Anti Money Laundering Policy

Anti Money Laundering Policy - Ryzen Pay

RYZEN VENTURES LLC - ANTI MONEY LAUNDERING AND COUNTER TERRORIST FINANCING POLICY

Definitions

Part 1: Policy Aims

Part 2: About Money Laundering and Terrorist Financing

2.1 Money Laundering
2.2 Terrorist Financing
2.3 Legal Framework
2.3.1 Proceeds of Crime Act 2002
2.3.2 The Terrorism Act 2000
2.3.3 Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
2.4 The Offences
2.4.1 Money Laundering offences
2.4.2 Reporting offences
2.4.3 Terrorist Financing offences
2.4.4 Defences
2.5 Consequences of non compliance with the MLR
2.6 Red flags

Part 3: Our Procedures

3.1 The Firm
3.1.1 Obligations on the firm
3.1.2. Appointment of MLRO
3.1.3 Firm Risk Assessment of Money Laundering and Terrorist Financing
3.1.4 Record keeping
3.1.4.1 Retention periods
3.1.4.2 Storage of records
3.1.4.3 Queries about records
3.1.5 Screening
3.1.6 Training
3.1.7 Approval of policies and procedures
3.1.8 Communication of changes to policies and procedures
3.1.9 Monitoring compliance
3.1.9.1 File reviews
3.1.9.2 Independent Review
3.2 The MLRO
3.2.1 Obligations
3.2.2 Reporting to authorities
3.2.3 Record keeping
3.2.4 Reporting to the board
3.3 Staff
3.3.1 Obligations on staff
3.3.2 Matter based risk assessment
3.3.3 Client Due Diligence
3.3.3.1 Client ID
3.3.3.1.1 Simplified Due Diligence
3.3.3.1.2 Standard Due Diligence
3.3.3.1.3 Enhanced Due Diligence
3.3.3.1.3.1 Situations that presents a higher risk of ML or TF
3.3.3.2 Process for Client ID
3.3.3.2.1 Evidence for a private individual – SDD
3.3.3.2.2 Additional requirement where the client is not present
3.3.3.2.3 Evidence for a corporate body – SDD
3.3.3.2.4 Identification and verification of the Beneficial Owner
3.3.3.2.5 Additional requirements where a PEP is involved
3.3.3.2.6 Sanctions
3.3.3.3 Purporting to act on behalf of another
3.3.3.4 Understanding the Purpose and Nature of the Business Relationship
3.3.3.4.1 Source of Funds
3.3.3.4.2 Funds for Transactions
3.3.3.4.3 Cash Payments
3.3.3.4.4 Overseas payments
3.3.3.4.5 Third Party Payments
3.3.3.4.6 Overpayments or mistaken payments into the client account
3.3.3.5 Ongoing Monitoring
3.3.3.5.1 When to Carry Out Further CDD
3.3.4 Reporting Procedure
3.3.4.1 What Is Suspicion?
3.3.4.2 Reporting Procedure
3.3.4.3 Communication with the client following a report

Appendices

Definitions

AML => Anti-Money Laundering

CTF => Counter-Terrorist Financing

CDD => Customer Due Diligence

SDD => Simplified Due Diligence

EDD => Enhanced Due Diligence

FATF => Financial Action Task Force

MLRO => Money Laundering Reporting Officer

MLCO => Money Laundering Compliance Officer

MRL => Money Laundering Regulations

NCA => National Crime Agency

SAR => Suspicious Activity Report

PEP => Politically Exposed Person

Part 1: Policy Aims

1.1 Top Level Commitment

Serious and organised crime is estimated to generate around £90 billion a year in the UK alone. As gatekeepers for both the financial and legal system in the UK we have an important role to play in preventing money launderers and terrorists from making use of our services to further and facilitate their criminal purposes. As an approved FCA payment services institution it is vital that no damage is done to that reputation. This firm is committed to the detection and avoidance of money laundering. We will take no avoidable risks and will co-operate fully with the authorities where necessary. No matter how much you want to help your client, you must not be a party to any form of dishonesty. You must be alert to the possibility that transactions on which we are instructed may involve money laundering. It is critical that all members of staff follow the firm’s policy in order to reduce the risk of this firm facilitating or furthering such criminal activity.

1.2 Purpose of the Policy

The purpose of this policy is to provide a set of procedures to follow to ensure that we do all we can to prevent us from doing the following:

Involvement in any of these actions, even innocent involvement, could constitute a criminal offence punishable by imprisonment. This applies to every single staff member, not just partners and member of staffs.

There may also be other, less severe, consequences:

Civil liability resulting in fines;
Damage to reputation if our name is or appears to be, lent to such transactions;
Claims from the true owner of property that we may have been involved in unlawful dealings;
Claims from the UK or other authorities; and
Disciplinary action from our professional regulator the FCA.

