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Anti Money Laundering (AML) Policy
The purpose of this policy is to provide guidance on the Anti Money Laundering Policy which is followed by the Firm in order to achieve full compliance with the relevant legislation concerning anti-money laundering.
Firms providing investment services are required to strictly comply with the provisions of the Law 188(I)/2007, the Prevention and Suppression of Money Laundering Activities Law, (the “Law” for the purposes of this policy) and the Directive DI144-2007-08 regarding the prevention of Money Laundering and Terrorist Financing (hereafter “Directive”). The main purposes of the Law are to define and criminalize the laundering of proceeds generated from unlawful activities, aimed at depriving criminals from the profits tied to criminal activities. In accordance with the Law, companies facilitating investment activities are obliged to set out policies and procedures that prevent money laundering activities. Those procedures, which are implemented by the Firm, as requested by Law, are the following:
a. Conducting identification and due diligence processes for clients through the implementation of a risk-based approach.
b. Ensure proper record keeping procedures in relation to clients’ identity and transactions.
c. Building internal reporting procedures delivered to a competent person (Compliance Officer or other individual acting in official capacity) who is appointed to receive and deliberate relevant information pertaining to knowledge or a suspicion that a client is engaged in fraudulent or money laundering activities.
d. Outlining appropriate procedures for internal controls and risk management all with the purpose of preventing money laundering and other fraudulent activities.
e. Providing the detailed examination of every transaction that, owing to its type, is considered susceptible to money laundering, and especially for overtly complicated or unusually large transactions and moreover transactions that take place without an obvious financial or legal purpose.
f. Developing measures to inform employees of the aforementioned procedures designed to prevent money laundering and comply with the legislation relating to money laundering.
g. Provision of continuously updated training to employees in the identification and handling of suspicious transactions suspected to be linked with money laundering.
Additionally, in agreement with the directive, the Firm’s Compliance Officer shall prepare a guide detailing risk management and procedures regarding prevention of money laundering and terrorist financing. In this respect, the anti-money laundering policy prepared by the Compliance Officer has been approved by the Board of Directors of the Firm.
Client Due Diligence and Identification Procedures
The Firm has adopted all obligations required by the Law and the Directive in relation to client due diligence and identification procedures. Robust due diligence procedures are employed in the following situations:
a. In the process of establishing any form of business relationship.
b. When implementing one-off transactions amounting to or exceeding EUR 15,000 (fifteen thousand euro), irrespective of whether the transaction is carried out in a single transaction or in several transactions which appear linked.
c. When there is a reasonable suspicion of money laundering or terrorist financing, irrespective of the size of the transaction.
d. When there are doubts about the honesty or adequacy of previously obtained client identification credentials.
Client Acceptance Policy
A client acceptance policy is determined and implemented under a particular set of criteria related to a client’s risk profile. In particular, the characteristics that specify the risk category to which a client belongs are mainly attributed to the client’s:
a. Business activities;
b. Country of origin;
c. Services applied for;
d. Expected nature and level of transaction;
e. Anticipated source and origin of funds.
Based on the factors relayed above, the Firm may initially reject client application for cooperation or proceed with establishing a business relationship with the client after categorizing the client as low, medium or high risk. The criteria for filtering clients on a risk-weighted basis are detailed in the fourth paragraph of this Anti Money Laundering Policy.
A risk-based analytical approach has been implemented by the Firm, which involves the identification, consideration and evaluation of a client’s risk profile, managed throughout the careful methodology of appraising appropriate comparable metrics and implementing rigorous due diligence procedures.
Simple Client Due Diligence
Simpler procedures may apply for potential lower risk clients. The following types of clients are considered to be of a lower risk:
a. Credit facilities or financial institutions already regulated by the European Directive 2005/60/EC and related member countries legislation preventing the utilization of the financial system for the purposes of money laundering and terrorist financing.
b. Credit facilities or financial institutions domiciled in a third country which imposes regulations equivalent to those imposed by the European Union and must adhere to compliance procedures embodying those requirements.
c. Publicly listed companies whose securities are subject to trading in the regulated marketplaces of European Union member states and listed companies from third countries subject to similar disclosure requirements consistent with global legislation and governance regulations.
d. Local public authorities of European Union member states.
e. The Firm shall perform adequate due diligence to determine the veracity of the client information to verify the client is eligible to be classified as lower risk client. Information culled is related to verification of client identity, determining the economic profile of the client and understanding the expected transactional volumes and patterns to identify unusual or suspicious transactions.
