Anti-Money Laundering

Transcription

1 NEW BUSINESS Anti Money Laundering Know Your Customer s Business/Know Your Customer Risk Matrix Product Vulnerabilities - Risk Classification for Registration Business Rating Rationale 1 Very Low Very lowest level of vulnerability Existing clients Corporate client regulated entity Funding made by existing clients or No money involvement at the time of taking on new client or Monies received direct from FCA regulated firms Electronic client screening AML checks Risk Based approach 2 Low Low probability unlikely to be attractive to money launderers Funds from UK clearing banks Banks responsible for performing CDD checks on customers UK Takeovers Introduction certificate from regulated entity/or perform CDD checks Establish source of wealth and source of funds Electronic client screening AML checks Risk based approach 3 Moderate May be used to launder low level criminality London Stock Exchange listing Prospectus from FCA regulated entities Funds from UK/EU clearing banks Banks responsible for performing CDD checks on customers Introduction certificate from UK/EU regulated entity/or perform CDD checks Electronic client screening AML checks Establish source of wealth and source of funds Risk based approach 1

2 4 High May be used to launder but product features may limit the extent to move substantial amount of criminals funds 5 Very High Due to customer, or the product or delivery channel, it is assessed to present a higher money laundering or terrorist financing risk for the registration business OFEX/AIM etc. listing Prospectus from FCA regulated entities Funds from UK/EU clearing banks Banks responsible for performing CDD checks on customers Introduction certificate from UK/EU regulated entity/or perform CDD checks UK unlisted companies (Receiving Agent performs CDD checks) Electronic client screening AML checks Establish source of wealth and source of funds Risk based approach High Risk customers/jurisdictions/products No involvement of other regulated entities 2

3 Note: references to Money Laundering Regulations refer to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Initial Public Offering (IPO), (includes Receiving Agent requirement for, offers for subscription, offers for sale) (This can also be received electronically. The company is seeking a listing on a recognised or nonrecognised exchange (individuals/fir ms or the general public/employ ees can invest in the company by completing an application form and cheque) Registrar collects and banks cheques from investors. Payable to [Registrar] re: Share Offer Third Party Cheques (see glossary appendix 1) Debit cards (see appendix 1) In terms of the issuer CDD checks, a risked based approach should be taken. This approach is based on the company s nature of business, the lawyers and investment bank/advisor being used. also check that the advisor is FCA regulated Premium 2 (Low) Standard 3 (Moderate) AIM 4 (High) NEX 5 (Very High) Risk-Based Approach (see glossary Appendix 1) Prospectus from an FCA regulated firm or EU equivalent is acceptable Or Introduction Certificate from FCA/EU regulated firm with copies of CDD documents attached. If the Prospectus is not to the required standard or the Introduction Certificate is not to our requirements full KYB/CDD should be conducted. Due diligence should be undertaken subject to the nature of the exchange. Private Companies Obtain the following: full name registered number registered office in country of incorporation business address names of all directors (or equivalent) - names of beneficial owners holding 25% 3

4 or more (the information can normally be obtained from If the customer, or the product or delivery channel, is assessed to present a higher money laundering or terrorist financing risk:- Apply Enhanced Due Diligence Verify the identity of: Two or more of the directors and the appropriate beneficial owners holding 25% or more Initial Public Offering, (No receiving agent requirement) The company is seeking a listing on either NEX, AIM, CISX or Full (No retail element) No monies received at the time of the IPO, however, shares are delivered to the advisor/investment bank for onward deliver to their clients usually on a Delivery versus payment (DVP) basis within the CREST settlement system In terms of the issuer CDD checks, a risked based approach should be taken. This approach is based on the company s nature of business, the lawyers and investment bank/advisor being used. also check that the advisor is FCA regulated Premium 2 (Low) Standard & CISX 3 (Moderate) AIM 4 (High) NEX 5 (Very High) Electronic client screening AML checks (see glossary Appendix 1) Risk-Based Approach (see glossary Appendix 1) Prospectus from an FCA regulated firm is acceptable. Or Introduction Certificate from FCA/EU regulated firm with copies of CDD documents attached. If the Prospectus is not to the required standard or the Introduction Certificate does not meet requirements full KYB/CDD should be conducted. Private Companies 4

5 Shares will be delivered either by receipt of a Board Resolution Allotting shares or by receipt of executed CREST transfer forms signed by the selling shareholder, selling shares into the IPO. Obtain the following: full name registered number registered office in country of incorporation business address names of all directors (or equivalent) - names of beneficial owners holding over 25% or more (the information can be obtained from If the customer, or the product or delivery channel, is assessed to present a higher money laundering or terrorist financing risk:- Apply Enhanced Due Diligence Verify the identity of: Two or more of the directors and the appropriate beneficial owners holding 25% or more Initial Public Offering (includes The company is seeking a listing on either NEX X, Registrar collects and banks cheques from investors. Payable to This process involves a Regulated Entity, [Registrar Trustees Limited] holding shares in the Premium 2 (Low) Electronic client screening AML checks (see glossary Appendix 1) Risk-Based Approach (see glossary Appendix 1) Prospectus from an FCA regulated firm is acceptable. 5