Part 2: Money Laundering and Terrorist Financing

2.1 Money Laundering

Money laundering is the process by which dirty money is made clean – so the true origins and ownership of money which was obtained illegally (“the proceeds of crime”) are disguised and the money then appears to come from a legitimate source. This is generally done in three different stages:

Placement — cash generated from crime is placed into the financial system i.e. paid into a bank account. This is the point at which detection is most likely. Because banks and financial institutions have developed AML procedures, criminals look for other ways of placing cash within the financial system.

Layering — the structuring of complex layers of financial or commercial transactions – for example buying or selling assets such as property or shares – so as to obscure the origins of funds and to make it as difficult as possible to follow the trail created.

Integration — once the origin of the funds is obscured the criminals will return them to the economy as legitimate business funds, often using a solicitor’s firm to buy a property, set up a trust, acquire a company, or even settle litigation, among other activities. This is the most difficult stage of money laundering to detect.

Payment Institutions may be targeted at any one of these stages.

2.2 Terrorist Financing

The most basic difference between terrorist financing and money laundering involves the origin of the funds. Terrorist financing usually uses funds for an illegal political purpose, but the money is not necessarily derived from illicit proceeds.

2.3 Legal Framework

Many jurisdictions have anti-money laundering regulations of some sort. Much of the money laundering and terrorist financing legislation and regulation introduced in jurisdictions in which the firm has offices has its roots in the work of the Financial Action Task Force (FATF), a body formed of the governments of a number of countries. Those standards are reflected in local legislation.

The European Union (EU) reflected the FATF Recommendations in five Directives, the last being the Fifth Money Laundering Directive of 2022, implemented into UK legislation Jan 2023.

2.3.1 Proceeds of Crime Act 2002

The POCA entered into force on February 2003. The POCA establishes a number of money laundering offences including failure to report suspected money laundering, tipping off about a money laundering investigation and prejudicing money laundering investigations.

2.3.2 The Terrorism Act 2000

The Terrorism Act establishes offences in connection with engaging or facilitating terrorism as well as raising or possessing funds for terrorist purposes. It establishes a list of organisations that the Secretary of State believes are involved in Terrorism. There is a failure to disclose offence and tipping off offences for those operating in the regulated sector for the purposes of AML/CTF obligations.

2.3.3 Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

The MLR set out administrative requirements for the AML regime within the regulated sector and outline the scope of CDD.

The MLR only apply to certain solicitor’s activities where there is a high risk of money laundering occurring. As such, they apply when solicitors participate in financial or real property transactions concerning such as buying and selling of real property or business entities; managing of client money, securities or other assets; opening or management of bank, savings or securities accounts and organisation of contributions necessary for the creation, operation or management of companies.

Although some transactions may not fall under the above mentioned categories, it is the firm’s policy to conduct CDD for all clients irrespective of the type of advice to be provided.

2.4 The Offences

The Proceeds of Crime Act 2002 and the Terrorism Act 2000 (as amended) create a suite of principal criminal offences in relation to

a) the proceeds of all crimes in the UK, and

b) property which is to be used for terrorist purposes or which is the proceeds of terrorism.

They also make it an offence not to disclose knowledge or suspicion of money laundering (except in very limited circumstances), or to “tip off” third parties about a report to the authorities, or an impending or existing investigation.

Offences also exist for conspiracy, attempt, counselling, aiding, abetting or procuring a principal offence

2.4.1 Money Laundering offences

The primary offences

In the UK, it is an offence under the Proceeds of Crime Act 2002 to carry out any of the following “primary” money laundering activities:

conceal, disguise, convert, or transfer criminal property, or remove it from England and Wales, Scotland or Northern Ireland;
enter into or become concerned in an arrangement which you know, suspect or have reasonable grounds to suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person; or
acquire, use or have possession of criminal property.

“Criminal property” is property which constitutes a person’s benefit from criminal conduct, and “criminal conduct” covers all conduct which constitutes an offence in any part of the UK, or which would do so if it occurred there (although there is a defence available for certain overseas conduct if it took place in a country where it did not constitute a criminal offence at the time it occurred).

It covers not only obvious serious crimes, like the illicit sale of drugs, but also to money or savings obtained as a result of relatively minor crimes, such as regulatory breaches, minor tax evasion or benefit fraud. A deliberate attempt to obscure the ownership of illegitimate funds is not necessary.

2.4.2 Reporting offences

The following activities are also an offence:

where you know or suspect, or have reasonable grounds to suspect, that another person is engaged in money laundering, failure to disclose that knowledge or suspicion or reasonable grounds for suspicion as soon as possible to a MLRO, the deputy MLRO or to the National Crime Agency (the "failure to disclose" offence); or
disclosure to a third party that a suspicious activity report has been made to the police, HM Revenue and Customs, the National Crime Agency or a nominated officer, or that an investigation into money laundering is being contemplated or carried out, and in both cases where the disclosure might prejudice any potential or ongoing investigation (the "tipping off" offence).