(i) Client Identification
For legal entities, the client identification process requires the provision of information related to:
- The client’s name.
- The client’s country of origin.
- The client’s contact details and office address for the headquarters.
- The names and identification documents for the beneficial owners.
- The client must supply the names of directors and provide authorized signatories.
For a natural person the client identification includes information related with:
- Proof of Identification (passport or other form of official government identification).
- Proof of address (utility bills, tax bills, and other documents that verify domicile).
(ii) Client Economic Profiling
The economic profiling of clients is intended to include details regarding:
- The foundation and rationale in applying for the formation of a business relationship.
- The expected transactional volume.
- The purpose of the transactional volume.
- The anticipated source of incoming funds to be credited to the account.
- The clients annual income and estimated net worth.
- The description of the source of income and key business activities.
(iii) Expected Transactional Volumes and Patterns
Financial transactions that are unexpected and appear suspicious or fraudulent in nature may look as follows:
- Financial transactions that exhibit no clear economic purpose.
- Utilization of a complicated ownership structure that employs accounts of a foreign Firm or group of companies which is not justified based on the requirements and assessment conducted via the client economic profile.
- The amount of transactions or the size of transactions requested by the client that deviate substantially from normally observed behaviors and patterns of activity.
- Large transactional volumes and/or funds deposited or credited into an account when the analysis of a client’s professional activities would not appear to validate such volumes or deposits.
- The activity involves only one transaction or has a very short duration.
- Frequent transactions appear in the same financial instrument without an obvious explanation and in circumstances that appear unusual compared to other situations.
- Transactions which do not reflect prevailing market conditions specifically regarding the size of the orders and frequency.
- Large or frequent transactions made by a client with no past or present record of employment.
- Client due diligence conclusions show the client profile is not corresponding with the level or size of transactional volumes.
4.2 Enhanced Due Diligence Process
The Firm will employ enhanced due diligence measures for clients in situations which show a substantially higher risk of money laundering or terrorist financing. Individuals and legal entities of the following nature could be considered high risk clients:
a. Exhibiting a highly complex ownership structure.
b. Exhibiting bearer shares (no registration of owner or tracking of ownership).
c. Exhibiting political exposure.
d. From high risk regions or countries known for high level corruption, organized crime, or drug trafficking.
e. Exhibiting transactions that display no apparent financial and/or commercial rationale.
f. Lack of willingness to provide details on the beneficial owners of a legal entity.
g. Lack of willingness to engage in face to face communication.
h. Exhibiting large and/or suspicious cash deposits or withdrawals.
The Firm shall take upon itself various measures to offset the higher risk by application of one or more of the following remedies:
a. Ensure the client’s identity is thoroughly established by the request for additional documentation, data or verifiable information.
b. Verify or certify the documents supplied or by requiring certification or notarization by a credit facility or financial institution.
c. Ensure that the first financial transaction of the relationship is carried out by an account created in the client’s name with a credit institution which functions in a country belonging to the European Economic Area.
d. To acquire the written approval from a Senior Manager before to the establishment of a transactional relationship with the prospective client.
e. To take suitable measures to ascertain the origin of the client’s net worth and the source of funds connected to the formation of the relationship or transaction.
f. To perform enhanced and continued monitoring of the transactional relationship
Other Matters Relating to Due Diligence and Reporting Procedures
The identification of a client and beneficial owner shall precede the creation of a transactional relationship or business relationship. The initial verification of the identity of the client and the beneficial owner may be concluded during the formation of a business relationship if essential to avoiding interruption in the normal conduct of business and in situations where there is more limited risk of occurrence of money laundering or terrorist financing. In such specific situations, all procedures shall be fulfilled after initial contact with the maximum expedience.
