UK agency compliance program

 AML & CTF Policy

TalkRemit Limited

 

 

 

 

 

 

Document Ref: TR-1.01
Last revision: Monday, February 15, 2021

Next review date: TBC (At least Annually)

Version:  1.01
Date: 20 February 2021
Owned by:  T Melliar-Smith
Scope: TalkRemit Limited
Author: T Melliar-Smith
Document ID: TR AML&CTF 

 

Review and Update Policy

The document owner will review and update this Anti-Money Laundering and Countering Terrorist Financing Policy on at least an annual basis.

 

Version Control

Version Date Changes Made Author
0.98 22 June 20 Creation of policy  T Melliar-Smith
0.99 02 Sept 20 Addition of CDD for firms and Agent AML controls T Melliar-Smith
1.0 14  20 Additional CCD onboarding features for Agent business and ID & Selfie added T Melliar-Smith
1.01 20 Feb Explicit explanation of sanctions scanning  T Melliar-Smith

 

  1. Contents
  1. TalkRemit Policy
  2. What is Money Laundering?
  3. What is Terrorist Financing?
  4. Risk Management
  5. Record Keeping
  6. Money Laundering Reporting Officer
  7. Requests for Information
  8. Suspicious Activity Reporting
  9. Sanctions – HMT and International Guidance Bodies & PEPs
  10. Customer Due Diligence (“CDD”)
  11. Partners (Bank) Due Diligence
  12. Shell banks
  13. Transaction Monitoring
  14. AML Wallet Controls
  15. AML Agent Controls
  16. Audits
  17. Whistle Blowing
  18. Appendix 1 – Acceptable Documents
  19. Appendix 2 – The UK Framework Overview
  20. Appendix 3 – FINANCIAL ACTION TASK FORCE (“FATF”)
  21. Appendix 4 – SUSPICIOUS ACTIVITY
  22. Appendix 5 – JMLSG – EQUIVALENCE STATUS OF OTHER COUNTRIES OR TERRITORIES
  23. Appendix 6 – HM TREASURY DIRECTIVES & SANCTIONS REGIME
  24. Internal Suspicious Activity Report Form
  25. Appendix 8 – Suspicious Activity Recording Form

 

1. TalkRemit Policy 

 

1.1 The Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2017 place obligations on TalkRemit Limited (“TalkRemit”) and its employees to establish internal procedures to prevent its services being used for Money Laundering or Terrorist Financing.

1.2 Combating Money Laundering and Terrorist Financing is the responsibility of all employees of  TalkRemit and it is therefore necessary for everyone to be aware of what constitutes Money Laundering and Terrorist Financing and how to act should they believe TalkRemit to be at risk.  

1.3 TalkRemit has adopted the standards detailed in law and in the Joint Money Laundering Steering Group (‘’JMLSG’’) Guidance. Among other things the Guidance details procedures to establish the true identity and good standing of a prospective customer before the start of any business relationship.   

1.4 It is the policy of TalkRemit to: 

  • Take reasonable care to establish and maintain effective systems and controls in order to ensure compliance with applicable laws and regulatory requirements relating to Money Laundering and Terrorist Financing.
  • Ensure that any staff member who has a suspicion records and promptly reports all unusual or suspicious activity to the Money Laundering Reporting Officer (“MLRO”). The MLRO shall where appropriate make a formal report to the National Crime Agency (“NCA”).
  • Never allow commercial considerations to override its commitment to prevent the occurrence of any money laundering activities and to combat the financing of terrorism. 
  • Ensure that the MLRO is provided with assistance and co-operation by all members of staff.
  • Ensure that this Anti-Money Laundering and Counter-Terrorist Financing Policy and procedures are strictly adhered to by all staff and regularly updated (at least annually) to reflect and comply with current regulations and law. 
  • Train all relevant staff (including relevant staff at outsourced partners) in the application of all relevant provisions of this document via initial, annual refresher and ad hoc training.
  • Maintain up-to-date customer records and details of all transactions and retain such information for at least 5 years after the last transaction or at least 5 years after termination of the business relationship, whichever is longer.