In order for there to be a failure to disclose offence, you must either know the identity of the money launderer or the whereabouts of the laundered property or believe the information on which your suspicion was based may assist in identifying the money launderer or the whereabouts of the laundered property.

Knowledge can include knowledge of circumstances which would indicate facts to an honest and reasonable person and knowledge of circumstances which would put an honest and reasonable person on enquiry.

Suspicion falls far short of proof based on firm evidence but goes beyond mere speculation. It must be based on some foundation

Reasonable grounds to suspect is an objective test. This could include wilful blindness, or negligently failing to make adequate enquiries or failing adequately to assess the facts and information that are either presented or available and that would put an honest person on enquiry.

2.4.3 Terrorist Financing offences

Insofar as “terrorist property” is concerned (i.e. property to be used for terrorism and the proceeds of terrorist activity), the primary offences in the UK are:

involvement in fundraising if you have knowledge or reasonable cause to suspect that the money or other property raised may be used for terrorist purposes;
use or possession of money or other property for terrorist purposes, including when you have reasonable cause to suspect that the property may be used for terrorist purposes;
involvement in arrangements which makes money or other property available to another if you know or have reasonable cause to suspect that it may be used for terrorist purposes;
entering into or becoming concerned in an arrangement facilitating the retention or control of terrorist property by, or on behalf of, another including by concealment, removal from the jurisdiction, or by transfer to nominees.

As with the Proceeds of Crime Act 2002, it is also an offence to fail to disclose knowledge, suspicion or reasonable grounds for suspicion of a primary terrorist property offence, or to “tip off” a third party about a suspicious activity report or potential or ongoing investigation relating to terrorist property offences where the investigation might be prejudiced as a result.

2.4.4 Defences

There are certain defences to the primary offences, but they are few and limited in scope. Also, there are certain exceptions/defences to the failure to disclose and tipping off offences. However, the defenses are not straightforward, and you should follow the firm’s reporting procedures and speak to the MLRO or deputy MLRO in all situations where you have a suspicion of money laundering so that he or she can make an informed decision on the appropriate course of action, and document this as necessary.

2.5 Consequences of non compliance with the Money Laundering Regulations

Failure to comply with the regulations has far reaching consequences for both the firm and for its staff. The firm could face a hefty financial penalty and in very serious cases staff could face imprisonment. A breach of the policy and hence the regulations can just as easily be caused by an administrative assistant as by a member of the management team. The safest course of action is therefore for everyone to follow the procedures set out in this policy as a matter of routine and to raise any queries or suspicions with the MLRO or his deputy.

2.6 Red flags

It is not possible to list all the circumstances which should give rise to a suspicion that a client or other person is engaged in money laundering. You should always be alert to anything unusual or inexplicable. However, the following list of warning signs should be borne in mind.

General

Transactions which have no apparent purpose and which make no obvious economic sense;
Where the transaction being requested by the client without reasonable explanation is out of the ordinary range of services normally requests or is outside the experience of the firm in relation to the particular client;
Where the client refuses to provide the information requested without reasonable explanation (e.g. a client appears to be acting as the agent for another person, but is reluctant to provide information regarding questions about his or her principal or the client purports to represent a company, but cannot provide evidence of legitimate, ongoing business activities, such as names of customers or suppliers);
Where a client who has entered into a business relationship uses the relationship for a single transaction or for only a very short period of time;
The wide use of offshore accounts, companies or structures in circumstances where the client’s needs do not support such economic requirements;
Unnecessary routing of funds through third party accounts;
Unusual investment transactions without apparently discernible profit motive;
Where the client is a political figure or government official or is related to one of these;
Attempts to launder proceeds through a cash intensive business (as criminals often do) - where the cash-flows appear too large or the profit margins too high, this may be a warning sign;
Dubious businesses often use more than one set of professional advisors. Ask yourself why has the firm been approached?
Unusual settlement requests, e.g. where unusually large sums of cash are offered or cash is being sent by persons who are not clients of the firm or where the source of funds or the way in which settlement is to take place is unusual. It is very unlikely that we would ever be presented with anything so obviously suspicious as a large cash payment but, if that were to happen, the payment should not be accepted;
Using the firm for banking services only, e.g. receipts of funds into client account, all or some of which prove not to be needed for any subsequent transaction, followed by a request by the client for onward transmission of the funds through the banking system to a third party. The firm’s policy is generally to prohibit the onward transmission of our client account details to any party outside the lawyer/client relationship;
Requests to hold boxes, parcels and sealed envelopes on behalf of a client. The firm’s policy is not to accept any package for safe custody without checking the contents;
Unusual instructions, e.g. where a client seeks to use the firm for an unusual niche practice about which the client purports to be an expert. In such cases, were must familiarise ourselves with the transaction proposed so that we know whether or not it is unusual; or

