ANTI-MONEY LAUNDERING INTERNAL DIRECTIVE OF VERITAS CAPITAL AG (HEREINAFTER THE ‘COMPANY’)
The present internal directives regulate the internal organization of the Company under the terms of Art. 8 AMLA with regard to combating of money laundering and the prevention of the financing terrorism. In this regard the Company shall fully verify the identity of the contracting party and shall ensure that the person is acting on his/her own behalf and not on behalf of a third party.
1. Scope of application, principle and purpose
These directives are applicable to all activities performed by the Company in the AMLA sector in the specific field of payment services which is included and contemplated by the current SOFIT affiliation. They are based on the provisions for due diligence of the AMLA regulations. Their purpose is to ensure an effective organization for compliance with the legal and regulatory provisions in the fight against Money laundering (Art. 305bis SCC), for the identification of assets subject to the power of disposal of criminal organizations (Art. 260 ter (1) SCC) for the prevention of the financing of terrorism (Art. 260 (1) SCC) and to guarantee due diligence in financial transactions.
2. Abbreviations used
AMAL: Federal Act on Combating Money Laundering and Terrorist Financing of 10 October 1997 LBA: Federal Act on Combating Money Laundering and Terrorist Financing in the Financial sector of 10 October 1997. SCC: Swiss Criminal Code
3. Tasks and responsibilities of the AML officer and the management (art. 8 LBA, art. 17, 18, 2, 23)The AML Officer shall be responsible for:
- Assuring compliance by the Company with all duties pursuant to the AMLA, especially for thorough, proper management in compliance with the law and regulations in addition to self- control of the AMLA files.
- Arranging and implementing repeat identification measures of a customer, authorized signatory or beneficial owner.
- Checking the business relationship against the relevant applicable lists of sanctioned persons, terrorists etc.
- Arranging and implementing special clarifications.
- Defining and regularly verifying the criteria relating to increased risk in business relationship and transactions.
- Supervising and scrutinizing increased risk business relationships. He will also decide whether to accept or continue increased risk business relationship.
- Arranging and executing the cancellation of business relationships.
- Submitting reports of suspected money laundering transactions to the Money Laundering Reporting Office (MROS) and arranging or implementing the freezing of assets and compliance with the ban of information.
- Immediate reporting to the Swiss Financial Market Supervisory Authority (FINMA) of all incidents which could lead to the cancellation of a business relationship, obligation to report and freezing of assets.
- Establishing, continuing, or terminating business relationships with politically exposed persons.
- Establishing, continuing or terminating business relationships of increased risk.
- Identify the client face to face though an arranged meeting with him
- Receive the necessary documents of identification such as passport copy, utility bill ascertaining the fiscal address of the client, kyc form.
The risk manager and asset manager shall identify the risks of the investment and verify that the client understands the consequences of his type of investment.
4. Identity verification
4.1 Procedures of identity verification of the customers (art. 3 LBA,), identification of the beneficial owner (art. 4 LBA) and particular obligation to clarify (art. 6 LBA).
During the establishment of a business relationship, the AML Officer shall supervise the method of identification of the digital platform of the external KYC provider (Annexe 2) verify the identity of the contracting party on the basis of supporting documents. During the establishment of a business relationship, the Company must obtain the following information from contracting parties:
- Establishing and verifying the identity of the customer and beneficial owner. For individuals and sole proprietors: surname, given name, date of birth, residential address and nationality. It will be required to request a written statement from the contracting party relating to the beneficial owner when the contracting party is not the beneficial owner or when this matter is in doubt, especially in the following cases:
- someone who clearly does not have sufficiently close links with the contracting party but has a power allowing him to withdraw assets;
- the assets deposited are clearly out of proportion w the financial position of the contracting party;
- contacts with the other party led him to make other unusual observations;
- Defining the power of the signatory with the contracting party. For corporations and partnerships: Company name and head office address. If the contracting party is a citizen of a state which does not use dates of birth or residential addresses, there is no obligation to provide this information. This exemption must be justified in a file note.
