AML POLICY
Last updated
Last updated
ANTI MONEY LAUNDERING AND TERROR FINANCING POLICY FOR CRYPTO 4 A CAUSE
Contents
Definitions: 3
Introduction 5
Company Overview 5
Working of Crypto Service Provider under FinCEN 6
RISK BASED APPROACH TO AML/ CFT 6
Know Your Customer 7
Customer Due Diligence (CDD) 9
Enhanced Due Diligence (EDD): 11
Simplified Due Diligence: 12
KYC Review and CDD updates: 12
Risk Assessment 12
Transaction Monitoring: 13
Suspicious Activity Reporting: 13
Currency Transaction Reporting (CTR) 13
FATCA (Foreign Account Tax Compliance Act): 14
CRS Reporting (Common Reporting Standards) 14
Sanctions and Embargos 14
Compliance Program 15
Annual Reporting: 15
Record Retention: 16
Training of Staff 16
Internal Controls 16
Money Laundering (ML): Money laundering is the processing of these criminal proceeds to disguise their illegal origin.
Terror Financing (TF): Terror financing involves the solicitation, collection, or provision of funds with the intention that they may be used to support terrorist acts or organizations. Funds may stem from both legal and illicit sources.
Beneficial Owner (BO): A person who is the ultimate owner of the funds placed or invested in any scheme and has complete control of funds.
Beneficiary: means the person to whom or for whose benefit the funds are sent or deposited in bank or person who has beneficial interest in financial transaction to be executed.
Class of Beneficiaries: for beneficiary (ies) of trusts that are designated by characteristics or by class, financial institutions shall obtain sufficient information concerning the beneficiary to satisfy the financial institution that it will be able to establish the identity of the beneficiary at the time of the payout or when the beneficiary intends to exercise vested rights.
an individual known to have joint beneficial ownership of a legal person or a legal arrangement or any other close business relations with a PEP.
any individual(s) who have beneficial ownership of a legal person or a legal arrangement which is known to have been set up for the benefit of a PEP.
an individual who is reasonably known to be intricately connected with the PEP for any other reason, including socially or professionally
Control: in relation to a legal person, means the power to exercise a controlling influence over the management or the policies of the undertaking, and, in relation to shares, means the power to exercise a controlling influence over the voting power attached to such shares.
Cross-Border Wire Transfer: means a wire transfer where the ordering institution and the beneficiary institution are located in different countries or jurisdictions.
Designated Person (DP): individual or entity designated under UNSC Act.
Proscribed Person (PP): means prescribed under applicable rules, circulars, directions, orders, or bye- laws. of the country
Domestic Wire Transfer: means any wire transfer where the originator and beneficiary institutions are located within a country regardless the system used to affect such wire transfer is located in another jurisdiction.
Family member of a PEP: it includes
(a) Spouse of the PEP; and (b) lineal descendants and ascendants of the PEP and siblings of PEP.
Fund Transfer/ Wire Transfer: means any transaction carried out by financial institutions on behalf of originator person by way of electronic means or otherwise to make an amount of money available to beneficiary person at another beneficiary institution, irrespective of whether the originator and the beneficiary are the same person.
Identity Document: A document which enables the verification of the identity of the natural person which includes ID cards, Passport, Driving License or any such documents.
Politically Exposed Person (PEP): means an individual who is or has been entrusted with a prominent public function either domestically or by a foreign country, or in an international organization and includes but is not limited to:
Foreign PEPs, Heads of State or of government, senior politicians, senior government officials, judicial or military officials, senior executives of state-owned corporations and important political party officials.
Domestic PEPs, Heads of State or of government, senior politicians, senior government officials, judicial or military officials, senior executives of state-owned corporations, important political party officials.
International organization PEPs, members of senior management or individuals who have been entrusted with equivalent functions; and (d) Provided that middle ranking or more junior individuals in the above referred categories are not included in the definition of PEPs.
Settlor: are natural or legal persons who transfer ownership of their assets to trustees by means of a trust deed or similar arrangement.
Transfer: means sale, lease, purchase, mortgage, pledge, gift, loan, or any other form of transfer of right, title, possession, or lien.
Trust: means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of beneficiary.
Trustee: means any person who accepts the confidence of the author of the trust to the benefit of the beneficiary.
Ultimate Effective Control or Ultimately Owns or Controls means situations in which ownership/ control is exercised through a chain of ownership or by means of control other than direct control.
