AML / KYC Policy
It is the policy of KGN Services LTD and its affiliates (hereinafter “KGN”) to prohibit and actively pursue the prevention of money laundering and any activity that facilitates money laundering or the financing of terrorist or criminal activities. KGN is committed to AML compliance in accordance with applicable laws in jurisdictions where KGN provides corporate and legal services. KGN requires its managers, employees and affiliates to comply with these standards to prevent the use of its products and services for money laundering purposes.
For the purposes of the policy, money laundering is generally defined as engaging in acts designed to conceal or conceal the true origin of criminally derived proceeds so that the illicit proceeds appear to be derived from legitimate origins or constitute legitimate assets.
In general, money laundering takes place in three phases. Cash first enters the financial system at the “placement” stage, where cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler’s checks, or deposited into accounts in financial institutions. At the “layering” stage, the funds are transferred or moved to other accounts or other financial institutions to further separate the money from its criminal origins. At the “integration” stage, the funds are re-entered into the economy and used to purchase legitimate assets or to finance other criminal activities or legitimate businesses. Terrorist financing must not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds which will later be used for criminal purposes.
Every employee of KGN whose tasks are connected with the delivery of products and services from KGN. and who directly or indirectly deals with KGN’s clientele, is expected to know the requirements of the applicable laws and regulations that affect his or her job responsibilities, and it shall be an affirmative duty of such an employee at all times to carry out these obligations in a manner that that comply with the requirements of the relevant laws and regulations.
The laws and regulations include, but are not limited to: “Customer Due Diligence for Banks” (2001) and “General Guide to Account Opening and Customer Identification” (2003) of the Basel Committee of Banking Supervision, 49+9 recommendations on money laundering by FATF, USA Patriot Act (2001), Money Laundering Prevention and Control Act of (2007,2010) or as amended from time to time.
To ensure that this general policy is implemented, the management of KGN must. has established and maintains an ongoing program with the aim of ensuring compliance with the relevant laws and regulations and preventing money laundering. This program seeks to coordinate the specific regulatory requirements across the Group within a consolidated framework to effectively manage the Group’s exposure to money laundering and terrorist financing across all business units, functions and legal entities.
Each of KGN’s affiliates is required to comply with all aspects of the Group’s policy as well as their own AML policies, which specifically take into account the local AML laws and requirements to which they are subject. Failure of the Group and its affiliates to comply with all applicable local AML laws and regulations could result in serious regulatory penalties, possible fines and criminal penalties and damage to the Group’s business reputation.
Risk assessment
An assessment of the risk of exposure to money laundering problems across all customer relationships must be carried out using KGN’s standardized risk assessment model. The risk assessment model must be approved by the board on an annual basis.
Suspicious activities
There are signs of suspicious activity that suggest money laundering. These are commonly referred to as “red flags”. If a red flag is detected, additional due diligence will be performed before accepting the customer’s requests or providing services. Examples of red flags are:
– The customer shows unusual concern regarding the AML policies, especially regarding his or her identity, type of business and assets, or is reluctant or refuses to disclose any information regarding business activities, or presents unusual or suspicious identification or business documents.
– The client wants to enter into transactions that lack business sense or apparent investment strategy, or that are inconsistent with the client’s stated business strategy.
– The information provided by the customer identifying a legitimate source of funds is false, misleading or materially incorrect.
– Upon request, the customer refuses to identify or fails to indicate any legitimate source of his or her funds and other assets.
– The customer (or a person publicly associated with the customer) has a questionable background or is the subject of news reports indicating possible criminal, civil or legal offences.
– The customer shows a lack of concern regarding risks, commissions or other transaction costs.
– The customer appears to be acting as an agent for an undisclosed principal, but refuses or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive about that person or entity.
– The customer finds it difficult to describe the nature of his business or generally lacks knowledge of his industry.
– The customer tries to make frequent or large deposits of currency, insists on trading only with liquid funds.
– For no apparent reason, the customer has multiple accounts under a single name or multiple names with a large number of inter-account or third-party transfers.
– The customer is from or has accounts in a country identified as a non-cooperative country or territory by the Financial Action Task Force.
– The customer’s account has unexplained or sudden extensive transfer activity, especially on accounts that had little or no previous activity.
– The customer’s account shows numerous currency or cashier’s check transactions that add up to significant sums.
– The customer’s account has a large number of bank transfers to unrelated third parties that are incompatible with the customer’s legitimate business purposes.
– The customer’s account has wire transfers that have no obvious business purpose to or from a country identified as a risk of money laundering or a haven for bank secrecy.
