Please read this Agreement carefully before accessing or using our Services. By accessing or using any part of our Services, you agree to become bound by the Terms of this Agreement. If you do not agree to all the Terms of this Agreement, then you may not access or use any of our Services. If these Terms are considered a non-binding offer by Moon Zebra, acceptance is expressly limited to these Terms.
Anti-Money Laundering Policy Objectives
It is the policy of Moon Zebra to prevent money laundering or the funding of terrorism and actively act to forbid such illicit activity. Moon Zebra complies with the EU fourth directive, the Prevention of Money Laundering and Funding of Terrorism 373.01, Prevention of Money Laundering Act 373. the FIAU implementing procedures, the criminal code Chapter 9 Laws of Malta and the Chapter 101 being The Dangerous Drugs Ordinance.
Money laundering is an offense by which money derived from criminal activity is passed through a series of processes to disguise the ownership and management of such revenue and therefore cannot be traced back to the underlying crime. The process of money laundering makes such funds to have been derived from legitimate sources of business. The stages of money laundering are as follows:
Placement is the stage where the money is introduced into the financial system, the funds at this stage are still illegitimate and the launderer will try to incorporate and place the money derived from illicit activities into the banking system to start the process of money laundering. At this stage, it is very important to understand where the money is being derived from as the person with the intention of committing such act will need to dispose of the money derived from the criminal activity without attracting any attention.
A number of methods for a launderer to perform the placement stage including, cash deposit cheques, traveler’s cheques, gambling, loan repayments, insurances on life policy’s, deposits in an amount of less than 10,000, mixing legitimate with illegitimate funds and asset purchasing.
At this stage the funds have managed to be deposited in the financial institution it is at this point layering is used through complex structures directed to lose all trace of the money and disguise ownership. This may happen by conducting transactions to different jurisdictions. This process is directed also to try to confuse any investigation and mislead traceability of the funds.
It is important to prevent such event by randomly questioning transaction by asking the right questions and avoiding alerting the customer of any wrongdoing, monitoring of transaction and amounts, Salaries verify that the company has that number of employee’s, use of gambling chips, ask for invoices and compare prices with the current market loans and loan repayments need to be supported with relevant documentation. These are amongst the few methods of monitoring transaction. The main intention at this source is to disguise the ownership.
At this stage, the money derived from criminal activity has been made legitimate and placed once again into the financial system as legitimate funds and the launderer has been successful in laundering the funds.
1. Terrorist Financing
When discussing terrorist financing, the money does not necessarily have to be derived from criminal activity. The funds may be derived from legitimate means. When one attempts to disguise the source of the funds or the use of such funds could possibly be then used for the funding of terrorism thereby concealing the identity of the individual funding the terrorist activity.
The intent and the scope of such acts is different and differ from one another, but the process used for the funding of terrorism can be fairly similar to those methods used for money laundering and the funding of terrorism.
Current legislation enforces Customer Due Diligence on transactions and having implemented such policy has made such processes harder for those who are willing to peruse such illegal activity. It is of utmost importance at Moon Zebra that the policies and the procedures are structured in a way that they ensure compliance with the regulators and legal framework, hence ensuring the such is updating according to the regulations and any changes forth on the legal framework and business objectives
Our AML policies, procedures, and internal controls are designed to ensure compliance with all applicable legislation and implementing procedures. The policy will be reviewed and updated on a regular basis to ensure appropriate policies, procedures, and internal controls are in place to account for both changes in regulations and changes in our business.
2. Know Your Customer & Due Diligence
KYC is one of the main aspects to identify as assess the relationship with the customer. KYC is a useful tool to assess the customer identify what type of relationship one is willing to pursue. At Moon Zebra we have various controls in place. Initially before on boarding a customer one has to provide all the relevant information. The controls in place are categorized as follows:
- Company verification and documentation;
- Identification of the company structure;
- Obtaining due diligence on the structure including share capital leading to an individual;
- The line of business the company is pursuing;
- Due diligence on Director, UBO’s and Signatories;
- Clients are monitored annually unless pose a higher risk and clients are reviewed according to the risk level they carry;
- Level of turnover;
- Source of Wealth and Source of funds;
- Control on the level of documentation provided, stamped, dated, signed;
- PEP’s declaration and updated C.V.;
- Declaration of ownership if share capital is held under fiduciary;
- Risk assessments carried out annually to assess the risk level.
