business/professional activities/operations

   6. the data and information that are used for the construction of the Client-legal person’s economic profile shall include, inter alia, the following:

      1. the name of the company

      2. the country of its incorporation

      3. the head offices address

      4. the names and the identification information of the Beneficial Owners

      5. the names and the identification information of the directors

      6. the names and the identification information of the authorised signatories

      7. financial information

      8. the ownership structure of the group that the Client-legal person may be a part of (country of incorporation of the parent company, subsidiary companies and associate companies, main activities and financial information).

The said data and information are retained in the Client’s file along with all other documents as well as all internal records of meetings with the respective Client. These are updated regularly or whenever new information emerges that needs to be added to the economic profile of the Client or alters existing information that makes up the economic profile of the Client.

7. identical data and information with the above mentioned shall be obtained in the case of a Client- natural person, and in general, the same procedures with the above mentioned shall be followed
   

8. Client transactions transmitted for execution, shall be compared and evaluated against the anticipated account’s turnover, the usual turnover of the activities/operations of the Client and the data and information kept for the Client’s economic profile. Significant deviations are investigated and the findings are recorded in the respective Client’s file. Transactions that are not justified by the available information on the Client, are thoroughly examined so as to determine whether suspicions over money laundering or terrorist financing arise for the purposes of submitting an internal report to the MLCO, according to Section 5 (e), and then by the latter to the Unit, according to Section 5 (g).

2. The Company shall apply each of the Client due diligence measures and identification procedures set out in point (1) above, but may determine the extent of such measures on a risk-sensitive basis depending on the type of Client, Business Relationship, product or transaction. The Company shall be able to demonstrate to CyBAR that the extent of the measures is appropriate in view of the risks of the use of the Investment and Ancillary Services for the purposes of Money Laundering and Terrorist Financing.

3. For the purposes of the provisions relating to identification procedures and Client due diligence requirements, proof of identity is satisfactory if-

   1. it is reasonable possible to establish that the Client is the person he claims to be; and,

   2. the person who examines the evidence is satisfied, in accordance with the procedures followed under the Law, that the Client is actually the person he claims to be.

The construction of the Client’s economic profile according to the provisions above shall be

undertaken by the MLCO.

In this respect, the data and information collected for the construction of the economic profile shall be fully documented and filed, as applicable, by the Head of the Corporate/Administration Department(s).

8. 6. Further Obligations for Client Identifications and Due Diligence Procedures

Despite the obligation described in point (1) above and while taking into consideration the level of risk, if at any time during the Business Relationship, the Company becomes aware that reliable or adequate data and information are missing from the identity and the economic profile of the Client, then the Company takes all necessary action, by applying the Client identification and due diligence procedures according to the Manual, to collect the missing data and information, the soonest possible, so as to identify the Client and update and complete the Client’s economic profile.

In addition to the obligation of points (1) and (2) above, the Company shall check the adequacy of the data and information of the Client’s identity and economic profile, whenever one of the following events or incidents occurs:

1. an important transaction takes place which appears to be unusual and/or significant compared to the normal pattern of transactions and the economic profile of the Client

2. a material change in the Client’s legal status and situation, such as:

   1. change of directors/secretary

   2. change of registered shareholders and/or Beneficial Owners

   3. change of registered office

   4. change of trustees

   5. change of corporate name and/or trading name

   6. change of the principal trading partners and/or undertaking of major new business activities

3. a material change in the way and the rules the Client’s account operates, such as:

   1. change in the persons that are authorised to operate the account

   2. application for the opening of a new account for the provision of new financial instruments.

8. 7. Simplified Client Identification and Due Diligence Procedures

With respect to the provisions of the Law and the Directive for simplified Client Identification and Due Diligence Procedures, the following shall apply:

1. The Company may not apply the measures described in points (a), (b) and (d) of Section 8.1, point

(1) of Section 8.4 and Sections 8.5 and 8.6 of the Manual in the cases where the Client is categorised as a low risk Client according to the criteria set in Section 7.4.

Furthermore, where the Client is categorised as a low-risk Client (according to the criteria set in Section 7.4) the verification of the identity of the Client and the Beneficial Owner may be completed during the establishment of a Business Relationship if this is necessary not to interrupt the normal conduct of business and where the risk of money laundering or terrorist financing occurring is low. In such situations these procedures shall be completed as soon as possible after the initial contact and before any transactions are conducted.

2. It is also not required that the provisions in Section 8.1 (a), (b) and (d), Section 8.4 (1) and Sections

8.5 and 8.6 , be applied, as applicable and appropriate, in respect of:

1. life insurance policies where the annual premium is no more than USD 1,000 or the lump sum is not more than USD 2,500

2. insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral

3. a pension or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member’s interest under the scheme

4. electronic money,

   1. if the device cannot be recharged, the maximum amount stored in the device is no more than USD 150; or

   2. if the device can be recharged, a limit of USD 2,500 is imposed on the total amount transacted in a calendar year, except when an amount of USD 1,000 or more is redeemed in the same calendar year by the bearer.

3. It is provided that the Company shall collect sufficient information, so as to decide whether the Client can be exempted according to the provisions already mentioned in Section 7.4. The Company when assessing the above mentioned shall pay special attention to any activity of those Clients or to any type of transactions which may be regarded as particularly likely, by its nature, to be used or abused for money laundering or terrorist financing purposes.

4. The Company shall not consider that Clients or transactions referred to in points (1) and (2) above represent a low risk of money laundering or terrorist financing if there is information available to suggest that the risk of money laundering or terrorist financing may not be low.

5. With respect to public authorities or public bodies of the EEA countries, for which the provisions of Section 8.5 (1) may not be applied, they must fulfil all the following criteria:

   1. the Client has been entrusted with public functions pursuant to the Treaty on European Union, the Treaties on the Communities or Community secondary legislation

   2. the Client’s identity is publicly available, transparent and certain
      
      
      

6. the activities of the Client, as well as its accounting practices, are transparent

7. either the Client is accountable to a community institution or to the authorities of a member

state, or appropriate check and balance procedures exist ensuring control of the Client’s activity.

8. 8. Normal and Enhanced Client Identification and Due Diligence Procedure

8. 8. 1. General

The MLCO shall apply normal due diligence measures, according to Sections 8.1, 8.4, 8.5 and 8.6 with respect to the Clients categorised as normal risk Clients, according to the criteria set in Section for 7.4 for Normal Risk Clients.