 

1.5 Failure by a member of staff to comply with the procedures set out in this Policy may lead to disciplinary action being taken against them. Any disciplinary action will be dealt with in accordance with TalkRemit’s Disciplinary Procedures. Individuals may also be liable to prosecution (see 2.4 and 3.4).

1.6 What are the obligations on TalkRemit Ltd and its employees?  

  • The Board of Directors and senior management of TalkRemit must be aware that they are directly and personally responsible for ensuring that the requirements of this Policy and Procedures are implemented and monitored.
  • Staff must record and promptly report all unusual or suspicious activities to the MLRO who will then determine whether to submit a formal Suspicious Activity Report to the NCA. 
  • The MLRO is to be provided with assistance and co-operation from all members of staff in carrying out their duties. 
  • All staff must maintain appropriate customer records. 

 

1.7 Scope 

This policy applies to all TalkRemit staff (whether they be permanent, temporary or contractors), and outsourced partners. 

This document is intended to provide the overall framework within which TalkRemit must operate. 

 

2 What is Money Laundering? 

 

2.1 Money Laundering (“ML”) is the generic term used to describe the process by which criminals attempt to hide and disguise the original ownership and control of the proceeds of their criminal activities. The processes by which criminally derived property may be laundered are extensive. Although not all laundered funds pass through the financial sector, the majority of laundered funds pass through this sector due to the nature of services and products offered.   

2.2 ML activity includes: 

  • Acquiring, using or possessing criminal property;
  • Handling the proceeds of crimes such as theft, fraud and tax evasion;
  • Being knowingly involved in any way with criminal or terrorist property (see section 3);
  • Entering into arrangements to facilitate laundering criminal or terrorist property;
  • Investing the proceeds of crimes in other financial products;
  • Investing the proceeds of crimes through the acquisition of property/assets;
  • Transferring criminal property. 

 

2.3 There are 3 stages of ML: Placement, Layering and Integration (together sometimes referred to as PLI). It is worth noting, however that money laundering does not need to follow the described stages in sequence, nor have all stages evident for money laundering to have occurred.  

(i) Placement – where funds derived from illegal activities are deposited into the financial system. 

Many crimes involve the creation of large amounts of cash. Criminals wish to hide this cash or make it appear to be legitimate and the best way is to place funds into an account or wallet of some sort. However, using TalkRemit to send a payment unsupported by income levels or employment type maybe suspicious.  Therefore, criminals may try to: 

  • Divide the cash into small denominations and make several payments into one or more accounts or wallets at one or more financial institutions, commonly known as structured deposits or “smurfing”.
  • Make payments or facilitate chargebacks with the help of company employees or merchants who are on the criminal’s payroll. 
  • Employ other criminals to receive or send small amounts of cash/funds elsewhere and look relatively genuine. 
  • Purchase goods such as jewellery, art or other high value goods which can be sold at a later date. 
  • Use our systems to facilitate any of the above. 

 

(ii) Layering – Confusing the trail to disguise the source of funds together with the ownership of the funds. This may involve complicated transactions or companies with opaque ownership structures or ‘shell’ companies. 

Once the funds are in our system criminals attempt to confuse the trail to distance themselves from the funds and make them harder to find, also with the aim of making the source of funds appear legitimate. This can include transferring funds outside the UK away from the UK authorities’ jurisdiction, or the transfer of funds between various payment firms. 

(iii) Integration – Funds are reintegrated into the economy appearing legitimate. 

This can involve loan payments, asset purchases/sales etc.

 

2.4 What are the key offences related to Money Laundering (“ML”)?  

(i) Assisting a Money Launderer  

It is an offence to assist a money launderer by concealing or entering into arrangements for the acquisition, use and/or possession of criminal property.  

If convicted of such an offence a person can receive a maximum of 14 years imprisonment and/or an unlimited fine.   

(ii) Failing to report  

It is an offence not to report knowledge or suspicion (on “reasonable grounds”) of money laundering activity to the MLRO, as soon as practically possible. Conviction of such an offence could result in imprisonment for up to five years and/or an unlimited fine.   

