ANTI-MONEY LAUNDERING AND KNOW YOUR CLIENT POLICY

1. Purpose

The purpose of this Policy is to provide guidance on the Anti-Money Laundering and Know your Client Policy which is followed by R1Investing, a trading name of R1Investing authorized and best by the Cyprus Securities and Exchange Commission (CySEC) under license No. 269/15 (the ‘Company’) in order to achieve full compliance with the relevant anti-money laundering legislation.  

The Policy should be read in conjunction with the procedures which are followed for account opening.  

2. Legal Framework

Investment Firms are required to comply with the provisions of the new Anti-Money Laundering Law of 2007 as amended (hereinafter the “Law y”) and the directive DI144-2007-08 regarding the prevention of Money Laundering and Terrorist Financing.  

The Company is obliged to set out policies and procedures for preventing money laundering activities. Those procedures, which are implemented by the Company, as these are requested by the Law, are the following:

  1. Client’s identification and due diligence procedures of clients
  2. Record keeping procedures with regards to client’s identity and their transactions
  3. Reporting procedures to the Anti-Money Laundering Compliance Officer, responsible for collecting necessary information that give rise to knowledge or suspicion that a client is engaged in money laundering activities.
  4. Appropriate procedures of internal control, risk management, with the purpose of preventing money laundering activities.
  5. Detailed examination of every suspicious transaction. Specifically for unusual and/or complicated and/or suspicious transactions and/or transaction taken place without obvious financial or legal purpose.
  6. Training of the employees with regards to the above procedures and Anti-Money Laundering Laws and/or relevant regulations

3. Policy 

The Company adopts procedures and processes that ensure compliance with the relevant Laws and Directives.

3.1   Client Identification and Due Diligence Procedures

The Company has adopted all requirements of the Law in relation to client identification and due diligence procedures. The client categorization, identification and due diligence are as follows:

  • low risk,
  • normal risk,
  • high risk

Clients with the following criteria are classified as High Risk due to the following conditions:

  • Non face to face customers
  • Accounts in the names of companies whose shares are in bearer form
  • Trusts Accounts
  • ‘Client accounts’ in the name of a   person
  • ‘Politically exposed persons’ accounts
  • Electronic gambling/ gaming through the internet
  • Customers from countries which inadequately apply FATF’s recommendations
  • Cross-frontier correspondent banking relationships with credit institutions – Clients from third countries
  • Any other Clients that their nature entail a higher risk of money laundering and terrorist financing
  • Any other Client determined by the Company itself to be classified as such.

Failure or refusal by a client to submit the requisite data and information for the verification of his/ her identity and the creation of his/ her economic profile, without adequate justification, constitutes elements that may lead to the creation of a suspicion that the client is involved in money laundering or terrorist financing activities. In such an event, the Company does not proceed with the establishment of the business relationship and considers the necessity whether the anti-money laundering officer is required to report to MOKAS.

The Company may allow the provision of KYC documentation to be provided during the initial contact, provided that the conditions of Circular C157 are met. 

3.2   Client Due Diligence Procedure

The practice to which the Company adheres in order to comply with the requirements of the Law on the subject of the client identification is achieved on a risk-based approach and it is set out following Client Due Diligence procedure. This shall comprise of the following:

  • Identification of the client and verification of the client’s identity on the basis of information obtained from a reliable and independent source.
  • The Company examines and checks on a regular basis, the validity and adequacy of the client’s identification data and information it maintains.
  • Identification of the beneficial owner and taking risk-based and adequate measures to verify his/ her identity on the basis of documents, data or information issued by or received from a reliable and independent source. As regards to legal persons, trusts and similar legal entities, taking risk-based and adequate measures to understand the ownership and control structure of the client.
  • Obtaining information on the purpose and intended nature of the business relationship.
  • Conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions being conducted are consistent with the data and information held by the firm in connection with the client.

Client and beneficial owner identification must occur before the establishment of a business relationship, given that the Company prohibits any client’s transaction or trade before the necessary documentation and information is provided. By way of derogation, the client’s and beneficial owner’s identity verification may be completed during the establishment of a business relationship if this is necessary in order not to interrupt the normal conduct of business and where there is limited risk of money laundering or terrorist financing occurring. In such situation, these procedures shall be completed as soon as practicable after the initial contact.