The MLCO shall apply enhanced due diligence measures, in addition to the measures referred to in Sections 8.1, 8.4, 8.5 and 8.6, with respect to the Clients categorised as high risk Clients according to the criteria set in Section 7.4 for High Risk Clients.

These measures include the following:

1. where the Client has not been physically present for identification purposes, the Company shall apply one or more of the following measures:

   1. obtain additional documents, data or information for verifying the Client’s identity

   2. take supplementary measures to verify or certify the documents supplied, or requiring confirmatory certification by a credit or financial institution

   3. ensure 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 within the EEA.

2. In respect of cross-frontier correspondent banking relationships with credit institutions-Clients from third countries, the Company shall:

   1. gather sufficient information about the credit institution-Client to understand fully the nature of the business and the activities of the Client and to assess, from publicly available information, the reputation of the institution and the quality of its supervision

   2. assess the systems and procedures applied by the credit institution-Client for the prevention of Money Laundering and Terrorist Financing

   3. obtain approval from the Senior Management before entering into correspondent bank account relationship

   4. document the respective responsibilities of the person engaged in financial or Other Business Activities and of the credit institution-Client

   5. with respect to payable-through accounts, must be ensured that the credit institution-Client has verified the identity of its Clients and performed ongoing due diligence on the Clients having direct access to the correspondent bank accounts and that it is able to provide relevant Client’s due diligence data to the correspondent institution, upon request.

3. With respect to transactions or Business Relationships with PEPs, the Company shall:

   1. have appropriate risk-based procedures to determine whether the Client is a PEP

   2. have Senior Management approval for establishing Business Relationships with such Clients

   3. take adequate measures to establish the source of wealth and source of funds that are involved in the Business Relationship or transaction

   4. conduct enhanced ongoing monitoring of the Business Relationship.

Below are described due diligence and identification procedures with respect to high risk Clients:

8. 8. 2. Non face-to-face Clients

The MLCO shall apply the following with respect to non face-to-face Clients:

1. In situations where a Client, especially a non-resident of the Republic, requests the establishment of a Business Relationship or an Occasional Transaction through mail, telephone, or the internet without presenting himself for a personal interview, the Company must follow the established Client identification and due diligence procedures, as applied for Clients with whom it comes in direct and personal contact and obtain exactly the same identification information and documents. However, due to the difficulty in matching the Client with the collected identification data, the Company shall apply enhanced Client identification and due diligence measures, in line with the provisions of Section 8.8.1 of the Manual, so as to effectively mitigate the risks associated with such Business Relationship or Occasional Transaction.

2. Practical procedures that can be applied as implementation of the measures of points (a)(i) and (a)(ii) of Section 8.8.1 regarding non face-to-face Clients of the Company are the following:

   1. direct confirmation of the prospective Client’s true name, address and signature from a bank

operating in his country of origin

2. obtaining a reference letter from a third person, according to Section 8.10

3. telephone contact with the Client at his residence or office, before the establishment of a Business Relationship or the Occasional Transaction, on a telephone number which has been verified from a reliable and independent source

4. contact with the Client through mail in an address previously verified by the Company from independent and reliable sources.

3. The provisions of point (1) of Section 8.8.1 are also applied to companies or other legal persons requesting the establishment of a Business Relationship or an Occasional Transaction through mail, telephone or internet. The Company shall take additional measures for ensuring that the companies or other legal persons operate from the address of their main offices and carry out legitimate business activities.

8. 8. 3. Account in names of companies whose shares are in bearer form

The MLCO shall apply the following with respect to accounts in names of companies whose shares are in bearer form:

1. The Company may accept a request for the establishment of a Business Relationship or for an Occasional Transaction from companies whose own shares or those of their parent companies (if any) have been issued in bearer form by applying, in addition to the procedures of Section 11.9.6, all the following supplementary due diligence measures:

   1. the Company takes physical custody of the bearer share certificates while the Business Relationship is maintained or obtains a confirmation from a bank operating in the Republic or a country of the EEA that it has under its own custody the bearer share certificates and, in case of transferring their ownership to another person, shall inform the Company accordingly

   2. the account is closely monitored throughout its operation. At least once a year, a review of the accounts’ transactions and turnover is carried out and a note is prepared summarising the results of the review which shall be kept in the Client’s file

   3. if the opening of the account has been recommended by a third person as defined in Section 8.10, at least once every year, the third person who has introduced the Client provides a written confirmation that the capital base and the shareholding structure of the company-Client or that of its holding company (if any) has not been altered by the issue of new bearer shares or the cancellation of existing ones. If the account has been opened directly by the company-Client, then the written confirmation is provided by the company-Client’s directors

2. when here is a change to the Beneficial Owners, the Company examines whether or not to permit the continuance of the account’s operation.

8. 8. 4. Trust accounts

The MLCO shall apply the following with respect to trust accounts:

1. When the Company establishes a Business Relationship or carries out an Occasional Transaction with trusts, it shall ascertain the legal substance, the name and the date of establishment of the trust and verify the identity of the trustor, trustee and Beneficial Owners, according to the Client identification procedures prescribed in throughout Section 8 of this Manual.

2. Furthermore, the Company shall ascertain the nature of activities and the purpose of establishment of the trust as well as the source and origin of funds requesting the relevant extracts from the trust deed and any other relevant information from the trustees. All relevant data and information shall be recorded and kept in the Client’s file.

8. 8. 5. ‘Client accounts’ in the name of a third person

The MLCO shall apply the following with respect to “Client accounts” in the name of a third person:

1. The Company may open “client accounts” (e.g. omnibus accounts) in the name of financial institutions from EEA countries or a third country which, in accordance with a relevant decision of the Advisory Authority it has been determined that the relevant third country applies procedures and measures for preventing Money Laundering and Terrorist Financing equivalent to the requirements of the EU Directive. In these cases the Company shall ascertain the identity of the abovementioned financial institutions according to the Client identification procedures prescribed in throughout Section 8.

2. In the case that the opening of a “client account” is requested by a third person acting as an auditor/accountant or an independent legal professional or a trust and company service provider situated in a country of the EEA or a third country which, in accordance with a relevant decision of the Advisory Authority it has been determined that the relevant third country applies procedures and measures for preventing money laundering and terrorist financing equivalent to the requirements of the EU Directive, the Company shall proceed with the opening of the account provided that the following conditions are met:

   1. the third person is subject to mandatory professional registration in accordance with the relevant laws of the country of operation

   2. the third person is subject to regulation and supervision by an appropriate competent authority in the country of operation for anti-Money Laundering and Terrorist Financing purposes

   3. the MLCO has assessed the Client identification and due diligence procedures implemented by the third person and has found them to be in line with the Law and the Directive. A record of the assessment should be prepared and kept in a separate file maintained for each third person

   4. the third person makes available to the Company all the data and documents prescribed in Section 8.10 (1).