6 Receiving Agent requirement for, offers for subscription, offers for sale) Using the Depositary Interest product NON-UK Companies (taking into account country risk), AIM, or Full (individuals/fir ms or the general public/employ ees to invest in the company) [Registrar] re: Share Offer Third Party Cheques (see glossary appendix 1) Debit cards (see appendix 1) name and issuing Depositary Interests into the CREST system on a one for one basis. As this method involves a Regulated Entity full CDD information is requested on the Company. A full Compliance Risk must be completed and proof of ID and proof of address of all Directors together with supporting company documentation obtained. Further checks must be completed on shareholdings over 25% and that the jurisdiction is acceptable Standard 3 (Moderate) AIM 4 (High) NEX 5 (Very High) Or Introduction Certificate from FCA/EU regulated firm with copies of CDD documents attached. If the Prospectus is not to the required standard or the Introduction Certificate does not meet requirements full KYB/CDD should be conducted. Private Companies Obtain the following: full name registered number registered office in country of incorporation business address names of all directors (or equivalent) - names of beneficial owners holding over - (the information can normally be obtained from If the customer, or the product or delivery channel, is assessed to present a higher money laundering or terrorist financing risk: Apply Enhanced Due Diligence Verify the identity of: Two or more of the directors and 6

7 the appropriate beneficial owners holding 25% or more Initial Public Offering (No receiving agent requirement) Using the Depositary Interest product NON-UK Companies (taking into account country risk) The company is seeking a listing on either NEX, AIM, or Full Listing This process involves a Regulated Entity, [Registrar Trustees Limited] holding shares in the name and issuing Depositary Interests into the CREST system one a one for one basis. As this method involves a Regulated Entity full CDD information is requested on the Company. A full Compliance Risk must be completed and proof of ID and proof of address of all Directors together with supporting company documentation obtained. Further checks must be completed on shareholdings over 25% and that the jurisdiction is Premium 2 (Low) Standard 3 (Moderate) AIM 4 (High) NEX 5 (Very High) Electronic client screening AML checks (see glossary Appendix 1) Risk-Based Approach (see glossary Appendix 1) Prospectus from an FCA regulated firm is acceptable. Or Introduction Certificate from FCA/EU regulated firm with copies of CDD documents attached. If the Prospectus is not to the required standard or the Introduction Certificate does not meet requirements full KYB/CDD should be conducted. Private Companies Obtain the following: full name registered number registered office in country of incorporation business address names of all directors (or equivalent) - 7

8 acceptable. names of beneficial owners holding over If the customer, or the product or delivery channel, is assessed to present a higher money laundering or terrorist financing risk:- Apply Enhanced Due Diligence Verify the identity of: Two or more of the directors and the appropriate beneficial owners holding 25% or more Electronic client screening AML checks (see glossary Appendix 1) UK Unlisted Companies Unlisted company wishes to employ a registrar to provide share register maintenance. No monies received, at the time of register take-on. As a broker/investment bank is NOT involved, undertake full CDD. In terms of all Directors and supporting company documentation Even where an FCA authorised body acts as introducer, undertake full CDD for unlisted 4 (High) Apply Enhanced Due Diligence Private Companies Obtain the following: full name registered number registered office in country of incorporation business address names of all directors (or equivalent) - 8

9 companies names of beneficial owners holding over AND Verify the identity of: All of the directors and the appropriate beneficial owners holding 25% or more Electronic client screening AML checks (see glossary Appendix 1) Mergers & Acquisitions (Takeovers) Company take over another company. Takeovers: Registrar acts for offer company and is responsible for: the receipt and validation of acceptances. If cash offer Offeror credits Registrar bank account on settlement day for distribution to acceptors Funding made by or on behalf of offeror (sometimes via a banking syndicate facility involving overseas banks). Payments made direct to accepting shareholder only. Risk/ML in terms of accepting shareholders low original shares have been registered on receipt of a transfer with a brokers stamp or through CREST; in both cases via a UK Takeovers 2 (Low ) Non-UK takeovers 3 (Moderate) Risk-Based Approach (see glossary Appendix 1) UK Takeovers For UK takeovers - Introduction Certificate from an FCA regulated firm should be acceptable, or if not received Standard Due Diligence should be under taken. Non-UK Takeovers Non-UK takeovers to be considered on a case by case basis. For EU takeovers the Introduction Certificate from an FCA/EU regulated firm should be acceptable or if not received Standard Due Diligence should be applied. (Subject to an 9