Financial Services

Part 3: Our Procedures

3.1 The Firm

3.1.1 Obligations on the firm

Conduct an annual risk assessment to identify and assess areas of risk of money laundering and terrorist financing particular to our firm.
Implement controls proportionate to the risks identified.
Establish and maintain policies and procedures in the following areas to anticipate and prevent activities relating to money laundering and terrorist financing:
1. Client identification and verification; (Customer Due Diligence)
2. Source and destination of funds.
Review policies and procedures annually and carry out ongoing monitoring of compliance with them through an independent audit conducted by external specialists.
Record any changes to the policies, procedures, and controls and communicate any such changes to staff.
Appoint a Money Laundering Reporting Officer (MLRO) to take responsibility for reporting any suspicious circumstances to the National Crime Agency (NCA) [and appoint a Money Laundering Compliance Officer (MLCO) to oversee the firm’s systems and controls.]
Ensure the MLRO is properly resourced.
Provide training at least every two years regarding the law and the firm’s procedures on money laundering to all members of staff.
Screen relevant employees as to integrity and knowledge prior to appointment and at regular intervals in line with training and appraisal.
Maintain records of client identification evidence for at least five years from the end of our business relationship with a client. We must also keep records in relation to transactions for at least five years from the end of the relationship.

3.1.2. Appointment of MLRO and MLCO

Under the Regulations we are required to appoint a Money Laundering Reporting Officer (MLRO)

The firms has appointed Bobby Singh as MLRO.

Any questions about these guidelines or money laundering issues generally should be addressed to the MLRO.

3.1.3 Firm Risk Assessment of Money Laundering and Terrorist Financing

The firm will carry out a written risk assessment annually in order to identify and assess the risk of money laundering and terrorist financing we face. This assessment will:

Assist in developing policies, procedures and controls to mitigate the risk of money laundering and terrorist financing;
Help us to assess the level of risk associated with particular business relationships and transactions to enable us to make appropriate risk-based decisions about clients and retainers;
Help us to identify risks pertinent to specific work areas

Matters for the firm to consider in carrying out this risk assessment can be found at Appendix 1 below.

A copy of the firm’s risk assessment can be found at Appendix 2. Each member of staff should ensure that they are familiar with it

3.1.4 Record Keeping

The following records will need to be kept.

A copy of, or the references to, the evidence of the client’s identity, plus supporting records (i.e. copies of original documents) obtained at client inception.
A copy of, or the references to, the evidence of the client’s identity, plus supporting records (i.e. copies of original documents) obtained as a result of ongoing monitoring.
A copy of, or the references to, the relevant information for beneficial owners.
A copy of, or the references to, supporting records (either original documents or copies) of a business relationship or occasional transaction which is the subject of CDD or ongoing monitoring.
Documentary evidence about the nature and purpose of the retainer to comply with regulation 5(c)MLR if you are in a business relationship.
A copy of the risk assessment of the client, plus supporting records.
Documentary evidence of enhanced due diligence, including PEPs.
Details of transactions plus supporting documents.
Details of concerns about the client or retainer.
Records of training provided by the firm.
Records of compliance monitoring.
Records of internal and external reports.

3.1.4.1 Retention Periods

The ID and supporting records must be kept for at least five years from the date on which the occasional transaction was completed or the business relationship ends.

The records for each transaction will be kept for at least five years from the date on which the transaction completed.

The training records will be kept for five years after the training was completed.

The records of compliance monitoring will be kept for five years.

3.1.4.2 Storage of records

An electronic record of the fact that ID has been obtained and the date will be kept on a restricted access client file.

The training records will be maintained by the MLRO.

The records of compliance monitoring will be kept by the MLRO.

The records of reports will be maintained by the MLRO.

3.1.4.3 Queries about records

If a member of staff has a concern or a query about any aspect of the record keeping obligations, they must contact the MLRO providing their details, details of the client, matter number, type of retainer and nature of query.

3.1.5 Screening

Regular screening of new and existing staff in relation to their skills, knowledge and expertise as well as their conduct and integrity will be carried out. The HR department will conduct a due diligence check on identification, screen for PEP/Sanctions and adverse media.

3.1.6 Training

All members of staff will be provided with training as to the law on money laundering and as to the firm’s procedures in how to prevent this (AML Training).

Each new starter’s induction process will include AML training in order to make them aware of the Firm’s policies and guidelines.

Refresher AML training will be provided every two years or sooner if there are substantive changes in law.

Records of all such training will be kept for a minimum of 5 years. The MLRO or person nominated by him will monitor such records to ensure that no one is overlooked and that refresher courses are held at timely intervals.

The effectiveness of the training provided will be monitored by way of assessment of the speaker at the end of the session and a later test.

3.1.7 Approval of policies and procedures

This policy and associated procedures have been reviewed and approved by management. The Senior Management Team will review it annually. Any material changes which are required before the annual review will require review and approval by SMT.