8. 8. 6. “Politically Exposed Persons” accounts

The Company shall apply the following with respect to the accounts of “Politically Exposed Persons”:

1. The establishment of a Business Relationship or the execution of an Occasional Transaction with persons holding important public positions in a foreign country and with natural persons closely related to them, may expose the Company to enhanced risks, especially if the potential Client seeking to establish a Business Relationship or the execution of an Occasional Transaction is a PEP, a member of his immediate family or a close associate that is known to be associated with a PEP.

   The Company shall pay more attention when the said persons originate from a country which is widely known to face problems of bribery, corruption and financial irregularity and whose anti-money laundering laws and regulations are not equivalent with international standards.
   
   

2. In order to effectively manage such risks, the Company shall assess the countries of origin of its Clients in order to identify the ones that are more vulnerable to corruption or maintain laws and regulations that do not meet the 40+9 requirements of the FATF, according to Section 8.8.8 of the Manual.

   With regard to the issue of corruption, one useful source of information is the Transparency International Corruption Perceptions Index which can be found on the website of Transparency International at www.transparency.org.

   With regard to the issue of adequacy of application of the 40+9 recommendations of the FATF, the Company shall retrieve information from the country assessment reports prepared by the FATF or other regional bodies operating in accordance with FATF’s principles (e.g. Moneyval Committee of the Council of Europe) or the International Monetary Fund.
   
   

3. As defined in Law and stated in Definitions of Section 1, PEPs are the natural persons who are residing in another member state of the European Union or a third country and who are or have been entrusted with prominent public functions and immediate family members, or persons known to be close associates, of such persons.
   
   

4. The meaning ‘Politically Exposed Persons’ includes the following natural persons who are or have been entrusted with prominent public functions’ in a foreign country:

   1. heads of State, heads of government, ministers and deputy or assistant ministers

   2. members of parliaments

   3. members of supreme courts, of constitutional courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances

   4. members of courts of auditors or of the boards of central banks

   5. ambassadors, charges d'affaires and high-ranking officers in the armed forces

   6. members of the administrative, management or supervisory bodies of State-owned enterprises.

5. Without prejudice to the application, on a risk-sensitive basis, of enhanced Client due diligence measures (Section 8.8.1 of the Manual), where a person has ceased to be entrusted with a prominent public function within the meaning of point (4) above for a period of at least one year, the Company shall not be obliged to consider such a person as politically exposed.
   
   

6. None of the categories set out in point (4) above shall be understood as covering middle ranking or more junior officials. ‘Immediate family members’ includes the following:

   1. the spouse or the person with which cohabit for at least one year

   2. the children and their spouses or the persons with which cohabit for at least one year

   3. the parents.

7. ‘Persons known to be close associates’ includes the following:

   1. any natural person who is known to have joint Beneficial Ownership of legal entities or legal arrangements, or any other close business relations, with a person referred to in point (4) above

   2. any natural person who has sole Beneficial Ownership of a legal entity or legal arrangement which is known to have been set up for the benefit de facto of the person referred to in point (4) above.
      
      
      

8. Without prejudice to the provisions of Section 8.8.1 (c), the Company adopts the following additional due diligence measures when it establishes a Business Relationship or carry out an Occasional Transaction with a PEP:

   1. the Company puts in place appropriate risk management procedures to enable it to determine whether a prospective Client is a PEP. Such procedures may include, depending on the degree of risk, the acquisition and installation of a reliable commercial electronic database for PEPs, seeking and obtaining information from the Client himself or from publicly available information. In the case of legal entities and arrangements, the procedures will aim at verifying whether the Beneficial Owners, authorised signatories and persons authorised to act on behalf of the legal entities and arrangements constitute PEPs. In case of identifying one of the above as a PEP, then automatically the account of the legal entity or arrangement should be subject to the relevant procedures specified in this Section of the Manual

   2. the decision for establishing a Business Relationship or the execution of an Occasional Transaction with a PEP is taken by the Management of the Company and the decision is then forwarded to the MLCO. When establishing a Business Relationship with a Client (natural or legal person) and subsequently it is ascertained that the persons involved are or have become PEPs, then an approval is given for continuing the operation of the Business Relationship by the Management of the Company which is then forwarded to the MLCO

   3. before establishing a Business Relationship or executing an Occasional Transaction with a PEP, the Company shall obtain adequate documentation to ascertain not only the identity of the said person but also to assess his business reputation (e.g. reference letters from third parties)

   4. the Company shall create the economic profile of the Client by obtaining the information specified in Section 8.5. The details of the expected business and nature of activities of the Client forms the basis for the future monitoring of the account. The profile shall be regularly reviewed and updated with new data and information. The Company shall be particularly cautious and most vigilant where its Clients are involved in businesses which appear to be most vulnerable to corruption such as trading in oil, arms, cigarettes and alcoholic drinks

   5. the account shall be subject to annual review in order to determine whether to allow its continuance of operation. A short report shall be prepared summarising the results of the review by the person who is in charge of monitoring the account. The report shall be submitted for consideration and approval to the Board and filed in the Client’s personal file.

8. 8. 7. Electronic gambling/gaming through the internet

The Company shall apply the following with respect to accounts related to electronic gambling/gaming through the internet:

1. The Company may establish a Business Relationship or execute an Occasional Transaction in the names of persons who are involved in the abovementioned activities provided that these persons are licensed by a competent authority of a country of the EEA or a third country which, in accordance with a relevant decision of the Advisory Authority it has been determined that the relevant third country applies procedures equivalent to the requirements of the EU Directive. For this purpose, the Company shall request and obtain, apart from the data and information required by the Manual, copy of the licence that has been granted to the said persons by the competent supervisory/regulatory authority, the authenticity of which must be verified either directly with the supervisory/regulatory authority or from other independent and reliable sources.

2. Furthermore, the Company shall collect adequate information so as to understand the Clients’ control structure and ensure that the said Clients apply adequate and appropriate systems and procedures for Client identification and due diligence for the prevention of money laundering and terrorist financing.