Proliferation Funding (PF): Financing used to smuggle the nuclear assets and its raw material. Since these may be used on terrorism purpose it is also included and termed as (AML/CFT/CPF) anti money laundering, combating financial terrorism, and controlling proliferation Financing.
Regulated Entity (RE): Any entity that is licensed under the government body or Regulator are called Regulated Entity.
Money laundering and terror financing are the most negative elements that has adverse effects on country`s economy. To mitigate such effects Government set out some rules and regulations to counter such elements which Crypto 4 A Cause will implement in its organization.
Money laundering is generally described as the process by which criminals attempt to hide or disguise the true origin and ownership of the proceeds of their criminal activities, including terrorist financing, thereby avoiding prosecution, conviction and confiscation of criminal funds. The prevention of terrorist financing is included in all the Firm’s policies, procedures, systems and controls for the prevention of money laundering.
Such operations may be complex but, in essence, they comprise three basic stages, as follows:
Placement – the placing of “dirty” money into the financial system;
Layering - the process of moving “dirty” money within the financial system to conceal the source of the funds;
Integration - the withdrawal of “cleaned” money from the financial system for the purpose of general expenditure or purchase of business or financial assets or real estate in furtherance of criminal activity.
In this document keeping in view such rules and regulations we have defined and set the standards regarding roles, objectives and responsibilities for countering Money Laundering and Terror Financing. This document will clearly mention the role of staff to identify, assess and report suspicions to FinCEN (Financial Crime Enforcement Network) as per Federal Government of US.
This document will clearly define Know your Customer, Customer Due Diligence, Identifying suspicion, assess the suspicion on some parameters defined under FinCEN. The role of compliance Officer does not end upon suspicion but start as compliance officer has to take actions upon the suspicion and report to the regulator in a pre-defined mechanism. Reporting of Currency Transaction beyond the threshold defined by FinCEN is also a role of compliance officer and retention of record for certain period defined.
The document is drafted upon the guidelines by FinCEN in different acts related to Bank Secrecy Act.
Crypto 4 A Cause is a legal entity registered under the laws of the Federal Government of US. The company acts a limited company which operates under the scope of business activities mentioned below
Crypto 4 A Cause is an ERC-20 token that aims to revolutionize charitable giving by leveraging the power of block chain technology. With Crypto 4 A Cause, users will have the ability to vote on proposals to donate money to a variety of charities, and they will also have the opportunity to
earn tokens through a play-to-earn game that is inspired by popular titles like Grand Theft Auto & Cyberpunk.
The decentralized nature of the Crypto 4 A Cause DAO allows users to have a say in where their donations go. By voting on proposals, users can choose which charities they want to support and how much they want to contribute. This ensures that the funds are used in a transparent and accountable manner, as all votes and transactions are recorded on the block chain.
In addition to voting on proposals, users will also be able to submit their own proposals for charitable projects. This allows the community to come together and collaborate on making a positive impact in the world.
To further engage the community and provide additional utility for token holders, Crypto 4 A Cause will also feature a play-to-earn game that is inspired by Grand Theft Auto. This game will allow users to earn tokens through gameplay, which they can then use to vote on proposals or hold as an investment.
The game will be set in a virtual world with various missions and challenges that players can complete to earn tokens. It will also include a marketplace where players can buy and sell virtual goods using the Crypto 4 A Cause token.
Any financial service provider who wants to run services in US will be bound under the Laws of US under different Acts presented by Congress time to time. FinCEN (Financial Crime Enforcement Network) is the most important regulator which directly controls financial institutions and collaborate with different regulating agencies of the US. FinCEN`s working and domain extended and well-shaped in 2020 when they introduced the AML/CFT/CPF laws considering FATF recommendations.
For initiating any business relation with any one entity must obtain some key information from its customer. This key information enables the entity to assess the risk, genuineness check of the customer and enables the entity to create a risk profiling of the customer which enable to impose some checks for monitoring the customer. Key information provides solutions in segmenting the customer like Salaried customer will be different from Sole Proprietor or business account etc. so
as their risk. Obtaining information or know your customer always set out the base of the customer relation with the entity.
For identification of customer/ occasional customer, at the minimum, Crypto 4 A Cause will obtain information, which includes but not limited to
Crypto 4 A Cause, at minimum, shall conduct CDD of their customers/ occasional customers in circumstances and matters set out in respective laws
For ensuring verification of documents and information obtained for CDD purposes, Crypto 4 A Cause will refer the source from which the document or information originates or use reliable and independent document, data or source as prescribed above and will use Veriff as a verification tool for verifying customer`s identity document in an automated manner.