- Annual review consists of updating due diligence and KYC, a re-evaluation of the client will also be conducted based of transaction reports and activity of the business.
- Business plan for the forthcoming year to identify any changes within the company.
3. Customer Due Diligence
3.1 Simplified due diligence VS Standard Due Diligence Vs Enhanced Due Diligence
Customer due diligence is an important aspect in identifying an individual and thus providing the correct information continues to strengthen the business relationship and reduce the risk within the relationship. We need to therefore verify by obtaining tangible evidence that ascertains the identity. Due diligence should therefore establish the identities of the individuals involved, the source of funds and gain an understanding of the business relationship, and also reveal who the beneficial owner is including also those cases where beneficial ownership has been disguised.
3.2 Risk-Based Approach
When discussing a Risk based approach one must on individual cases determine what level of due diligence should be applied on identification, business relationship and transaction weather above or below the threshold we need to be able to provide evidence to our supervisory that the appropriate measures according the situation have been taken. There are three identified categories of due diligence.
3.2.1 Simplified due diligence: This method of due diligence is to be applied when one is satisfied with the operation and the nature of business in services provided by the client. Clients that fall under the umbrella of simplified due diligence are those entities that are usually licenced by a financial regulator, public authorities and have a transparent and are publically available.
3.2.2 Standard due diligence: Standard due diligence is the most common form of due diligence practiced. Standard Due Diligence should be used to identify the operation, company structure and the line of business of the customer. The information obtained should be obtained to assist one to better understand whether the business will be used as a tool for money laundering or as a genuine business. the company is willing to undertake.
Standard due diligence involves identifying the company structure, the line of business of the company, verification of identity and any supporting documentation mainly any licensing required to operate. Proof of address is also required to be provided to constantly verify the customer in question.
Compliance should undertake a review of the customer according to the level of risk the client can have on the business. This should continue to ensure from time to time that the company is compliant and abiding by the rules and regulation against money laundering and the funding of terrorism. One may determine what is required to be provided by the customer according to the suspicion of risk this ensure that there is no wrongdoing being done by the company.
3.2.3 Enhanced due diligence: Enhanced due diligence is the highest form of due diligence to be obtained on an entity or an individual. When business is being conducted in high-risk jurisdictions, it is important to be able to access or ask the company to provide the AML/CFT controls and obtain appropriate approval from senior management, one needs to be satisfied with the respondent institution has verified the identity and ongoing performing due diligence on those customer (directors, shareholders, signatories).
The client should be able to provide relevant due diligence upon request. Enhanced due diligence is to be conducted when Politically Exposed Persons are involved or when a client has been identified to have a higher risk of being involved in ML/FT or when there has not been face-to-face contact with the client. When a PEP has been identified in the company structure, the following are to be implemented
- Approval from senior management.
- The source of wealth and the source of funds need to be established (including also transactions to such persons).
- Ongoing enhanced due diligence (every 6 months) needs to be conducted to monitor the business relationship.
Although the term of a PEP is 12 months after one is no longer serving in public office. It would be beneficial that after the term enhanced due diligence should still be conducted for a minimum established 12 months or longer until the individual until deemed to pose no further risk.
Customer due diligence whether simple, standard or enhanced, is to be kept for a minimum period of five (5) years. In the following circumstances
- Following the occasional transaction
- From the end of a business relationship
- Records of the transaction with original documents or copies needed to identify the transaction
If pending criminal investigation all documentation will be kept for more that the five years established. Upon the expiry of retention periods the entity shall delete all personal data until further information is provided for the obligation to retain such data. Authorities my grant an extra five years if pending investigation.
4. Source of Wealth VS Source of Funds
4.1 Source of Wealth and supporting certification
a) Savings from salary (basic and/or bonus)
- Original or certified copy of a pay slip (or bonus payment)
- Letter from employer confirming salary
- Latest audited accounts (if self-employed) and company bank statement
b) Sales of shares or other investments/liquidations of an investment portfolio
- Certified investment/savings certificates, contract notes or cash-in statements
- Bank statement clearly showing receipt of funds and investment company name
- A signed letter detailing funds from a regulated accountant
c) Sale of property
- Signed letter froma solicitor
- Certified copy sale contract
- Signed letter from estate agent
- Grant of probate (with a copy of the will), which must include the value of the estate
- Signed letter from solicitor
e) Company sale
- Signed letter from solicitor or regulated accountant
- Copy of contract of sale, plus bank statement showing proceeds
- Copies of media coverage (if applicable) as supporting evidence
f) Company profit
- Certified copy of latest audited company accounting
- Donor’s source of wealth (requirements of evidence as stated above for each individual source of wealth and a letter from the donor confirming details of the gift).