3. In the case that the Client is a person who offers services (e.g. payment providers, software houses, card acquirers) to the persons mentioned in point (1) above, then the Company shall request and obtain, apart from the data and information required by the Manual, adequate information so as to be satisfied that the services are offered only to licensed persons. Also, it will obtain information necessary to completely understand the ownership structure and the group in which the Client belongs, as well as any other information that is deemed necessary so as to establish the Client’s economic profile. Additionally, the Company shall obtain the signed agreement between its Client and the company that is duly licensed for electronic gambling/gaming activities through the internet, by a competent authority of a country mentioned in point (1) above.

4. For all the above cases, the decision for the establishment of a Business Relationship or the execution of an Occasional Transaction is taken by the Management of the Company and the decision is then forwarded to the MLCO. Moreover, the account of the said Client is closely monitored and subject to regular review with a view of deciding whether or not to permit the continuance of its operation. Accordingly, a report shall be prepared and submitted for consideration and approval to the Board and filed in the Client’s personal file.

8. 8. 8. Clients from countries which inadequately apply FATF’s recommendations

1. The FATF 40+9 Recommendations constitute the primary internationally recognised standards for the prevention and detection of Money Laundering and Terrorist Financing.

2. The Company shall apply the following with respect to Clients from countries which inadequately apply FATF’s recommendations:

3. exercise additional monitoring procedures and pay special attention to Business Relationships and transactions with persons, including companies and financial institutions, from countries which do not apply or apply inadequately the aforesaid recommendations

4. transactions with persons from the said countries, for which there is no apparent economic or visible lawful purpose, are further examined for the establishment of their economic, business or investment background and purpose. If the Company cannot be fully satisfied as to the legitimacy of a transaction, then a suspicious transaction report is filed to the Unit, according to point Section 5 (g).

5. with the aim of implementing the above, the Head of the Corporate/Administration Department(s) and the MLCO shall consult the country assessment reports prepared by the FATF (http://www.fatf-gafi.org), the other regional bodies that have been established and work on the principles of FATF [e.g. Moneyval Committee of the Council of Europe (www.coe.int/moneyval)] and the International Monetary Fund (www.imf.org). Based on the said reports, the MLCO assesses the risk from transactions and Business Relationships with persons from various countries and decides of the countries that inadequately apply the FATF’s recommendations. According to the aforesaid decision of the MLCO, the Company applies, when deemed necessary, enhanced due diligence measures for identifying and monitoring transactions of persons originating from countries with significant shortcomings in their legal and administrative systems for the prevention of Money Laundering and Terrorist Financing.

8. 9. Client Identification and Due Diligence Procedures (Specific Cases)

The MLCO shall ensure that the appropriate documents and information with respect to the following cases shall be duly obtained, as applicable and appropriate:

8. 9. 1. Natural persons residing in the Republic

1. The Company shall not accept any client from the Republic of Vanuatu.

8. 9. 2. Natural persons not residing in the Republic

1. The Company shall obtain the information described in Section 8.9.1 to ascertain the true identity of the natural persons not residing in the Republic.
   
   

2. In addition to the information collected according to Section 8.9.1, without prejudice to the application on a risk-sensitive basis, the Company shall require and receive information on public positions which the prospective Client holds or held in the last twelve (12) months as well as whether he is a close relative or associate of such individual, in order to verify if the Client is a PEP.
   
   

3. Furthermore, passports shall always be requested from the Clients not residing in the Republic and, if available, official national identity cards issued by the competent authorities of their country of origin shall be obtained. Certified true copies of the pages containing the relevant information from the said documents shall also be obtained and kept in the Client’s files.

   In addition, if in doubt for the genuineness of any document (passport, national identity card or documentary evidence of address), the Company shall seek verification of identity with an Embassy or the Consulate of the issuing country or a reputable credit or financial institution situated in the Client’s country of residence.
   
   

4. In addition to the aim of preventing Money Laundering and Terrorist Financing, the abovementioned information is also essential for implementing the financial sanctions imposed against various persons by the United Nations and the European Union. In this respect, passport’s number, issuing date and country as well as the Client’s date of birth always appear on the documents obtained, so that the Company would be in the position to verify precisely whether a Client is included in the relevant list of persons subject to financial sanctions which are issued by the United Nations or the European Union based on a United Nations Security Council’s Resolution and Regulation or a Common Position of the European Union’s Council respectively.

8. 9. 3. Joint accounts

In the cases of joint accounts of two or more persons, the identity of all individuals that hold or have the right to manage the account, are verified according to the procedures set in Sections 8.9.1 and 8.9.2 above.

8. 9. 4. Accounts of unions, societies, clubs, provident funds and charities

In the case of accounts in the name of unions, societies, provident funds and charities, the Company ascertains their purpose of operation and verifies their legitimacy by requesting the production of the articles and memorandum of association/procedure rules and registration documents with the competent governmental authorities (in case the law requires such registration).

Furthermore, the Company shall obtain a list of the members of board of directors/management committee of the abovementioned organisations and verifies the identity of all individuals that have been authorised to manage the account according to the procedures set in Sections 8.9.1 and 8.9.2.

8. 9. 5. Accounts of unincorporated businesses, partnerships and other persons with no legal substance

1. In the case of unincorporated businesses, partnerships and other persons with no legal substance, the identity of the directors, partners, Beneficial Owners and other individuals who are authorised to manage the account shall be verified according to the procedures set in Sections 8.9.1 and 8.9.2.

   In addition, in the case of partnerships, the original or a certified true copy of the partnership’s registration certificate shall be obtained.
   
   

2. The Company shall obtain documentary evidence of the head office address of the business, ascertains the nature and size of its activities and receives all the information required according to Section 8.5 for the creation of the economic profile of the business.
   
   

3. The Company shall request, in cases where exists, the formal partnership agreement and shall also obtain mandate from the partnership authorising the opening of the account and confirming authority to a specific person who will be responsible for its operation.

8. 9. 6. Accounts of legal persons

1. For Clients that are legal persons, the Company shall establish that the natural person appearing to act on their behalf, is appropriately authorised to do so and his identity is established and verified according to the procedures set in Sections 8.9.1 and 8.9.2.
   
   

2. The Company shall take all necessary measures for the full ascertainment of the legal person’s control and ownership structure as well as the verification of the identity of the natural persons who are the Beneficial Owners and exercise control over the legal person according to the procedures set in Sections 8.9.1 and 8.9.2.
   