(iii) Tipping Off  

It is an offence to prejudice an enquiry by tipping off the money launderer, or anybody else, that a disclosure has been, or might be made and an investigation into his/her activities is being, or may be, carried out. 

The punishment on conviction for this offence is a maximum of 2 years imprisonment and/or an unlimited fine.

  

3 What is Terrorist Financing?   

 

3.1 The term Terrorist Financing (“TF”) relates to the use of financial firms to launder money or misdirect clean money for the purpose of illegal and illegitimate terrorist activity. TF includes proliferation financing which is assisting in the financing and/or development of nuclear, biological, radiological, chemical weapons and/or their means of delivery.  

3.2 Terrorism is the use or threat of action designed to influence governments, intimidate any section of the public, advance a political, religious or ideological cause where the action would involve violence, threats to health and safety, damage to property or disruption of electronic systems. 

3.3 Terrorists typically use low value but high-volume fraudulent activity to fund their operations. Bulk cash smuggling and placement through cash-intensive businesses is one typology. They are now also moving monies through the new online payment systems and cross-border movement of funds by means of stored-value cards. Charities have also been used in countries where controls are not as stringent as, say, in the UK. 

3.4 What are the key offences of aiding the Financing of Terrorism? 

(i) Failure to disclose the belief or suspicion that someone has committed, or attempted to commit, any of the above offences is an offence in itself and if convicted the penalty is up to 5 years’ imprisonment and/or an unlimited fine. 

(ii) Revealing that a disclosure of suspicion of terrorist funding has been, or might be, made or that an investigation into terrorist funding offences is being carried out, or contemplated, (where this is likely to prejudice an investigation) is also an offence. The penalty upon conviction is up to 2 years’ imprisonment and or/an unlimited fine. 

3.5 There can be similarities between the movement of terrorist property and the laundering of criminal property. The primary offences relating to the funding of terrorism are: 

  • Fund-raising for the purpose of terrorism;
  • Using or possessing money for the purpose of terrorism;
  • Involvement in funding arrangements;
  • Facilitating the retention or control of money which is destined for, or is the proceeds of, terrorism. 
  • Conviction for any of the above offences can result in up to 14 years’ imprisonment and/or an unlimited fine. 

 

 

4 Risk Management 

 

4.1 Risk Based Approach  

TalkRemit adopts a risk based approach to the prevention of ML and TF. In accordance with TalkRemit’s Risk Management Policy, the risks of ML and TF are to be placed in to one of four categories , i.e. Low, Medium-Low, Medium and High. This approach means that the level of Customer Due Diligence (“CDD”) required will vary from one customer to another and from one department to another. Each department is responsible for undertaking its own risk assessments and these will be reviewed as part of TalkRemit’s Compliance Monitoring Programme from time to time for accuracy and consistency.  

CDD can take three different forms, namely Standard, Simplified or Enhanced. Details of each of these are contained in section 10. Customers and/or transactions that are deemed to represent a High risk of ML or TF must be subject to Enhanced Due Diligence (“EDD”).   

4.2 Categories of Risk 

The risk category assigned to an account before it is opened must be monitored regularly and changes made as appropriate. TalkRemit’s MLRO is to be immediately informed if at any time the ML/TF risk is assessed as being High.  

4.3 New Products:  

Any new activity of TalkRemit or significant change to an existing activity is to be assessed for any potential ML and TF risk. 

 

5 Record Keeping

 

5.1 Records to be retained are: 

  • Customer Due Diligence files – all records that have been collected are to be retained while the relationship is ongoing and subsequently for 5 years from the last transaction, or 5 years after the relationship ends, whichever the longer.
  • Transaction monitoring including all investigated activity even if not acted upon. Internal suspicious activity reports including reports not acted upon.
  • Suspicious Activity Reports (“SARs”) made to the NCA including copies of any additional information provided. 
  • Requests for information from law enforcement agencies and responses provided.
  • Sanction and PEP screening records, including any potential matches and evidence of investigations undertaken. 