While complying with CDD requirements Crypto 4 A Cause will ensure:
In case of an account/ relationship of an entity with abbreviated name or title, Crypto 4 A Cause will satisfy that the subject name/ title is in accordance with the constituent documents of the entity. Account/ relationship shall not be allowed in abbreviated name in cases where entity has its complete non-abbreviated name in their constituent document.
Crypto 4 A Cause will comply at minimum for all types of customers, financial services they offer and geographical locations they operate in, depending on the outcome of the IRAR as required in
Risk based approach Based on the categorization they shall profile their business relationships, occasional transactions, or operating geographical locations and may take decision of SDD (Simplified Due Diligence) for low risk and EDD (Enhanced Due diligence) for high risk customers, financial services they offer and geographical locations they operate in.
Crypto 4 A Cause will complete the verification of the identity of the customer, occasional customer, and beneficial owner before establishing a business relationship or conducting the occasional transaction or during establishing a business relationship or occasional transactions.
Any update in credentials of the customer is initiated by the customer will be updated in system ASAP.
CDD reviewed periodically as High-Risk customer`s CDD is reviewed in one (1) year time whereas medium risks are reviewed in two (2) years and low risk in three (3). This update is done after reviewing customer transactional behavior in period mentioned above.
Risk assessment of the customer is the process where entity assess the risk of the customer based on different parameters to mitigate the future foreseen risks and limit the impact of the unforeseen risks. As risk profiling depends upon numerous factors and is not limited to such factors as many of the risks are foreseeable, but some are not.
Crypto 4 A Cause will categorize Customer Risk`s categorization in three (03) different segments
High Risk
Medium Risk
Low Risk
These risk categories are formulated upon different risk indicators like, customer type, modes of channels used for transactions, Geographical location, Profession.
Some professions which are treated and defined as High Risk are as follows
Housewife
Accountants
Estate agents/ property dealers
Jewelers and High value ornaments dealers
Accounts which are highly cash based.
Risk profiling of the customer and its assessment is done based on Customer Due diligence and effective due diligence provides more accurate risk assessment which Crypto 4 A Cause will ensure
Once customer is on-boarded after performing KYC, CDD and risk assessment the customer can now perform transactions. Crypto 4 A Cause in assessing the transactions CDD will be most vital tool in creating suspicion which may be raised, and Crypto 4 A Cause may ask about the support document of the relevant transaction.
Crypto 4 A Cause will ensure to implement transaction monitoring through best possible software available for transaction monitoring. Record of transaction monitoring will always be kept fore audit purpose.
Crypto 4 A Cause will ensure to report any suspicion established by the AML analyst which deemed to report SAR to the FINCEN and provide every evidence of suspicion, reason, and customer details to the authorities. Whenever suspicion is reported is shall always be remained secret and may not intimate any of the details of SAR to the customer as it may be considered as “TIP OFF” and will ensure proper training of staff to negate the element of Tip Off.
Federal law requires financial institutions to report currency (cash or coin) transactions over
$10,000 conducted by, or on behalf of, one person, as well as multiple currency transactions that aggregate to be over $10,000 in a single day. These transactions are reported on Currency Transaction Reports (CTRs). The federal law requiring these reports was passed to safeguard the financial industry from threats posed by money laundering and other financial crime. To comply with this law, Crypto 4 A Cause will obtain personal identification information about the individual conducting the transaction such as a Social Security number as well as a driver’s license or other government issued document. This requirement applies whether the individual conducting the transaction has an account relationship with the institution or not. There is no general prohibition against handling substantial amounts of currency and the filing of a CTR is required regardless of the reasons for the currency transaction. The Crypto 4 A Cause will collects this information in a manner consistent with a customer’s right to financial privacy.
Breakup of large volume of cash transaction is prohibited as this is called “structuring.” Federal law makes it a crime to break up transactions into smaller amounts for the purpose of evading the CTR reporting requirement, and this may lead to a required disclosure from the Crypto 4 A Cause to the government. Structuring transactions to prevent a CTR from being reported can result in imprisonment for not more than five years and/or a fine of up to $250,000. If structuring involves
more than $100,000 in a twelve-month period or is performed while violating another law of the United States, the penalty is doubled and Crypto 4 A Cause is aware of this.