   

3. The verification of the identification of a legal person that requests the establishment of a Business Relationship or the execution of an Occasional Transaction, comprises the ascertainment of the following:

   1. the registered number

   2. the registered corporate name and trading name used

   3. the full addresses of the registered office and the head offices

   4. the telephone numbers, fax numbers and e-mail address

   5. the members of the board of directors

   6. the individuals that are duly authorised to operate the account and to act on behalf of the legal person

   7. the Beneficial Owners of private companies and public companies that are not listed in a Regulated Market of an EEA country or a third country with equivalent disclosure and transparency requirements

   8. the registered shareholders that act as nominees of the Beneficial Owners

   9. the economic profile of the legal person, according to the provisions of Section 8.5.
      
      

4. For the verification of the identity of the legal person, the Company shall request and obtain, among others, original or certified true copies of the following documents:

   1. certificate of incorporation and certificate of good standing (where available) of the legal person

   2. certificate of registered office

   3. certificate of directors and secretary

   4. certificate of registered shareholders in the case of private companies and public companies that are not listed in a Regulated Market of an EEA country or a third country with equivalent disclosure and transparency requirements

   5. memorandum and articles of association of the legal person

   6. a resolution of the board of directors of the legal person for the opening of the account and granting authority to those who will operate it

   7. in the cases where the registered shareholders act as nominees of the Beneficial Owners, a copy of the trust deed/agreement concluded between the nominee shareholder and the Beneficial Owner, by virtue of which the registration of the shares on the nominee shareholder’s name on behalf of the Beneficial Owner has been agreed

   8. documents and data for the verification, according to the procedures set in Sections 8.9.1 and 8.9.2, of the identity of the persons that are authorised by the legal person to operate the account, as well as the registered shareholders and Beneficial Owners of the legal person.

5. Where deemed necessary for a better understanding of the activities, sources and uses of funds/assets of a legal person, the Company shall obtain copies of its latest audited financial statements (if available), and/or copies of its latest management accounts.
   
   

6. For legal persons incorporated outside the Republic, the Company requests and obtains documents similar to the above.
   
   

7. As an additional due diligence measure, on a risk-sensitive basis, the Company shall carry out (when deemed necessary) a search and obtain information from the records of the Registrar of Companies and Official Receiver of the Republic (for domestic companies) or from a corresponding authority in the company’s (legal person’s) country of incorporation (for foreign companies) and/or request information from other sources in order to establish that the applicant company (legal person) is not, nor is in the process of being dissolved or liquidated or struck off from the registry of the Registrar of Companies and Official Receiver and that it continues to be registered as an operating company in the records of the Registrar of Companies and Official Receiver of the Republic or by an appropriate authority outside the Republic.
   
   It is pointed out that, if at any later stage any changes occur in the structure or the ownership status or to any details of the legal person, or any suspicions arise emanating from changes in the nature of the transactions performed by the legal person via its account, then it is imperative that further enquiries should be made for ascertaining the consequences of these changes on the documentation and information held by the Company for the legal person and all additional documentation and information for updating the economic profile of the legal person is collected.
   
   

8. In the case of a Client-legal person that requests the establishment of a Business Relationship or the execution of an Occasional Transaction and whose direct/immediate and principal shareholder is another legal person, registered in the Republic or abroad, the Company, before establishing a Business Relationship or executing an Occasional Transaction, shall verify the ownership structure and the identity of the natural persons who are the Beneficial Owners and/or control the other legal person.
   
   

9. Apart from verifying the identity of the Beneficial Owners, the Company shall identify the persons who have the ultimate control over the legal person’s business and assets. In the cases that the ultimate control rests with the persons who have the power to manage the funds, accounts or investments of the legal person without requiring authorisation and who would be in a position to override the internal procedures of the legal person, the Company, shall verify the identity of the natural persons who exercise ultimate control as described above even if those persons have no direct or indirect interest or an interest of less than 10% in the legal person's ordinary share capital or voting rights.
   
   

10. In cases where the Beneficial Owner of a legal person, requesting the establishment of a Business Relationship or the execution of an Occasional Transaction, is a trust set up in the Republic or abroad, the Company shall implement the following procedure:

    1. the Company shall ascertain the legal substance, the name and the date of establishment of the trust and verify the identity of the trustor, trustee and Beneficial Owners, according to the procedures set in Sections 8.9.1 and 8.9.2

    2. furthermore, the Company shall ascertain the nature of activities and the purpose of establishment of the trust as well as the source and origin of funds requesting the relevant extracts from the trust deed and any other relevant information from the trustees. All relevant data and information should be recorded and kept in the Client’s file.
       
       

8. 9. 7. Investment funds, mutual funds and firms providing financial or investment services

1. The Company shall establish and maintain Business Relationships or execute Occasional Transactions with persons who carry out the above services and activities which are incorporated and/or operating in countries of the EEA or a third country which according to a relevant decision of the Advisory Authority it has been determined that applies requirements equivalent to those laid down in the EU Directive, provided that the said persons:

   1. possess the necessary license or authorisation from a competent supervisory/regulatory authority of the country of their incorporation and operation to provide the said services, and

   2. are subject to supervision for the prevention of Money Laundering and Terrorist Financing purposes.
      
      

2. In the case of the establishment of a Business Relationship or the execution of an Occasional Transaction with persons who carry out the above services and activities and which are incorporated and/or operating in a third country other than those mentioned in point (1) above, the Company shall request and obtain, in addition to the abovementioned, in previous points, documentation and the information required by the Manual for the identification and verification of persons, including the Beneficial Owners, the following:

   1. a copy of the license or authorisation granted to the said person from a competent supervisory/ regulatory authority of its country of incorporation and operation, whose authenticity should be verified either directly with the relevant supervisory/regulatory authority or from other independent and reliable sources, and

   2. adequate documentation and sufficient information in order to fully understand the control structure and management of the business activities as well as the nature of the services and activities provided by the Client.
      
      

3. In the case of investment funds and mutual funds the Company, apart from identifying Beneficial Owners, shall obtain information regarding their objectives and control structure, including documentation and information for the verification of the identity of investment managers, investment advisors, administrators and custodians.

8. 9. 7. Nominees or agents of third persons

1. The Company shall take reasonable measures to obtain adequate documents, data or information for the purpose of establishing and verifying the identity, according to the procedures set in Sections

8.9.1 and 8.9.2 of the Manual:

1. the nominee or the agent of the third person, and

2. any third person on whose behalf the nominee or the agent is acting.

2. In addition, the Company shall obtain a copy of the authorisation agreement that has been concluded between the interested parties.