3.1.8 Communication of changes to policies and procedures

All staff will be provided with a copy of this Policy and will be asked to confirm that they have read and understood it

3.1.9 Monitoring compliance

The MLR requires the firm to monitor compliance with the policies and procedures which have been established to comply with the regulations.

3.1.9.1 File reviews

This will take place intermittently every 6 months

3.1.9.2 Independent Review

The firm will engage internal consultants to carry out an independent audit every year. The audit will assess whether:

Identity checks were obtained as required by the client verification procedure;
File opening checklists have been completed;
Satisfactory evidence has been obtained;
Risk assessments have been completed as required by the procedure;
Ongoing monitoring is being undertaken as required by the procedure;
Potential ML concerns have been raised with the MLRO;
Reports have been made to the MLRO;
There have been any compliance failings.

All staff must co-operate with requests from the external audit consultants to provide files and other information.

The external audit consultants and the MLRO will review the audit results and decide what action is required to rectify any non-compliance. Any corrective action should be completed as soon as possible.

3.2 The MLRO

3.2.1 Obligations on the MLRO

Deal with day-to-day queries regarding money laundering and give clear guidance to staff.
Receive and review internal suspicion reports.
Decide when to report to NCA.
Make any report to NCA.
Keep records of all internal suspicion reports and keep under review.
Keep records of all external suspicion reports and keep under review.
Keep records of all information received but not acted upon.
Prepare an annual report to the board. This will help assess the adequacy of the firm’s policies and procedures.
In relation to PEPs, decide whether to take on a matter, and what Enhanced Due Diligence (EDD) should be carried out.
Ensure all staff receive Anti-Money Laundering (AML) training and that a record of the training is maintained.
Obtain information about the effectiveness of training by assessment of the trainer, and through testing at a later date.
Advise staff on dealings and communications with clients once a report has been made to prevent inadvertent tipping off.

3.2.2 Reporting to authorities

If the MLRO decides to report to NCA, it will be made clear whether the firm is:

NCA should give or refuse consent to continue with the transaction within 7 clear working days – if no response is received in this time consent to proceed will be deemed to have been given.

If consent is withheld the firm must not proceed with the transaction for a period of 31 calendar days (the ‘moratorium period’), from the date of the refusal, otherwise it risks committing a money laundering offence.

Following the moratorium period, the NCA can apply for an extension for 6 further periods of one month. The MLRO will investigate in that event what if anything can be communicated to the client. Staff MUST NOT discuss this with the client without guidance and permission from the MLRO.

3.2.3 Record keeping

Record will be kept in a restricted client folder where copies of ID/DD and results of checks will be kept.

These will then be destroyed after the relevant period has been lapsed.

3.2.4 Reporting to the Board

The MLRO will prepare a report on an annual basis containing the following information:

Details of training provided and the names of any person who did not attend.
Any material changes to risk factors.
Details of PEPs/high risk clients taken on by the firm.
Number of retainers terminated as a result of lack of CDD or suspicious circumstances.
Details of internal reports received.
Details of external reports made.
Any response received to reports made.
Any approaches by NCA/SRA/law enforcement agencies relative to AML/CTF concerns.
Identify reporting trends and problems/risks and assess whether reporting procedure is working effectively.
Plan of work going forward – any changes to policy or procedures, any specific areas to concentrate on.
Any issues identified by external consultants’ independent audit.

3.3 Staff

3.3.1 Obligations on staff

Comply with the firm’s policies, systems, and procedures as set out in this policy.
Continue to monitor all retainers for warning signs of money laundering or terrorist financing.
Seek guidance from the MLRO or the deputy in relation to any issues arising.
Report any suspicions to the MLRO or the deputy.
Refer any queries or requests for information from law enforcement to the MLRO or his deputy.
Follow directions received from the MLRO or the deputy.
Maintain confidentiality at all times.
Avoid discussing any potential or actual reports with clients or third parties unless authorised to do so by the MLRO or the deputy.
Attend and participate in training.

3.3.2 Matter/Activity based risk assessment

Once a client has been opened activity a risk assessment take place very time a new instruction is
received to ensure this is within the risk appetite of the firm.

3.3.3 Client Due Diligence

Identify the client and verify their identity from a reliable and independent source (such as a passport).
Identify and verify the identity of any beneficial owner of the client (where the beneficial owner is an entity or legal arrangement, understand its ownership and control structure).
Identify and verify the identity of any person purporting to act on behalf of a client and verify that they are authorised to act for that client.
Assess and obtain information on the purpose and intended nature of the business relationship or transaction.

3.3.3.1 Client ID

It is the firm’s policy to verify the identity of all new clients and all existing clients at the start of a new matter unless they have been identified already, you are satisfied that nothing about their situation has changed and they have instructed us within the last 12 months.

The identification procedures must be carried out as soon as reasonably practicable after first contact is made between the firm and client. It is not necessary for the firm to wait until the verification process is complete before commencing work for the client. However, if it proves impossible to satisfactorily complete the process we must cease to act for the client.