- During the establishment of a business relationship with an individual or sole proprietor, the AML Officer verifies the identity of the contracting party on the basis of the latter's identity document. Accepted identity documents are:
- any document issued by a Swiss authority which bears a photograph;
- A foreign passport or a special travel document for entering Switzerland recognised under the VCF (Visa and Border Control) directives of the Federal Office for Immigration, Integration and Emigration.
- When the business relationship is established without the two parties meeting, the AML Officer also verifies the residential address via correspondence or any other adequate means.
- During the establishment of a business relationship with corporations or partnerships listed in the trade register, the AML Officer verifies the identity of the contracting party on the basis of one of the following documents:
- An extract from the trade register issued by an employee of the trade register;
- A paper certificate taken from a database managed by the trade register authorities, which the Member obtains itself.
- A paper certificate taken from a directory or reliable database managed by a private company.
4.2 The renewal procedure of the identity
This verification must also be carried out when the business relationship is established via correspondence, as soon as the contracting party is met in person.
Identification of the beneficial owner (art. 4 LBA)
On entering into a business relationship which requires verification of the customer’s identity, the Company will obtain details and where appropriate verify the identity of the beneficial owner.
The AML Officer must obtain a written declaration from the customer indicating the identity of the beneficial owner if one of the following conditions is given:
- The customer and the beneficial owner are not one and the same.
- The customer is a domiciliary company.
- There are grounds to suspect possible money laundering or the financing of
- There is doubt as to whether the customer is actually the beneficial owner.
4.3 Particular obligation of video identification to clarify the identity of the investor for investments above CHF 3,000 or above CHF 25,000 in accordance to the permission of the SRO
Regarding the video call with any investor, it needs to be kept short but to cover the three key areas below :
- (a) Personal information
- (b) Identification
- (c) Origin of funds
The person should state their name, age, country of citizenship/residency, and a brief professional background.
On the video call, the person should hold up the ID they have used to register for the ICO by the side of their face in a visible way so that you can confirm that it is a true identity of the investor.
Origin of funds:
The person should tell you how they have generated the funds that he/she will be investing in the ICO. If the funds are in cryptocurrencies, he/she should also disclose how they acquired the Bitcoins/ether etc., i.e. which trading platform etc.
From the technical point of view, there shall be deployed efforts in order to explore ways in which these two analysis can be implemented:
- (ii) Flagging and geolocalisation of IP addresses from countries under sanctions;
- (iii) Forensic analysis of the block explorer, and clusterisation of public keys.
4.4 Compliance Check List for Merchant Onboarding
When the company onboards a merchant paymaster it requests:
- Company Extract including elaborated documentation of directors and secretary & registered office
- Certificate of shareholders
- ID card or Passport copy for each UBO
- Utility bill for UBO and Director
- Bank statement of the company
- Utility bill for the company
- Recent extract from Company’s registry – not older than 3 months
- Organization/ Structure chart as per the form described below – please use the described example and
send the form as a separate document in .docx or .pdf format
- Last year Financial Statements
To be Renewed Every Six Months
Shared office agreement
To be renewed Every Year
-Certificate of incorporation
5. Verification of Source of Funds
Particular attention shall be given to the origin of the funds (cf. the KYC documentation) as well as to ingoing and outgoing movements that the customer may execute.
These observations and information shall be recorded in writing and attached to the client's file.
If there is any doubt regarding the origin or movement of the funds, the AML officer must be informed immediately, and must decide which measures to take.
In particular, the following documents and information shall be obtained:
a) identification of the counter-party (passport copy, utility bill, further identity and professional profile questions; incorporation documents, certificate of incorporation (or similar) for companies together with the documents identifying the directors, shareholders, UBOs, as need be);
b) underlying transaction documents (contracts, rulings/judgment, invoices) explaining the economic background of the transaction;
c) bank account comfort letter; and
d) ancillary documents (in the event of transactions exceeding the total amount of EUR 15,000) such as custom declarations, bills of laden, promissory notes, or for higher levels of risk tax declaration, or bank statement of the last three months, etc
The identification documents must be certified by a notary or an attorney and the AML Officer shall be at liberty to request the documents to be apostilled or even the originals, in the discretion of the AML Officer.