8. 10. Reliance on Third Persons for Client Identification and Due Diligence Purposes

1. The Company may rely on third persons for the implementation of Client identification and due diligence procedures, provided that:

   1. the third person makes immediately available all data and information, which must be certified true copies of the originals, that were collected in the course of applying Client identification and due diligence procedures
      

   2. the Company applies the appropriate due diligence measures on the third person with respect to his professional registration and procedures and measures applied from the third person for the prevention of Money Laundering and Terrorist Financing, according to the provisions of the Law.

2. For the purposes of this Section of the Manual, third person means credit institutions or financial institutions or auditors or independent legal professionals or person providing trust and company services included in the definition of the term “Other Business Activities”, falling under the EU Directive and which:

   1. they are subject to mandatory professional registration, recognised by law; and

   2. they subject to supervision regarding their compliance with the requirements of the EU Directive.
      
      

3. Further to point 2 above, third person for the purposes of this Section of the Manual may also be any other person who is engaged in financial business (as defined in Section 2 of the Law), or accountants or independent legal professionals or persons providing to third parties trust and company services as included in the definition of the term “Other Business Activities” and who operate in countries outside the EEA and which according to a relevant decision of the Advisory Authority, have been determined that they impose equivalent procedures and measures for the prevention of Money Laundering and Terrorist Financing to those laid down by the EU Directive. It is provided that the abovementioned third persons have to fulfil the requirements set out in points 2(a) and 2(b) above.
   
   

4. The Company may rely on third persons only at the outset of establishing a Business Relationship or the execution of an Occasional Transaction for the purpose of verifying the identity of their Clients. According to the degree of risk any additional data and information for the purpose of updating the Client’s economic profile or for the purpose of examining unusual transactions executed through the account, is obtained from the natural persons (directors, Beneficial Owners) who control and manage the activities of the Client and have the ultimate responsibility of decision making as regards to the management of funds and assets.
   
   

5. Further to point 3 above, in the case where the third person of subparagraph (1) is an accountant or an independent legal professional or a trust and company services provider from a country which is a member of the EEA or a third country that the Advisory Authority has determined to be applying procedures and measures for the prevention of Money Laundering and Terrorist Financing equivalent to the EU Directive, then the Company, before accepting the Client identification data verified by the said third person, shall apply the following additional measures/procedures:

   1. the MLCO or the appointed person shall assess and evaluate, according to point (l) of Section 6 of this Manual, the systems and procedures applied by the third person for the prevention of Money Laundering and Terrorist Financing, as applicable

   2. as a result of the assessment of point (a) above, the MLCO must be satisfied that the third person implements Client identification and due diligence systems and procedures which are in line with the requirements of the Law and the Directive

   3. the MLCO shall maintain a separate file for every third person of the present paragraph, where it stores the assessment report of point (a) and other relevant information (for example identification details, records of meetings, evidence of the data and information of point 2 above)

   4. the commencement of the cooperation with the third person and the acceptance of Client identification data verified by the third person is subject to approval by the MLCO, according to Section 6 (l).

NOTE: For the purposes of this Section of the Manual, the terms financial institutions and persons engaged in financial business activities do not include currency exchange offices and money transmission or remittance offices.

The MLCO shall be responsible for the implementation of the provisions mentioned in this Section of the Manual.

The Internal Auditor shall be responsible to review the adequate implementation of the provisions mentioned herein, at least annually.

9. Account Monitoring

The constant monitoring of the Clients’ accounts and transactions is an imperative element in the effective controlling of the risk of Money Laundering and Terrorist Financing.

In this respect, the MLCO shall be responsible for maintaining as well as developing the on-going monitoring process of the Company. The Internal Auditor shall review the Company’s procedures with respect to the on-going monitoring process, at least annually.

The procedures and intensity of monitoring Clients’ accounts and examining transactions on the Client’s level of risk shall include the following:

1. the identification of:

   1. transactions which, as of their nature, may be associated with money laundering or terrorist financing

   2. unusual or suspicious transactions that are inconsistent with the economic profile of the Client for the purposes of further investigation.

   3. in case of any unusual or suspicious transactions, the head of the department providing the relevant investment and/or ancillary service as well as the Head of the Corporate/Administration Department(s) shall be responsible to communicate with the MLCO

2. further to point (a) above, the investigation of unusual or suspicious transactions by the MLCO. The results of the investigations are recorded in a separate memo and kept in the file of the Clients concerned

3. the ascertainment of the source and origin of the funds the use of appropriate IT systems.

10. Suspicious Transactions

Although it is difficult to define a suspicious transaction, as the types of transactions which may be used by money launderers are almost unlimited, a suspicious transaction shall often be one which is inconsistent with a Client's known, legitimate business or personal activities or with the normal business for that type of account. It is, therefore, imperative that Company officials know enough about their Clients' business in order to recognize that a transaction or a series of transactions is unusual.

The following are examples of suspicious Clients that shall have to be reported to the MLCO:

1. Client (natural person) which verification of identity has proven to be particularly difficult and who appears to be cautious in providing details with respect to his identity

2. Client (legal entity) whereby difficulties or delays in the submission of the relevant documentation are encountered

3. Client, referred from an overseas bank or from an existing Client, whereby both prospective Client and referring bank or existing Client are residents of countries of lax jurisdictions.
   

Examples, in accordance with the Directive, of what might constitute suspicious transactions/activities related to Money Laundering and Terrorist Financing are listed in Section 10.2 of the Manual. The relevant list however, includes examples that do not apply directly to the Company’s business model such us examples that relate to cash transactions. Moreover, the relevant list is not exhaustive nor it includes all types of transactions that may be used, nevertheless it can assist the Company and its employees (especially the MLCO and the Head of the Corporate/Administration Department(s)) in recognising the main methods used for Money Laundering and Terrorist Financing. The detection by the Company of any of the transactions contained in the said list prompts further investigation and constitutes a valid cause for seeking additional information and/or explanations as to the source and origin of the funds, the nature and economic/business purpose of the underlying transaction, and the circumstances surrounding the particular activity.

In order to identify suspicious transactions the MLCO shall perform the following activities:

• monitor on a continuous basis any changes in the Client’s financial status, business activities, type of transactions etc

• monitor on a continuous basis if any Client is engaged in any of the practices described in the list containing examples of what might constitute suspicious transactions/activities related to Money Laundering and Terrorist Financing which is mentioned in Appendix 4 of this Manual.

