ANTI-MONEY LAUNDERING POLICY
Last Reviewed on: January, 2023
1. OBJECTIVES OF THE AML/CFT POLICY
The objectives of this AML/CFT Policy (“The Policy”) is to ensure compliance risks are identified, and adequately mitigated. Herconomy Limited (“Herconomy/The Organization”) seeks to reduce AML/CFT compliance risks considering the nature, scale, and complexity of its business.
The Policy has been derived from the general principles, laws, regulations and directives for combating money laundering and the financing of terrorism. The Organization is taking security measures and has adopted policies, practices and procedures that promote high ethical and professional standards and prevent the Organization from being used, intentionally or unintentionally, by criminal elements.
The Organization has also established Know Your Customer (KYC) programmes as an essential element for service, risk management and control procedures. The Organization is obliged not only to establish the identity of its customers, but also to monitor account activity to determine those transactions that do not conform with the normal or expected transactions for that customer or type of account.
The intensity of KYC programmes beyond these essential elements is tailored to the degree of risk. The Policy is also designed to meet the requirements of the Special Control Unit Against Money Laundry (“SCUML”) regulations and other directives issued by other regulators.
2. COMPLIANCE OFFICER
The Compliance Officer is primarily responsible for overseeing and managing the processes for ensuring compliance with the Organization’s internal rules and policies, statutory legislation, and regulation(s). The officer is responsible for ensuring that rendition of regulatory and other returns is carried out within the stipulated time frame. He is also responsible for ensuring that the activities of the Organization and its employees are conducted in accordance with all applicable laws and regulations, all external rules, policies and procedures and the highest ethical standards.
2.1 SCOPE OF THE COMPLIANCE FUNCTION
The scope of compliance function covers management of regulatory risk throughout the Organization, which comprises monitoring, and providing appropriate reports, on compliance with:
2.2 OBJECTIVES OF THE COMPLIANCE OFFICER:
The Compliance Officer’s objectives include the following:
3. APPLICABLE RULES & REGULATIONS
The Organization’s activities are regulated by the following legislations
4. INTERNAL COMPLIANCE
The Compliance Officer is responsible for compiling all applicable legislations and regulations and designing appropriate controls and monitoring procedures. The compilation process shall be a continuous process as new legislations and regulatory guidelines are issued.
4.1 REGULATORY ENVIRONMENT SCANNING AND UPDATES
The Compliance Officer shall daily scan the operating environment for updates by way of new circulars, directives, and other regulations. This is done by scanning through the websites of regulators, news media and other relevant sources.
The Compliance Officer shall in addition review every new regulatory update or enquiries received to check for the following:
5. MONEY LAUNDERING PREVENTION
Herconomy Limited shall take reasonable and necessary steps to ensure that members of staff who handle transactions which may involve money laundering are aware of their responsibilities, by designing internal rules to ensure that money laundering legislation is complied with. These includes the following:
6. KNOW YOUR CUSTOMER (KYC)
A business relationship with the Organization will never be established until the identity of a potential customer is satisfactorily established.
The Organization must establish to its satisfaction that it is dealing with a real entity and persons and obtain satisfactory identification. Regular contact with the customer must be used to keep such knowledge up to date and appropriate notes must be placed in the customer’s file.
Know Your Customer (KYC) process does not stop at the account opening stage but should be updated on every possible occasion. This includes monitoring changes in the customer’s activities, verifying address changes etc. All these changes should be documented in the customer’s file. For every new customer, a risk-based approach to KYC should be adopted for carrying out customer due diligence. Enhanced due diligence should be carried out for high-risk customers. Ongoing due diligence should be carried out on all customers, based on their risk profile.
To prevent Money Laundering and Terrorist Financing, Herconomy will implement processes and procedures in its line of business to conduct appropriate User/Customer due diligence through the Herconomy Business Partner/User Screening Questionnaire, Identifying the User and verifying the User’s identity on the basis of the following “Know Your Customer” principles:
User/Customer documentation can either be submitted in physical or electronic form. An appropriate record of the received documentation, steps taken and copies of, or reference to, the documentation of the customer must be kept. Records should be kept as long as the relationship endures with the User/Customer and for at least five (5) years after the relationship ends. Where the applicable laws impose a longer period, the provision of such law shall be applicable.
Customers that fall into the following types of businesses shall be required to provide a registration certificate issued by the Special Control Unit Against Money Laundering (SCUML) as part of the KYC process:
7. RISK ASSESSMENT MATRIX
Risk assessment matrix shall be clearly defined in terms of the nature of business, location of customer and his clients/source of funds, etc. This will enable assignment of risk rating of customers into low, medium, and high risk as appropriate. Each customer shall be subjected to a risk assessment using a Risk Assessment matrix developed for this purpose. Customers shall be assigned risk rating as follows:
The following shall be the responsibilities of the Compliance Officer with respect to customer Risk Assessment:
8. CUSTOMER RISK CATEGORIES
Herconomy Limited shall consider customers that fall into the following categories as high risk:
The Organization shall consider customers that do not fall into the category of High and low Risk as Medium Risk Customers.
POLITICALLY EXPOSED PERSONS (PEPS)
The following categories of customers shall be classified as politically exposed persons (PEPs):
9. SUSPICIOUS AND UNUSUAL TRANSACTIONS
Suspicious transaction is that which is unusual because of its size, volume, type, or pattern, or otherwise suggestive of known money laundering methods. It includes any transaction that is inconsistent with the customer’s known, legitimate business or personal activities or normal business for the type of relationship or that lacks obvious economic rationale.
9.1 CRITERIA FOR DETERMINING SUSPICIOUS AND UNUSUAL TRANSACTIONS
The following criteria shall provide guidance in determining suspicious and unusual transactions in Herconomy Limited :
A report on suspicious activity should contain, at least, the following information, which will be confirmed by the Compliance Officer:
Without prejudice to the generality of the foregoing, Herconomy shall have an obligation to report any suspicious transaction to the appropriate regulatory authority. More specifically, Herconomy shall;
Herconomy shall immediately and in any event not later than 24 hours after the transaction report to the regulatory authority.
9.2 PROCESS FOR FILING A SUSPICIOUS AND UNUSUAL TRANSACTION
To ensure Herconomy Limited ’s compliance with regulatory requirements on suspicious and unusual transactions, the following procedures shall apply
Training encompassing applicable AML/CFT laws and recent trends in money laundering and terrorist financing activities as well as Herconomy Limited’s policies and procedures to combat money laundering shall be provided to all relevant staff as needs arises. Trainings on AML/CFT shall be carried out as per regulatory requirement. Trainings shall be conducted using either of the following means:
11. POLICY REVIEW AND AUDITS
Regular reviews of the effectiveness of this Policy are carried out in addition to audits periodically undertaken by Herconomy’s internal audit unit. This provides the Executive Management with the necessary assurance and information regarding the operating effectiveness of Herconomy’s controls and processes relating to this Policy.