3.3.3.1.1 Simplified Due Diligence

SDD is permitted where the business relationship or transaction is considered to present a low risk of
money laundering or terrorist financing, taking into account the firm’s risk assessment.

The types of clients that may be considered low risk and therefore potentially suitable for SDD (in the absence of any other risk indicators) are as follows:

1. Public or listed companies, or subsidiaries of public or listed companies, whose shares are listed on the primary exchange in any of the following countries: an EU Member State, or Norway, Iceland, Liechtenstein, Australia, Brazil, Canada, Hong Kong, India, Japan, South Korea, Mexico, Singapore, Switzerland, South Africa, USA, Jersey, Guernsey, Isle of Man, Gibraltar, Netherlands Antilles, Aruba, or the French overseas territories.

2. Financial or credit institutions regulated in one of the following countries: an EU Member State, Norway, Iceland, Liechtenstein, Australia, Brazil, Canada, Hong Kong, India, Japan, South Korea, Mexico, Singapore, Switzerland, South Africa, USA, Jersey, Guernsey, Isle of Man, Gibraltar, Netherlands Antilles, Aruba, or the French overseas territories.

3. Public/listed companies or financial/credit institutions which are not listed/regulated in any of the countries referred to in 1 or 2, above.

3.3.3.1.2 Standard Due Diligence

This is the level of due diligence detailed at 3.3.3.2.1 and 3.3.3.2.3 below. The presence of high risk factors, may require further checks, or evidence, by way of EDD.

3.3.3.1.3 Enhanced Due Diligence

EDD must be undertaken in the following circumstances:

Any cases identified as high risk in the risk assessment undertaken by the firm or in relation to the matter. (See 3.3 below.)
Any transaction or business relationship with a person established in a high-risk third country.
Any transaction or business relationship with a Politically Exposed Person (PEP) or associate or family member of a PEP. (See below)
Where a customer has provided false or stolen ID documents.
Where a transaction(s) is/are:

(a) complex and unusually large or follows an unusual pattern; and

(b) have no apparent legal or economic purpose.

The firm’s risk assessment takes into account all circumstances in which EDD is required and therefore it is important that all staff follow the procedures set down in that document.

3.3.3.1.3.1 Situations that present as a higher risk of Money Laundering or Terrorist Financing

Regulation 33(6) of the MLR sets out a wide range of risk factors including customer risk factors, product/delivery/service/transaction risk factors and geographical risk factors.

If you have any reason to believe that the matter may fall into this category you must seek approval of the MLRO who will assist in determining what EDD is required/employ enhanced due diligence measures. Measures may include:

(a) Seeking additional independent, reliable sources to verify information provided;

(b) Taking additional measures to understand better the background, ownership and financial situation of the customer, and other parties to the transaction;

(c) Taking further steps to be satisfied that the transaction is consistent with the purpose and intended nature of the business relationship;

(d) Increasing the monitoring of the business relationship, including greater scrutiny of transactions.

3.3.3.2 Process for Client ID (SDD)

Although the anti-money laundering regulations introduced in most countries contain exceptions for types of work or relationships where identity verification is not required, it is the policy of the firm to apply the identity requirements to all new clients, since the relationship may evolve into an ongoing business relationship where the evidence would be required, and it is easiest to ask for the necessary information when the relationship is first being established. Further, the universal application of the identification procedures helps the firm to avoid acting for dubious or dishonest clients for whom we would not wish to act in any event.

3.3.3.2.1 Evidence for a private individual – SDD

For all matters the client’s full name, address and date of birth should be obtained and recorded on AX

The details provided should also be verified by asking the client to produce at least one document from each of the following lists:

List A (evidence of name and date of birth)

Current valid full passport (this is best form of ID);
National identity card or resident’s permit;
Current photocard driving licence;
Firearms certificate;
State pension or benefit book; and
Inland Revenue tax notification.

List B (evidence of address)

Recent utility or local authority council tax bill;
Recent bank/building society statement;
Recent mortgage statement;
Current driving licence (not if used in List A); and
Local council rent card or tenancy agreement.
A home visit will also qualify as evidence of address, a note should be recorded of the date of the home visit on the file.

Paperwork relied upon should be something that was posted rather than printed off the internet. Although many people now obtain information such as bank statements electronically there is obviously the risk that these are more easily forged. When accepting electronic documents consider carefully the risk of forgery.

c) The Compliance Team will also carry out KYC/KYB checks using Experian on the client for PEP and Sanction Screening.

Where joint instructions are received, identification procedures should be applied to each client.

3.3.3.2.2 Additional requirement where the client is not present

The client must be instructed to take the original and copy Name and Address ID required for CDD to a Solicitor, Doctor or Accountant and have the copy documents certified as a true copy of the original and where it is a document with a photograph, that it is a true likeness of the person named in the document. The copy documents should then be sent to us via the postal service.