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA. And Crypto 4 A Cause will ensure to obtain details on the FATCA and report the same to the regulator as per Federal Laws.
Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. There are serious penalties for not reporting these financial assets. This FATCA requirement is in addition to the long-standing requirement to report foreign financial accounts on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (formerly TD F 90-22.1).
FATCA requires certain U.S. taxpayers who hold foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) to report information about those assets on Form 8938, which must be attached to the taxpayer’s annual income tax return. The reporting threshold is higher for certain individuals, including married taxpayers filing a joint annual income tax return and certain taxpayers living in a foreign country.
The Common Reporting Standard (CRS) is a new information-gathering and reporting requirement for financial institutions in participating countries/jurisdictions, to help fight against tax evasion and protect the integrity of tax systems.
The purpose of the CRS is to avoid tax evasion and ensure that all financial information is accurately reported, even across borders. Prior to the CRS, countries only shared financial information such as assets and tax information with other countries upon request, which did not effectively prevent tax evasion. Crypto 4 A Cause will ensure to abide such regulatory reporting to negate any chance of tax evasion
In an era of global village where all the industries are interconnected the financial institutions are bound to follow Global Financial Controllers who imposes the financial sanctions and embargoes to the different segments as well countries. These sanctions and embargoes prohibit the business/ financial dealing with the proscribed or banned organizations as well as individuals and trade with countries. Globally OFAC (Office of Foreign Asset control) controls the trade and remittance transfer
from countries as well as individuals. Crypto 4 A Cause will ensure to follow and search customers against such sanctions and embargoes as defined by UNSC and OFAC.
Compliance program simply means to follow all regulations and rules set out by Government and its agencies or bodies. Compliance Program in every organization is a framework tool which provides dimensions and an outline structure to the tasks to be performed within organization. It is a system of processes, policies and procedures, and controls that are developed to ensure compliance with all applicable rules, regulations, contracts, and policies governing the actions of the organization. An effective program assists individuals within the organization to be aware and understand the expectations to do the right thing. Crypto 4 A Cause has set up the Compliance Program through which assessment of the laws are done periodically and amendments have been done once the regulations are changed or updated.
Compliance program is an ongoing process based on rules and regulations to perform tasks. For a better and effective compliance program there shall be policies and SOPs to be formulated in accordance with the regulations and rules and this need to be reviewed periodically. Periodically review not only depends only upon the updates in the regulations and rules but review is always due wen a problem or difficulty performing tasks are arises and Crypto 4 A Cause will meet all such requirements for betterment at organizational level.
Compliance reporting is most important reporting as it mostly reported to the regulators outside the organization. Any lapse or error may penalize the organization. To mitigate such penalization Crypto 4 A Cause have developed such as a part of the Policy so that all reporting will be done timely and effectively. Compliance reporting includes SAR, FATCA, CRS, Compliance reporting to the management and product related reports. Internal reports include compliance program approvals which are presented to the management highlighting the limitations, updates or penalties if imposed. For such reporting CCM (Compliance Committee Meeting) is conducted where Compliance officer who is the representative of the compliance section of the organization to the regulators present his report. This CCM is conducted quarterly in most cases. Audit is also conducted of various exercises within compliance department which presents short comings in KYC, CDD or documentations. Short comings in KYC process are mostly penalized by the regulator.
Record retention is the most important part of relationship with the customer. Crypto 4 A Cause will ensure to retain record of the customers as defined under Federal Laws of US. Record retention time starts when the relationship between customer and organization is terminated. During the course of relationship, no record is discarded as it may be useful at any time if customer perform any suspicious activity. In most cases the record retention period is of five (05) years after relationship termination but in some cases the record retention is extended up to ten (10) years.
Crypto 4 A Cause will ensure training of all staff regarding AML/CFT/CPF and will develop programs to enhance their knowledge and aware them about the latest developments in AML/CFT/CPF regulations.
Crypto 4 A Cause will ensure to build strong Internal controls for that Crypto 4 A Cause will implement some tasks which include but are not limited to:
Development and keeping the entity’s business strategy up to date including entity risk appetite.
Development and keeping the entity’s policy framework approved by board updated with regard to mitigation of emergent ML/ TF/ PF risks.
Development and keeping up to date AML/ CFT/ CPF compliance program/ procedure manuals/ SOPs approved by senior management, for ensuring AML/ CFT/ CPF controls (preventive measures) including implementation of TFS related to TF & PF and reporting of STRs/ CTRs.