Furthermore, the MLCO shall perform the following activities:

• receive and investigate information from the Company’s employees, on suspicious transactions which creates the belief or suspicion of money laundering. This information is reported on the Internal Suspicion Report (Appendix A). The said reports are archived by the MLCO

• evaluate and check the information received from the employees of the Company, with reference to other available sources of information and the exchanging of information in relation to the specific case with the reporter and, where this is deemed necessary, with the reporter’s supervisors. The information which is contained on the report which is submitted to the MLCO is evaluated on the Internal Evaluation Report (Appendix B), which is also filed in a relevant file

• if, as a result of the evaluation described above, the MLCO decides to disclose this information to the Unit, then he prepares a written report, which he submits to the Unit (Appendix C).

• if as a result of the evaluation described above, the MLCO decides not to disclose the relevant information to the Unit, then he fully explain the reasons for his decision on the Internal Evaluation Report.

MLCO’s Report to the Supervisory body

All the reports of the MLCO are send or submitted to the Unit by post, facsimile or by hand.

After the submission of a suspicious report, the Company may subsequently wish to terminate its relationship with the Client concerned for risk avoidance reasons. In such an event, the Company exercises particular caution, not to alert the Client concerned that a suspicious report has been submitted to the Unit. Close liaison with the Unit is, therefore, maintained in an effort to avoid any frustration to the investigations conducted.

After submitting the suspicious report, the Company adheres to any instructions given by the Unit and, in particular, as to whether or not to continue or suspend a particular transaction or to maintain the particular account active.

The Supervisory body may instruct the Company to refrain from executing or delay the execution of

a Client's transaction without such action constituting a violation of any contractual or other obligation of the Company and its employees.

Furthermore, after the submission of a suspicious report, the Clients’ accounts concerned as well as any other connected accounts are placed under the close monitoring of the MLCO.

Submission of Information to the Supervisory body

The Company shall ensure that in the case of a suspicious transaction investigation by the Supervisory body, the MLCO will be able to provide without delay the following information:

1. the identity of the account holders

2. the identity of the Beneficial Owners of the account

3. the identity of the persons authorized to manage the account

4. data of the volume of funds or level of transactions flowing through the account

5. connected accounts

6. in relation to specific transactions:

   • the origin of the funds, as applicable

   • the type and amount of the currency involved in the transaction

   • the identity of the person that gave the order for the transaction

   • the destination of the funds, as applicable

   • the form of instructions and authorisation that have been given

   • the type and identifying number of any account involved in the transaction.

1. Appendix A: Internal Suspicion Report for Money Laundering and Terrorist Financing;

2. Appendix B: Internal Evaluation Report for Money Laundering and Terrorist Financing;

3. Appendix C: MLCO Report to the Unit

Examples of Suspicious Transactions and Activities related to Money Laundering and Terrorist Financing

• Transactions with no discernible purpose or are unnecessarily complex;

• Use of foreign accounts of companies or group of companies with complicated ownership structure which is not justified based on the needs and economic profile of the Client;

• The transactions or the size of the transactions requested by the Client do not comply with his usual practice and business activity;

• Large volume of transactions and/or money deposited or credited into, an account when the nature

• of the Client’s business activities would not appear to justify such activity;

• The Business Relationship involves only one transaction or it has a short duration;

• There is no visible justification for a Client using the services of a particular financial organisation. For example the Client is situated far away from the particular financial organisation and in a place where he could be provided services by another financial organisation;

• There are frequent transactions in the same financial instrument without obvious reason and in conditions that appear unusual (churning);

• There are frequent small purchases of a particular financial instrument by a Client who settles in cash, and then the total number of the financial instrument is sold in one transaction with settlement in cash or with the proceeds being transferred, with the Client’s instructions, in an account other than his usual account;

• Any transaction the nature, size or frequency appear to be unusual, e.g. cancellation of an order, particularly after the deposit of the consideration;

• Transactions which are not in line with the conditions prevailing in the market, in relation, particularly, with the size of the order and the frequency;

• The settlement of any transaction but mainly large transactions, in cash;

• Settlement of the transaction by a third person which is different than the Client which gave the order;

• Instructions of payment to a third person that does not seem to be related with the instructor;

• Transfer of funds to and from countries or geographical areas which do not apply or they apply

• inadequately FATF’s recommendations on Money Laundering and Terrorist Financing;

• A Client is reluctant to provide complete information when establishes a Business Relationship about the nature and purpose of its business activities, anticipated account activity, prior relationships with financial organisations, names of its officers and directors, or information on its business location. The Client usually provides minimum or misleading information that is difficult or expensive for the financial organisation to verify;

• A Client provides unusual or suspicious identification documents that cannot be readily verified;

• A Client’s home/business telephone is disconnected;

• A Client that makes frequent or large transactions and has no record of past or present employment experience;

• Difficulties or delays on the submission of the financial statements or other identification documents, of a Client/legal person;

• A Client who has been introduced by a foreign financial organisation, or by a third person whose countries or geographical areas of origin do not apply or they apply inadequately FATF’s recommendations on Money Laundering and Terrorist Financing;

• Shared address for individuals involved in cash transactions, particularly when the address is also a business location and/or does not seem to correspond to the stated occupation (e.g. student, unemployed, self-employed, etc);

• The stated occupation of the Client is not commensurate with the level or size of the executed transactions;

• Financial transactions from non-profit or charitable organisations for which there appears to be no logical economic purpose or in which there appears to be no link between the stated activity of the organisation and the other parties in the transaction;

• Unexplained inconsistencies arising during the process of identifying and verifying the Client (e.g. previous or current country of residence, country of issue of the passport, countries visited according to the passport, documents furnished to confirm name, address and date of birth etc);

• Complex trust or nominee network;

• Transactions or company structures established or working with an unneeded commercial way.

• e.g. companies with bearer shares or bearer financial instruments or use of a postal box;

• Use of general nominee documents in a way that restricts the control exercised by the company’s

• board of directors;

• Changes in the lifestyle of employees of the financial organisation, e.g. luxurious way of life or avoiding being out of office due to holidays;

• Changes the performance and the behaviour of the employees of the financial organisation.
  
  B. TERRORIST FINANCING

1. Sources and methods

The funding of terrorist organisations is made from both legal and illegal revenue generating activities. Criminal activities generating such proceeds include kidnappings (requiring ransom), extortion (demanding “protection” money), smuggling, thefts, robbery and narcotics trafficking. Legal fund raising methods used by terrorist groups include:

1. collection of membership dues and/or subscriptions

2. sale of books and other publications

3. cultural and social events

4. donations

5. community solicitations and fund raising appeals.