6. General Criteria for Detecting High Risk Business Relationships and Transactions
Person(s) responsible for reporting and the following criteria are applicable:
- The head office or residence of the contracting party and beneficial owner as well as their nationality.
- The type and place of the commercial activity of the contracting party and beneficial owner.
- The amount in stake.
- No meeting with the contracting party and the beneficial owner.
- Type of services or products requested.
- Country of origin or destination of frequent payments.
- Business relationships with politically exposed people must be considered high risk in all cases.
- Business relationships with foreign financial intermediaries who hold correspondent accounts in Switzerland must always be regarded as high-risk.
- The extent of the resulting additional clarifications varies depending on whether the foreign company concerned is subjected to suitable monitoring and regulation with regards to anti- money laundering and the financing of terrorism.
- The amount of deposited assets.
- The total ingoing’s and outgoings made by the client.
- Cash payments or requests for cash withdrawals.
Based on the risk profile or criteria established for business relationship/transaction, the AML Officer with the support of Company staff determines whether a relationship/transaction is of increased risk. He will also check the business relationship against the relevant applicable lists of terrorists and sanctions (Swiss and UN sanctions lists, World Check etc.)
6.1. Cases of Higher Risk Profile
If an increased risk business relationship or transactions exists or there are indications that such a business relationship or transaction might exist, the AML Officer shall decide:
- On any measures that may be required in order to further clarify the risk, especially with regard to the nature and scope of the required clarifications on the financial background and the purpose of the business relationship.
- On the risk category of the business relationship.
- On accepting or continuing the increased risk business relationship. This decision must be documented.
- On the measures of supervision of increased risk business relationships/transactions, especially with regard to processing of transactions where there is no personal contact with the customer.
If suspicion of money laundering arises under the terms of Art. 9 AMLA, the AML Officer will cancel the transactions and check if there are adequate ground for suspicion under the terms of Art. 9 Para. 1 letter b AMLA and takes any appropriate action.
If the adequate grounds for suspicion exist, the AML Officer shall immediately arrange freezes the assets and files a report on the case with the Money Laundering Reporting Office (MLRO). The AML Officer also guarantees compliance with the ban on information (Art. 10a AMLA).
The following list contains an draft list to be constantly update of countries which are considered to be high risk and with which the Company shall refuse any transactions : Afghanistan, Bangladesh, Bosnia and Herzegovina, Vanuatu, Venezuela, Zimbabwe, Indonesia, Iran, Iraq, Iceland, Yemen, Kyrgyzstan, China, Congo, Cuba, Kuwait, Lebanon, Libya, Morocco, Myanmar, Nepal, Nigeria, Palestine, North Korea, Serbia, Syria, Somalia, Sudan, USA, Trinidad and Tobago, Tunisia, Uganda, Sri Lanka, Ecuador, Ethiopia, South Soudan.
6.2 Criteria for defining relationship of high risk (art. 6 LBA)
For the 20th business relationship and every business relationship onwards the Company will establish the criteria of high risk for each business relationship/transaction on which the decision of entering into the business relationship will be based. The main criteria will be:
- The registered office, permanent place of residence, or nationality of the contracting party and/or beneficial owner.
- The nature and location of the business activities conducted by the contracting party and/or beneficial owner.
- The absence of personal contact with the contracting party as well as the beneficial owner;
- The type of services or products requested;
- The total of the assets deposited;
- The total of incoming and outgoing assets;
- Country of origin or destination of frequent payments;
- Complexity of structures, in particular through the use of domiciliary companies.
6.3 Criteria allowing to detect high risk (art. 6 LBA)
The criteria constituting high risk transactions and subject of especial scrutiny in regards to the customer’s activities will be:
- The total of incoming and outgoing assets.
- Any significant deviations from the type, volume or frequency of transactions that would be normal in the context of the business relationship.
- Any significant deviations from the type, volume or frequency of transactions that would be normal in comparable business relationship.
- Transfers of value greater than CHF 50,000 (single or in installments) at the beginning of the business relationship.
- Transfers of value greater than CHF 100,000 (single or in installments) throughout the existence of the relationship.
- Commission payments.
- Services payments in excess of CHF 50,000.