Client Identification Renewal
Existing client records will be reviewed annually to ensure that the official documents, data or client information held by the firm are kept updated. Due diligence procedures shall be conducted not only for all new clients but also existing clients as appropriate based on the risk profile. The firm’s measures, procedures, and controls will be regularly reviewed to mitigate potential risks that could result from changing attributes of existing clients, new clients, services and financial instruments.
Third Party Due diligence Performance
The Firm is approved to utilize third party platforms to meet the client due diligence requirements. Nevertheless, the responsibility for meeting due diligence obligations shall remain with the Firm, not the third party.
Client Record Procedures
The Firm shall maintain thorough records of the following documentation and details for utilization in any investigation conducted by national authorities into any potential money laundering or terrorist financing activities:
a. The clients name and address combined with copies of official identification documents (including passports, government issued identification).
b. The name and address (or identification code) of counterparties.
c. The form of instruction or authority.
d. The details of an account from which any funds were sent.
e. Any details pertaining to the form and destination of payment made by the Firm to the client.
f. Business communications.
Information obtained as a result of client due diligence examination, will be kept by the Firm, for a period of at least 5 years after the business relationship with the client has ended. More specifically, for business relationship and transactions, The Firm will maintain any supporting evidence and records for a period of at least five years following the carrying out of the transactions or the end of the business relationship.
The Firm will classify and inform all clients of classification used by the Firm prior to engaging in a business relationship with potential clients. Clients shall be categorized based on the metrics delineated below:
The Firm, when dealing with eligible counterparties, is exempted from important obligations under conduct of business rules, best execution rules, client order handling rules. For that purpose, eligible counterparties may consider to be falling within the following categories:
- Investment firms;
- Credit institutions;
- Insurance companies;
- UCITS and their management companies;
- Pension funds and their management companies;
- Other financial institutions authorized or regulated by local or national law;
- Commodity and commodity derivative traders (dealing on proprietary account);
- National governments and corresponding offices including bodies which manage public debt;
- Central Banks;
- Supranational organizations;
- Entities in outside countries equivalent to the categories mentioned above.
A professional client is defined as a client possessing relevant experience, knowledge and expertise to make investment decisions and properly evaluate the risks incurred. Definition as a professional client is dependent on the client falling within one of the following categories:
· Legal entities requiring authorization or regulation to operate in financial markets including:
- Credit institutions;
- Investment Firms;
- Other authorized or regulated financial institutions;
- Insurance companies;
- Collective investment schemes and management companies of such schemes;
- Pension funds and management companies of such funds;
- Commodity and commodity derivatives dealers;
- Other institutional investors:
· Larger facilities meeting two of the following size requirements, on a proportional basis:
- Balance Sheet totaling at least EUR 20,000,000
- Annual Net Turnover at least EUR 40,000,000
- Net Worth at least EUR 2,000,000
· National, regional, and local governments and other public bodies
· Other institutional investors for which the main activity is investing in financial instruments including entities devoted to asset securitization or other financing
A client serving as neither an eligible counterparty nor a professional investor is characterized as a retail client.
As a point of reference, eligible counterparties or professional clients are permitted to request non-professional treatment and the Firm may agree to provide a higher degree of security. In this respect, the Firm notifies clients of their option to be classified as retail clientele via written communication. The Firm proceeds in this manner in order to maintain a uniform level of commitment to all clients.
A higher level of protection will be afforded by the Firm when the client forms a written agreement with the Firm to effectively denote the client will not be treated as a professional client.
Additionally, clients who initially classified by the Firm as retail clients are permitted to appeal to be classified as professional clients if at least two of the following requirements are fulfilled:
- Client carried out transactions, in significant size, at an average frequency of 10 transactions quarterly over the prior ten quarters.
- The client’s portfolio of financial instruments exceeds EUR 500,000.
- The client is currently employed or was previously employed in the financial services sector for a minimum of one year in a professional position requiring intimate knowledge of the designated transactions or services.
The process for clients requesting treatment as professionals is as follows:
- Clients shall convey in written communications to the Firm that they wish to be considered professional clients generally or with respect to a particular investment service, transaction, or type of product.
- The Firm shall provide clients in clear written communication a description of the protections and investor compensation rights to which the client is no longer entitled.
- The client shall state in writing, in a separate document from the contract with the Firm, that the client is fully aware of the consequences of losing such account protections as previously defined.