In these situations, we require the source of wealth and how the business is being funded. In this instance, the use of a C.V. should be sufficient to provide a clear overview of the source of wealth of the identified politically exposed person (PEP)
4.2 Source of Funds and Supporting Documentation
The source of funds in a business institution is depends on the different obtainable funds that are available from company investments, assets, lines of business, growth of the industry and profits derived from operation of a business. To establish the source of funds used in a relationship with a customer can usually be established upon review of the transactions of the company. One would be able to determine if the business is in line with the objectives stated and how the funds are being generated.
Source of funds in brief can be defined as the activity a business follows that generates funds for a business being both a relationship and an occasional transaction.
5. Suspicious Activity Reporting
If a transaction seems to have no economic or lawful validity record of such transaction should be examined and findings should be presented to the FIAU the suspicious activity report should be filled in and presented accordingly to the MLRO. The STR can be also submitted anon in writing.
Kindly refer to appendix figure 1.1.
Suspicious Activity Report (SAR) – Internal Template
5.1 Obligations on payment service provider
a. The payment service provider of the payer shall ensure that transfers of funds are accompanied by the following information on the payer
• Name of the payer
• The payer’s payment account number; and
• The payer’s address, official personal document number customer identification number or date and place of birth
b. The payment service provider of the payer shall ensure that transfers if funds are accompanied by the following information
• Name of the payer
• The payer’s payment account number; and
• The payer’s address, official personal document number customer identification number or date and place of birth
c. By way of derogation from point (B) of paragraph 1 and point (B) of paragraph 2, case of a transfer not made from or to a payment account, the payment service provider of the payer shall ensure that the transfer of funds is accompanied by a unique transaction identifier rather than a payment account number(s)
d. Before transferring funds, the payment service provider of the payer shall verify the accuracy of the information referred to in paragraph 1 on the basis of documents, data or information obtained from a reliable and independent source.
e. Verification as referred to in paragraph 4 shall be deemed to have taken place where:
i) a payer’s identity has been verified in accordance with Article 13 of Directive (EU) 2015/849 and the information obtained pursuant to that verification has been stored in accordance with Article 40 of that Directive; or
Member States shall require that obliged entities apply the customer due diligence measures not only to all new customers but also at appropriate times to existing customers on a risk-sensitive basis, including at times when the relevant circumstances of a customer change.
f. Without prejudice to the derogations provided for in Articles 5 and 6, the payment service provider of the payer shall not execute any transfer of funds before ensuring full compliance with this Article.
5.2 What are Suspicious Transactions?
5.2.1 Reasonable grounds to suspect: Suspicious transactions are financial transactions that you have reasonable grounds to suspect are related to the commission of a money laundering offence. This includes transactions that you have reasonable grounds to suspect are related to the attempted commission of a money laundering offence.
Suspicious transactions also include financial transactions that you have reasonable grounds to suspect are related to the commission of a terrorist activity financing offence. This includes transactions that you have reasonable grounds to suspect are related to the attempted commission of a terrorist activity financing offence.
“Reasonable grounds to suspect” is determined by what is reasonable in your circumstances, including normal business practices and systems within your industry. While the Act and Regulations do not specifically require you to implement or use an automated system for detecting suspicious transactions, you may decide that such a system would be beneficial to your business.
In this context, transactions include those that are completed or attempted as explained in subsection 3.2.
Your compliance regime has to include an assessment, in the course of your activities, of the risk of money laundering or terrorist financing. According to this assessment, in higher risk situations, you have to take reasonable measures to conduct ongoing monitoring for the purpose of detecting suspicious transactions. For more information about risk assessment requirements, see Guideline 4: Implementation of a Compliance Regime.
More information about a money laundering offence and a terrorist activity financing offence is provided below. Sections 6, 7 and 8 have more information about how to identify a suspicious transaction.