6.4 Methods of supervising business relationships and transactions (art. 8 LBA)
The Company take the measures that are required to prevent money laundering and terrorist financing in their field of business. In particular they collect and update the information about the activities of their customers and follow the updates in regulations preventing money laundering and terrorist financing.
The AML Officer decides about starting or continuing a relationship with persons politically exposed and the implementation, monitoring and evaluation regular checks on all business relationships with higher risks. He is also responsible for the establishment of effective monitoring of business relationships or transactions and ensures the detection of increased risk.
In cases of limited personal contact with the customer, especially when the contact is by the way of electronic technologies or other new technologies, the Company take all measures to manage related with that risk adequately.
The Company recognize that authorised supervising authorities can order audit or to demand the information and documents required for the purposes of supervision from the Company at any time.
7. Reporting well-founded suspicions to the Money Laundering Reporting Office (art. 9-10a LBA)
The AML officer will immediately file a report with the Money Laundering Reporting Office (MLRO) if he:
a. Knows or has reasonable grounds to suspect that assets involved in the business relationship:
- are connected to a punishable offense in accordance with Art. 260ter numeral 1 or Art. 305bis of Swiss Criminal Code, or
- are the proceeds of a felony, or
- are subject to the power of disposal of a criminal organisation, or
- serve the financing of terrorism (Art. 260quinquies Para. 1 of Swiss Criminal Code).
b. Breaks off negotiations for the acceptance of a business relationship due to justifiable suspicion in accordance with Art. 260ter numeral 1 or Art. 305bis of Swiss Criminal Code.
The Limitation of Duty to Report (Art. 9 Para. 2 AMLA) applies accordingly.
8. Handling the documentation
8.1 Methods and forms of retention of documentation (art. 7 LBA)
Upon the establishment of the business relationship it is mandatory to create a file, then to add all documents obtained in the pursuit of knowledge of the client and its transactions. The AML Officer holds the duty of creating in detail and keeping all records of clarifications and transactions for up to 10 years after a business relationship ceases. All documents will be kept in such a way that they can be presented to a requesting authority within 3 working days.
Documents and supporting documents must be kept and classified in order to facilitate immediate access to the information.
These files shall be kept in a safe place at the Company's head office. The files shall be retained for a period of ten years after the execution of a transaction. In the event that the business relationship is terminated the documents shall be retained for a period of ten years following the cancellation of the contractual relationship. documentation of the Company (especially the documents and records on customer relationships and executed transactions) in such a way as to allow a competent third party – especially the auditors appointed by authorised supervising authorities to perform the AMLA audit – to be able to form a reliable picture of the Company and their customers activities.
The Company keeps the record of some clarifications, transactions and copies of documents provided by customers in electronic form.
If the Company transfer contract relationships subject to the AMLA to another company, the Company documents this termination in its AMLA by filing a notification letter or other documents associated with termination and must retain all original documents or authenticated copies thereof found in the AMLA file for a period of 10 years. With the customer’s consent the Company can transfer originals and authenticated copies of his AMLA file to the company newly responsible for the customer. While choosing a company newly responsible for the customer the Company take special notice of their qualifications.
8.2 Place of custody of documentation, customer’s documentation (art. 7 LBA)
The place of custody of customer’s documentation and all other documentation is the registered office of the Company. Customers’ identity documents is kept in original or as notarized and legally valid copies. The Company can keep electronic records. If the server used is not located in Switzerland, the Company must keep a physical or an electronic copy of current relevant documents.
The Company keeps the record of some documents provided by customers in electronic form. He keeps it at a server located in Switzerland and inaccessible to third parties.
The Company retain especially:
- a copy of documents used for identification of the contracting party
- a written clarification of the contracting party on the identity of the beneficial owner
- a written note on the results of investigation in case of increased risk
- the documentation of the executed transactions
- a copy of the reports filed at MLRO pursuant to Art. 9 Par. 1 AML
9. Education and training on prevention of money laundering and of terrorism (art. 8 LBA)
The Company's AML Officer shall attend annual training courses as imposed by law, the Company shall organise an annual AMLA training session for employees with attendance being compulsory for people who have a relationship with clients.
The AML Officer