The name and address of the institution providing the certification should be noted and checked by reference to a professional directory.

3.3.3.2.3 Evidence for a corporate body - SDD

Where client is a corporate body such as a company, partnership, LLP or trust, the Conflict team will obtain and verify:

Full name of entity;
Company number or other registration; and
Address of its registered office and principal place of business (if different);
Governing documents - Memorandum and Articles of Association, Partnership Agreement, Constitution or Trust Deed (unless a plc);
The law to which it is subject (unless a plc);
Names of the board of directors (or equivalent management body) and the senior persons responsible for its operations (unless a plc);
The identity of one director/manager.

3.3.3.2.4 Identification and verification of the Beneficial Owner

Where client is an individual instructing us on his own behalf there is no beneficial owner. However, if the entity instructing us is a company or a trust (including an executor in probate) we will need to determine who the beneficial owner is. The definition of beneficial owner will depend on the nature of the entity. In general terms the beneficial owner is someone who owns or is entitled to 25% or more of the shares/ voting rights/capital/ profits of the entity on whose behalf the transaction is being conducted or a person who ultimately exercises control over that entity

3.3.3.2.5 Additional requirements where a PEP is involved

Who is a PEP?

An individual who has been entrusted within the last year with a prominent public function including:

heads of state, heads of government, ministers and deputy or assistant ministers;
members of parliament or similar legislative bodies;
members of the governing bodies of political parties;
members of supreme courts, of constitutional courts, or of other high level judicial bodies whose decisions are not generally subject to further appeal, except in exceptional circumstances;
members of courts of auditors or of the boards of central banks;
ambassadors, charges d’affairs and high-ranking officers in the armed forces;
members of the administrative, management or supervisory bodies of state-owned enterprises;
directors, deputy directors and members of the board or equivalent function of an international organisation;
family members of a PEP -spouse, partner, parents, children and their spouses or partners;
known close associates of a PEP - persons with whom joint beneficial ownership of a legal entity or legal arrangement is held, with whom there are close business relationships, or who is a sole beneficial owner of a legal entity or arrangement which is known to have been set up for the benefit of the primary PEP.

Middle ranking and junior officials are not PEPs.

The Compliance Team will carry out an electronic verification search using [name of provider]World Check to check for potential PEPs. Frequently there will be a “false positive” result. In the event of a PEP match, they will google the client’s name and attempt to find the PEP and eliminate the client. You may need to seek instructions from the client if they cannot eliminate them.

If someone is a PEP it should be reported to the MLRO immediately who will decide if the firm will take on the matter and what needs to be done regarding EDD. In particular further information may be needed to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction and the business relationship may require closer monitoring.

3.3.3.2.6 Sanctions

The UK government imposes financial restrictions on persons and entities as part of its domestic counter-terrorism regime, as well as those persons proscribed by the United Nations and/or EU. These rules restrict:

The Compliance Team will carry out an electronic verification search using Experian/Credit Safe ad any other relevant public source to check for potential sanctions. Frequently there will be a “false positive” result. In the event of a sanctions match, the [who] will google the client’s name and attempt to find the sanctions person or entity and eliminate the client. You may need to seek instructions from the client if they cannot eliminate them.

You can also refer to HM Treasury consolidated list of all persons and entities that are subject to sanctions which are effective in the UK. This is available at https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-oftargets/consolidated-list-of-targets

There are a number of countries and regimes to which financial sanctions have also been applied please see separate appendix 3 with updated list.

3.3.3.3 Purporting to act on behalf of another

Where we have been instructed by an agent who purports to act on behalf of the client we must undertake full due diligence for the third party ad ensure we are satisfied the relationship between the parties is genuine.

3.3.3.4 Understanding the Purpose and Nature of the Business Relationship

In relation to each transaction (or series of transactions depending on nature of the work) the following questions should be considered:

Is the transaction in question of the type that this client might be expected to do?
Is there anything unusual in the client’s demeanour or behaviour (e.g. secrecy, reluctance to provide information)?
Is there any reason why it is unusual for this client to instruct this legal practice to carry out the transaction (e.g. distance, not type of work practice usually does etc.)?
Is there anything which makes the transaction seem overly or unnecessarily complex (e.g. additional steps not needed etc.)?
Is there anything which leads you to suspect the transaction is a sham to use the client account as a banking facility?
Is there an unusual urgency about the matter, where the client will not listen to legal advice, and just wants to complete as soon as possible?

3.3.3.4.1 Source of Funds

The best source of payment is one made by cheque/CHAPS/BACS drawn on an account in the Client’s name from a UK or UK/EU authorised bank. .

Further information as to the source of the funds (i.e. the account from which the funds have come from) or further actions will be required in the following cases:

1) The payment is for a transaction

2) Client wants to pay by cash

3) Payment is coming from overseas

4) Payment is being made by a third party

5) Client has made an overpayment.