11. DOCUMENTS RETENTION POLICY

The Corporate/Administration Department(s) of the Company shall keep all records for not less than 5 years from the date of completion of the transaction, or of termination of business relationship. These should include:

• Copies of the material of the customer identification

• The relevant evidence and details of all business relationships and transactions, including documents for the recording of transactions in the accounting books, and

• Relevant documents of correspondence with the customers and other persons with whom they keep a business relation.

• Evaluation of the systems and procedures applied by a third person in case that the Company will rely on, for identification and due diligence purposes.

Such records will be rapidly made available to the Supervisory body, when requested.

11. 1. General

The Corporate/Administration Department(s) of the Company shall maintain records of:

1. the Client identification documents obtained during the Client identification and due diligence procedures, as applicable

2. the details of all relevant records with respect to the provision of investment and ancillary services to Clients

The documents/data of mentioned above shall be kept for a period of at least five (5) years, which is calculated after the execution of the transactions or the termination of the Business Relationship.

It is provided that the documents/data mentioned in points (a) and (b) above which may be relevant to ongoing investigations shall be kept by the Company until the Unit confirms that the investigation has been completed and the case has been closed.

11. 2. Format of Records

The Corporate/Administration Department(s) shall retain the documents/data mentioned in Section

11.1 of the Manual, other than the original documents or their Certified true copies that are kept in a hard copy form, in other forms, such as electronic form, provided that the Corporate/Administration Department(s) shall be able to retrieve the relevant documents/data without undue delay and present them at any time, to Supervisory body, after a relevant request.

In case the Company will establish a documents/data retention policy, the MLCO shall ensure that the said policy shall take into consideration the requirements of the Law.

The Internal Auditor shall review the adherence of the Company to the above, at least annually.

11. 3. Certification and language of documents

1. The documents/data obtained, shall be in their original form or in a certified true copy form. In the case that the documents/data are certified as true by a different person than the Company itself or by the third person mentioned in Section 8.10, the documents/data must be apostilled or notarised.

2. A true translation shall be attached in the case that the documents of point (1) above are in a language other than English.
   

Each time the Company shall proceed with the acceptance of a new Client, the Corporate/Administration Department(s) officer shall be responsible for ensuring compliance with the provisions of points 1 and 2 above.

12. EMPLOYEES’ RESPONSIBILITIES, EDUCATION AND TRAINING

Staff who handle or are managerially responsible for handling transactions which may involve money laundering will be made aware of:

• their responsibilities under the Company’s anti-money laundering arrangements, including those for obtaining sufficient evidence of identity, recognising and reporting knowledge or suspicion of money laundering and use of findings of material deficiencies;

• the identity and responsibilities of the MLRO;

• the law and regulations relating to money laundering; and

• the potential effect on the Company, its employees and its clients of any breach of money laundering provision. All members of staff will receive periodic training in addition to the information provided in this document. This is expected to include seminars organised by the MLCO. Employees should ensure that they regularly update their knowledge of these procedures given the seriousness of the consequences of breaching the Act and the Regulations.

A record of anti-money laundering training supplied must be maintained and will include the dates, nature and names of recipients of such training.

Employees’ Obligations

1. The Company’s employees shall be personally liable for failure to report information or suspicion,

regarding money laundering or terrorist financing

2. the employees must cooperate and report, without delay, according to Section 5 (e), anything that comes to their attention in relation to transactions for which there is a slight suspicion that are related to money laundering or terrorist financing

3. according to the Law, the Company’s employees shall fulfil their legal obligation to report their suspicions regarding Money Laundering and Terrorist Financing, after their compliance with point (b) above.

Education and Training

Employees’ Education and Training Policy

1. The MLCO shall ensure that its employees are fully aware of their legal obligations according to the

Law, by introducing a complete employees’ education and training program

2. the timing and content of the training provided to the employees of the various departments will be determined according to the needs of the Company. The frequency of the training can vary depending on to the amendments of legal and/or regulatory requirements, employees’ duties as well as any other changes in the financial system of the Republic Prevention of Money Laundering and Terrorist Financing Manual

3. the training program aims at educating the Company’s employees on the latest developments in the prevention of Money Laundering and Terrorist Financing, including the practical methods and trends used for this purpose
   

4. the training program will have a different structure for new employees, existing employees and for different departments of the Company according to the services that they provide. On-going training shall be given at regular intervals so as to ensure that the employees are reminded of their duties and responsibilities and kept informed of any new developments.

The MLCO shall be responsible to refer to the relevant details and information in his/her Annual

Report in respect of the employees’ education and training program undertaken each year.

MLCO Education and Training Program

The Senior Management of the Company shall be responsible for the MLCO of the Company to attend external training. Based on his/her training, the MLCO will then provide training to the employees of the Company further to Section 15.2.1 above.

The main purpose of the MLCO training is to ensure that relevant employee(s) become aware of:

• the Law and the Directive

• the Company’s Anti-Money Laundering Policy

• the statutory obligations of the Company to report suspicious transactions

• the employees own personal obligation to refrain from activity that would result in money laundering

• the importance of the Clients’ due diligence and identification measures requirements for money

laundering prevention purposes.

The MLCO shall be responsible to include information in respect of his/her education and training program(s) attended during the year in his/her Annual Report. Funds obtained from illegal sources are laundered by terrorist groups by the same methods used by criminal groups. These include cash smuggling by couriers or bulk cash shipments, structured deposits to or withdrawals from bank accounts, purchases of financial instruments, wire transfers by using “straw men”, false identities, front and shell companies as well as nominees from among their close family members, friends and associates. Non-profit organisations: Non–profit and charitable organisations are also used by terrorist groups as a means of raising funds and/or serving as cover for transferring funds in support of terrorist acts. The potential misuse of non-profit and charitable organisations can be made in the following ways:

1. Establishing a non-profit organisation with a specific charitable purpose but which actually exists only to channel funds to a terrorist organisation.

2. A non-profit organisation with a legitimate humanitarian or charitable purpose is infiltrated by terrorists who divert funds collected for an ostensibly legitimate charitable purpose for the support of a terrorist group.

3. The non-profit organisation serves as an intermediary or cover for the movement of funds on an international basis.

4. The non-profit organisation provides administrative support to the terrorist movement.

Unusual characteristics of non-profit organisations indicating that they may be used for an unlawful purpose are the following:

1. Inconsistencies between the apparent sources and amount of funds raised or moved.

2. A mismatch between the type and size of financial transactions and the stated purpose and activity of the non-profit organisation.

3. A sudden increase in the frequency and amounts of financial transactions for the account of a non-profit organisation.

4. Large and unexplained cash transactions by non-profit organisations.