5.2.2 Money laundering offence: Under Canadian law, a money laundering offence involves various acts committed with the intention to conceal or convert property or the proceeds of property (such as money) knowing or believing that these were derived from the commission of a designated offence. In this context, a designated offence means most serious offences under the Criminal Code or any other federal Act. It includes but is not limited to those relating to illegal drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeit money, stock manipulation, tax evasion and copyright infringement.
5.2.3 Terrorist activity financing offence: Under Canadian law, terrorist activity financing offences make it a crime to knowingly collect or provide property, such as funds, either directly or indirectly, to carry out terrorist crimes. This includes inviting someone else to provide property for this purpose. It also includes the use or possession of property to facilitate or carry out terrorist activities.
There are other offences associated with terrorist activities that are not specifically related to financing, such as participating in or facilitating terrorist activities, or instructing and harbouring terrorists. Suspicious transactions should be reported to the FIAU.
5.2.4 Completed or attempted transactions: A completed transaction is one that has occurred. For example, if you process a deposit from a client towards the purchase of an asset such as a life insurance policy or a house, a financial transaction has occurred. This is true even if the final sale associated to the deposit does not go through. In this example, the refund of the deposit would also be a financial transaction.
5.2.5 Attempted transactions: An attempted transaction is one that a client intended to conduct and took some form of action to do so. An attempted transaction is different from a simple request for information, such as an enquiry as to the fee applicable to a certain transaction. An attempted transaction includes entering into negotiations or discussions to conduct the transaction and involves concrete measures to be taken by either you or the client.
The following are examples of attempted transactions:
- A financial entity or casino refuses to accept a deposit because the client refuses to provide identification as requested.
- A securities dealer or life insurance agent refuses to process a transaction for which the client insists on using cash because their business practice is not to accept cash.
- A client of a real estate agent starts to make an offer on the purchase of a house with a large deposit but will not finalize the offer once asked to provide identification.
- An individual asks an accountant to facilitate a financial transaction involving large amounts of cash. The accountant declines to conduct the transaction.
- A money services business will not process a request to transfer a large amount of funds because the client requesting the transfer refuses to provide identification requested.
For you to have to report an attempted transaction it must be one that you have reasonable grounds to suspect was related to money laundering or terrorist financing (as explained in subsection 3.1). An attempt to conduct a transaction does not necessarily mean the transaction is suspicious. However, the circumstances surrounding it might contribute to your having reasonable grounds for suspicion.
5.2.6 Transactions related to terrorist property: If you suspect that a transaction, whether completed or attempted, is related to terrorist financing, you have to make a suspicious transaction report to MLRO.
If you know, rather than suspect, that a transaction is related to property owned or controlled by or on behalf of a terrorist or a terrorist group, you should not complete the transaction. Accounts will be frozen accordingly and an STR should be raised immediately.
6. Duties of the MLRO
The MLRO is responsible for the reports raised concerning knowledge or suspicion regarding MONEY laundering and the funding of terrorism, The MLRO is also responsible to determine if a suspicion continues to happen, such knowledge is to be reported to the FIAU and respond to the information required from such entity.
The MLRO can appoint a designated employee to assist the MLRO and the person appointed is to work in the direction pointed by the MLRO. The designated employee’s duties are to consider reports and to establish if the information reported gives rise to the knowledge or suspicion of money laundering and the funding of terrorism.
7. Risk-Based Approach – The Purpose
The purpose of the RBA is to enable one to identify the level of risk of ML/FT the business may be subject to. It is important to note that if due diligence is collected after a business relationship one should take note of the reason for such incidence. One can delay on conducting due diligence proving the fact that the risk assessment has been conducted and that the customer does not pose a high risk of money laundering /funding of terrorism. The purpose of conducting a risk assessment is to grasp and understanding of the following.
i) A detailed identification of the customer who is to pose a higher than average risk and One should be able to conclude whether EDD should be applied.;
ii) One must understand the following;
iii) Customer background – this can be obtained through a C.V;
iv) The country of origin – obtained through a valid passport (must not expire in the next 6 month);
v) Product – Risk is carried out according to what product the customer has taken, it is identifying source of wealth and also why is the customer opting for the product and what is the business plan and intent of using such product;
vi) Monitoring for such account must be given a priority.