– The customer’s account indicates large or frequent wire transfers, immediately withdrawn by check or debit card without any apparent business purpose.
– The customer makes a deposit followed by an immediate request that the money be paid out or transferred to a third party or to another company, without any obvious business purpose.
– The customer makes a deposit with the aim of buying a long-term investment shortly followed by a request to liquidate the position and transfer the proceeds from the account.
– Customer engages in excessive journal entries between unrelated accounts for no apparent business purpose.
– The customer requests that a transaction be processed in such a way that the company’s normal documentation requirements are avoided.
– The customer, for no apparent reason or in conjunction with other red flags, engages in transactions involving certain types of securities, such as penny stocks, bearer bonds, which, although legitimate, have been used in fraudulent schemes and money laundering activities. (Such transactions may warrant additional due diligence to ensure the legitimacy of the customer’s activity.)
Specially designated nationals and sanctioned parties screening
All new clients must be screened against the US Office of Foreign Assets Controls (OFAC) list of Specially Designated Nationals (“SDN”) and sanctioned parties before services are offered or an account is opened on that client’s behalf. Any contests against these lists will result in WIS refusing to provide any services to listed individuals and legal entities.
Customer identification
KGN will document and maintain written customer identification procedures (“CIP”) that will enable a reasonable belief that KGN knows the true identity of each customer. If KGN is unable to verify a customer’s identity within a reasonable period of time after services or account opening request, those services will be suspended and the account will be closed. Such account and services will be subject to increased due diligence until the time the customer’s identity has been verified or the account has been closed and services suspended.
CIP for natural persons
For natural persons, the following information must be obtained where relevant:
– legal name and other names used (such as maiden name);
– correct permanent address (the full address must be obtained; a post office box number is not sufficient);
– telephone number, fax number and e-mail address;
– Date and place of birth;
– nationality;
– position, public position and/or name of employer;
– an official personal identification number or other unique identifier contained in an unexpired official document (eg – passport, ID card, residence permit, social security register, driver’s license) bearing a photograph of the customer;
– source of wealth (where applicable).
KGN must verify this information by at least one of the following methods: l
– confirmation of the date of birth from an official document (eg birth certificate, passport, identity card, social security records);
– confirmation of the permanent address (e.g. electricity bill, tax assessment, bank statement, a letter from a public authority);
– to contact the customer by phone, letter or email to confirm the information provided after an account has been opened or other services provided (eg a disconnected phone, returned mail or incorrect email address should warrant further investigation);
– confirmation of the validity of the official documentation provided through certification by an authorized person
CIP for institutions
The underlying principles of customer identification for natural persons apply equally to customer identification for all institutions. Where the identification and verification of natural persons is involved in the following, the above guidance with respect to such persons shall apply equally. The term institution includes any entity that is not a natural person.
For corporate entities (i.e. corporations and partnerships), the following information must be obtained:
– Name of institution;
– headquarters of the institution’s business operations;
– the postal address of the institution;
– contact telephone and fax numbers;
– some form of official identification number, if available (eg tax identification number);
– the original or certified copy of the certificate of incorporation and the memorandum and articles of association;
– the nature and purpose of the company and its legitimacy.
This information must be verified by at least one of the following methods:
– for established corporate entities – review of a copy of the most recent report and accounts (audited if available);
– to carry out an inquiry from a company information service or an undertaking from a reputable and well-known firm of lawyers or accountants confirming the submitted documents;
– carry out a business search and/or other commercial investigations to establish that the institution has not been or is not in the process of being dissolved, struck off, liquidated or terminated;
– utilization of an independent information verification process, e.g. by accessing public and private databases;
– obtaining prior bank references;
– visit the company where practicable;
– contact the company via phone, post or e-mail.
Record keeping
All identification documentation and service records must be retained for the minimum period required by local law.
Education
All new employees must receive anti-money laundering training as part of the mandatory new hire training program. All relevant employees are also required to complete AML training annually. Participation in additional targeted training programs is required for all employees with day-to-day AML responsibilities.
Administration
For the purpose of the AML policy, KGN must appoint the AML Compliance Committee. The KGN AML Compliance Committee is responsible for the administration, revision, interpretation and application of this policy. The policy will be reviewed annually and revised as necessary.
The AML Compliance Committee’s duties with respect to the policy include, but shall not be limited to, designing and implementing and updating the policy as necessary; training of officers and employees; monitoring compliance of KGN affiliates, maintaining necessary and appropriate records; and independent testing of the operation of the policy.