3.3.3.4.2 Funds for Transactions

In respect of all transactional payments i.e. any payment not for fees/disbursements information as to the source of the funds should be obtained by:

(a) Seeking instructions from the client;

(b) Obtaining documentary evidence in support of client’s instructions for example bank statements for the previous 6 months showing movement and source of monies, including if the funds have been with third parties.

3.3.3.4.3 Cash Payments

We do not ordinarily accept cash. Permission of the MLRO must be sought before accepting cash.

3.3.3.4.4 Overseas payments

In respect of overseas payment further information as to the source of the funds should be obtained by:

a. Seeking instructions from the client;

b. Obtaining documentary evidence in support of client’s instructions for example bank statements for the previous 6 months showing movement and source of monies, including if the funds have been with third parties.

The responses should be recorded and kept on client file.

3.3.3.4.5 Third Party Payments

In respect of a third-party payment:

(a) Seek instructions from the client as to why payment is being made by a third party

(b) Obtain documentary evidence as to the source of the monies from the third party for 6 months prior to the transaction.

(d) Gift/declaration form must be completed where appropriate.

The responses should be recorded on [where].

3.3.3.4.6 Overpayments or mistaken payments into the client account

Any overpayment or mistaken payment into our firm’s bank account may trigger:

1. A full risk assessment; and

2. Due diligence on the payer (if it is not the client).

The monies will not be returned unless and until the MLRO is satisfied that there is no significant risk of money laundering.

3.3.3.5 Ongoing Monitoring

Ongoing monitoring is the process of keeping a client/retainer under review to ensure that the transactions are consistent with your knowledge of the client, their business and the risk profile. This means:

(a) Keeping the documents, data or information obtained for the purpose of applying CDD up to date

(b) Continuing to keep under scrutiny all the transactions undertaken during the course of the relationship and the source of funds.

(d) Staying alert to any suspicious circumstances which may suggest money laundering, terrorist financing or the provision of false CDD material.

3.3.3.5.1 When to Carry Out Further CDD

You must consider obtaining further ID or verifying any changes if;

If you have a concern about a business relationship or a query as to what the next step should be, you must contact the MLRO.

3.3.4 Reporting Procedure

You must report any suspicion you may have that money or property has originated from criminal activity regardless of whether client passes the due diligence checks. Criminal activity can be anything from terrorism and drug dealing to low level tax evasion – under declaring income etc.

It is important that you do not “turn a blind eye” even if you consider what you suspect to be low level offending. It is highly likely that it may be discovered during an internal or external audit, if someone else takes over the conduct of your file or if suspicions are reported in relation to another party to the transaction.

Failure to report your suspicions is a criminal offence which could result in a fine, a criminal record and in the worst cases, in imprisonment. At the very least you run the risk of losing your job.

In order to protect yourself it is vital that anything you have said or done is recorded in writing. Therefore, is it important you follow all the procedures set out in this policy and the correct procedure for reporting to the MLRO or the deputy.

You will not be breaching client confidentiality or privilege by reporting any matters to the MLRO. The MLRO will be solely responsible for determining issues relating to privilege and external reporting obligations to the NCA.

3.3.4.1 What Is Suspicion?

To suspect something is quite a low threshold. However, it must still have some factual foundation so is more than a “gut feeling” that something isn’t quite right.

In relation to the actual money laundering offences, the test is a subjective one – it has to be proved that the person in question actually suspected that proceeds of crime were being used or that funds were destined to finance terrorist activities.

However, the offence of failing to report knowledge or suspicion is tested objectively i.e. would the facts have caused a reasonable person to suspect that another person is engaged in money laundering? This is a lower standard and therefore staff need to be on their guard.

The test is, therefore, two-fold:

1) Do you, as a matter of fact, have a suspicion? and

2) Would a reasonable person with your experience, background and understanding have a suspicion based on the facts as known to you?

You are not expected to police your client – so if something comes up and client offers a reasonable explanation you do not have to corroborate that explanation (though do make a file note). But if something doesn’t feel right or alarm bells are ringing do not hesitate to report to the MLRO or the deputy MLRO.

3.3.4.2 Procedure for Reporting Issues/Suspicion to MLRO or deputy MLRO

A suspicious activity must be reported to the MLRO verbally or in writing.

Keep a copy of the report, but NOT ON CLIENT FILE.

3.3.4.3 Communication with the client following a report.

Telling your client that you have reported the matter or even discussion of any suspicion with your client is a criminal offence known as “tipping off”. It is viewed as a very serious offence and again runs the risk of imprisonment.

This also applies to any member of staff who knows that a report has been made or is being contemplated, including administrative staff.

Once you have reported the matter to the MLRO you will be advised not to carry out any further work on the matter until otherwise informed. The MLRO will also advise as to what to say to client should he/she make enquiries. It is important that all staff members who are aware of the report and who may be contacted by client know what they can and cannot say.

Ryzen Ventures LLC

Company Registration: 400408377

License Number: GT/111024/01

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