10 Mergers: regulated firm. assessment of risk) Registrar is responsible for the receipt and validation of acceptances (if applicable) and distributes new shares to shareholders in the combined group, which may also involve cash fraction payments. In cases where the person carrying out the merger/acquisition is not the Registrar for the target, the Registrar will take-on the targets share register from other service provider/company. If the customer is outside the EU or is assessed to present higher money laundering or terrorist financing risk Apply Enhanced Due Diligence Full KYB/CDD should be conducted: Obtain the following: full name registered number registered office in country of incorporation business address Verify the identity of the corporate from: either a search of the relevant company registry or confirmation of the company s listing on a regulated market or a copy of the company s Certificate of Incorporation A risk based approach should be undertaken whether the following verifications are also required. The identity of: Two or more of the directors and the appropriate beneficial owners holding 25% or more 10

11 Source of wealth and source of funds to be established on a risk-sensitive basis Electronic client screening AML checks (see glossary Appendix 1) 11

12 Appendix 1 Glossary Electronic Anti-Money Laundering checks - In addition to obtaining evidence of ID and address, an online client screening check is also carried out. This consists of a check of the applicant company, its directors, authorised signatories and principle shareholders against various sanctions lists such as H M Treasury sanctions list, Non- Cooperative Countries and Territories (NCCT) and Politically Exposed Persons (PEPs). Risk Based Approach - a risk based approach will be undertaken based on all or elements of:- The corporate profile (e.g. private/public, regulatory status/history, nature of business, financial performance, business locations). Director profiles (e.g. regulatory status/history). Underlying shareholder/customer profiles (e.g. individual/corporate, history, UK/overseas). Payment/Entitlement values and currency. Payment channels (e.g. cheque, BACS, CHAPS, UK/overseas). Scope of existing monitoring controls. Electronic Payments (e.g. CHAPS/debit cards) - The registrar will supply the relevant information if applicable to comply with the EU Wire Transfers Regulations. As the registrar may not be in a position to confirm whether an electronic payment is third party or not, anything over 15,000 (or the sterling equivalent) will be treated as if it is. Debit Card payments will only be accepted from UK Banks. As a guide to registrars the following should apply for electronic payments: 15,000 and under can be accepted without any Due Diligence Requirements or further monitoring. 15,001-50,000 - Discretionary due diligence to be undertaken 50,001-99,999 - Bank statements to verify payment is in applicants name along with passport to confirm the individuals identity. 100, All subject to Due Diligence. should ensure that all reasonable controls are undertaken to manage the receipt of payments in accordance with regulatory obligations and such controls should include duplicate payment monitoring. CHAPS payments are accepted from FCA authorised brokers/entities upon receipt of confirmation that satisfactory Know Your Customer (CDD) checks have been performed on the underlying applicants and evidence account is in the authorise firms name and that they are indeed authorised. Third party cheques - Third party cheques are accepted if they are building society cheques or bankers' drafts where the building society or Bank has confirmed the name of the account holder by stamping/endorsing the cheque/ bankers draft to such effect. Third party cheques are accepted from FCA authorised brokers/entities upon receipt of confirmation that satisfactory Customer Due Diligence (CDD) checks have been performed on the underlying applicants. The registrar is responsible for exercising reasonable discretion in relation to other third party cheque payments. Accordingly a risk based approach must be taken with regard to the nature of the payment and other associated factors. 12

13 As a guide to registrars the following should apply: Third party cheques up to 15k (or the sterling equivalent) - can be accepted without any due diligence requirements or further monitoring. Third party cheques between 15k (or the sterling equivalent) and 50k discretionary due diligence to be undertaken. Third party cheques over 50k - all subject to due diligence, except for those received from an FCA authorised brokers/entities provided evidence received that account is in their name. Checks for linked transactions should be carried out as appropriate. Return of funds As standard, all funds will be returned to the originator; direct to their account/card for electronic payments or a cheque made payable to the person named on the original. Sanctions As standard, sanctions responsibility rests with the issuer company; however, on a periodic basis share registrars check the share registers against the H M Treasury sanctions list (and any others, as deemed appropriate). Country/Jurisdiction Risk Consideration should be given to the risks associated with the relevant countries/jurisdictions involved. Reliance An FCA regulated/ supervised firm (i.e. an Intermediary ( IFA )) which is acting in accordance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), may allow itself to be relied upon by another FCA regulated/ supervised firm, for all or part of the due diligence (including Identification & Verification and risk-assessment) that they have applied against a mutual client. Wherever used, the approach to and standards of reliance, must be aligned with that described in the aforementioned legislation, as well as the Joint Money Laundering Steering Group (JMLSG) guidance. The written consent of a firm to be relied upon, must be provided in advance of it being used, having been signed/ authorised by an individual acting as an employee of that firm, who is in an appropriate and senior position. Where requested to do so and within a period of no more than five business days, the firm being relied upon will make available to the firm that has placed reliance on them, any information/ data/ evidence that they have used in the due diligence process, in relation to a particular mutual client. 13