Reviews of existing records must take place on a regular basis, thus ensuring that the documents, data or information held are kept up-to-date.  Client due diligence procedures shall be applied not only to all new clients but also at appropriate times to existing clients on a risk sensitive basis.

3.3   Simplified Client Due Diligence

Alternatively, simplified procedures may apply for lower risk clients. More detailed client due diligence measures for lower risk clients shall apply when there is no suspicion of money laundering, regardless of any derogation, exemption or threshold, and not whenever a business relationship is established. The following types of clients are considered lower risk:

  • Credit or financial institutions best by the European Directive 2005/60/EC and its relative transposition member countries legislation on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing.
  • Credit or financial institutions situated in a third country which imposes requirements equivalent to those laid down by the European Union and are under supervision for compliance with those requirements.
  • Listed companies whose securities are admitted to trading on a best market of an EU member state and listed companies from third countries which are subject to disclosure requirements consistent with Community legislation.
  • Domestic public authorities of EU member states.

It should be noted that the Company shall gather sufficient information to establish if the client qualifies to be classified as lower risk client.

3.4   Enhanced Client Due Diligence

The Company should further apply enhanced client due diligence measures in situations which by nature can present high risk of money laundering or terrorist financing.

More specifically, where the client has not been physically presented for identification purposes, the Company shall take specific and adequate measures to compensate for the high risk, by applying one or more of the following measures:

  • Ensuring that the client’s identity is established by  additional documents, data or information.
  • Supplementary measures to verify or certify the documents supplied, or requiring confirmatory certification by a credit or financial institution.
  • Ensuring that the first payment of the operations is carried out through an account opened in the client’s name with a credit institution which operates in a country of the European Economic Area.

Politically exposed persons are individuals who are or have been entrusted with prominent public functions at the Republic or in a foreign country and close associate is someone with a close relationship with the politically exposed persons.  The Company should adopt the following additional due diligence measures to determine whether a prospective client is a politically exposed person:

  • The Company shall put in place appropriate risk management procedures to enable it to determine whether a prospective client is a politically exposed person
  • Approval from Senior Management prior to the establishment of a business relationship with the client.
  • Before the establishment of the business relationship the Company obtains adequate documentation to ascertain not only the identity of the said person but also to assess his/her business reputation.
  • The Company collects the required by Law information and creates the economic profile of the client.
  • In addition, the Company is reviewing regularly the profile of the client
  • Take appropriate measures for the establishment of the origin of the client’s assets and the source of funds that are related with the establishment of the business relationship or transaction.
  • Conduct enhanced and continuous monitoring of the business relationship.

4. Client Account Opening Procedures

4.1 KYC documentation for natural persons

Prior to accepting new clients and allowing them to trade with the Company, the following documents shall be obtained for the verification of clients’ identity:

  • Completed Client Questionnaire in client area, TIN,(Tax Identification Number)
  • Colored copy of a valid  Passport or ID;
  • Colored copy of proof of Resident such as a government document (residents certificate, property tax/ Utility Bill (electricity, water, gas Etc.) / bank statement / Credit card statement.
  • All docs must have the residential address and must be issued within the past 3 months. All the information must be clearly visible, as well as all 4 corners of the document.
  •   The Company does not accept phone bills.

    For Credit or Debit Card Deposits:

     Colored copies of the credit card (front and back) used to fund the account. 

    For the front copy of the credit card
     the following must be visible: expiration date, full name, bank name and the last 4 digits of the card. The first 12 digits must be covered.
  •  All the information must be clearly visible, as well as all 4 corners of the document. 

The Company maintains clear standards and policies on what records must be kept for customer identification and individual transactions. Such practise is essential to permit the Company to monitor its relationship with the customer, to understand the customer’s on-going business and, if necessary, to provide evidence in the event of disputes, legal action or a financial investigation that could lead to criminal prosecution. Also all new clients and new accounts are approved by at least one person, Head of Back Office or the Company’s AML Officer. 

The Company obtains customer identification documents and retains copy of these for at least seven (7) years after an account is closed. The Company also retains all transaction records for at least seven (7) years after an account is closed.

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