 

5.2 All employees are required to follow TalkRemit’s Data Retention Policy and Procedures.  

6 Money Laundering Reporting Officer

 

6.1 The MLRO acts as the focal point for all activity relating to ML and TF. The MLRO will monitor compliance with the regulations and make regular reports to senior management.  

TalkRemit’s MLRO is Thomas Melliar-Smith.

6.2 The MLRO is approved by the FCA and has ultimate responsibility for the implementation of AML procedures. The MLRO will submit an Annual Report to the Board.  

 

7 Requests for Information

 

7.1 In addition to the obligations on TalkRemit which are mentioned above it is also likely to receive one of 4 types of request for assistance: 

  • Enquiry – This is normally when the enquirer is unsure if the suspect has an ‘account’ with us however TalkRemit may appear on a credit report or a receipt from an ATM machine etc. 

 

  • DPA request – under section 29 of the original Data Protection Act we are able to give out information on customers as it relates to the prevention of crime. However, we are not obliged to provide this information and there is no penalty if we choose not to do so.  Only information on customers in the UK can be provided based on this type of enquiry. Any information provided cannot be used in a court of law. 

 

  • Requests for Information – These written requests are received from governmental bodies or agencies and may be provided under legislation such as: Police Act, Child Support Act, Social Security Administration Act, Nationality, Immigration and Asylum Act. Section 35(1) of the Data Protection Act 2018 allows for information to be provided where a statutory provision requires the supply of information.

 

  • Production Order – this is an official request and we are obliged to provide any information contained in the order. If we do not comply with the order by the time specified, we will be in contempt of court and TalkRemit could be prosecuted. Information can be provided for overseas customers if it is requested. The information provided can be used in a court and a witness statement may be required to accompany the evidence submitted. 

 

Other requests for Information

7.2 No information should be provided over the phone as there is no proof that the person requesting the information is who they claim to be. Staff should always ensure that, before providing any information in any format, they have satisfied themselves that the person requesting information has the appropriate authority to request and receive that information. A record must be kept of any information provided. 

Any information or communication made to, or provided by a counterparty such as a bank, regulator etc, will be normally sent to an agreed individual or list of individuals. Any information received by persons not on the defined agreed list must be forwarded to one of listed individuals immediately. Only those persons listed as the agreed contacts may contact the counterparty unless written authorisation is provided.

The list of agreed individuals will normally be stored in the Counterparty Contacts folder on the shared drive.

7.3 Any member of staff seeking further guidance or clarity on dealing with requests for information should in the first instance contact the MLRO. 

 

8 Suspicious Activity Reporting

 

8.1 If any employee becomes aware of any suspicious activity, has actual knowledge of ML or TF relating to any prospective or actual customer or actual transaction, then the suspicion should be immediately reported to the MLRO by way of an internal Suspicious Activity Report (“SAR”). See Appendix 6. The submission of an internal SAR to the MLRO will discharge the employee’s obligation to report a suspicion under POCA 2002.

8.2 Employees of TalkRemit must report internal SARs either directly to the MLRO as soon as possible and in any event within 2 days of the event. Outsourced partners of TalkRemit must report SARs directly to the MLRO. It is a current requirement that TalkRemit and not outsourced partners submit SARs to NCA (unless prior agreement is held where an outsourcer is a regulated entity) and, where relevant, to the authorities in overseas jurisdictions. This process must be reflected in the outsource agreement or if a Joint Operating Manual has been created.    

8.3 It is at the MLRO’s discretion, based on the information available, whether or not to report SARs to NCA and where relevant to overseas authorities.  

8.4 All TalkRemit employees (as well as outsourced partners), shall respond in full to all enquiries made by the MLRO for the purposes of evaluating the internal SAR and reporting to the National Crime Agency as appropriate. Information provided to the MLRO in response to such enquiries does not breach customer confidentiality or professional privilege and no employee shall withhold information on those grounds. The MLRO must be given full access to all information held within TalkRemit (as well as outsourced partners) that may be relevant. 

8.5 The MLRO will confirm receipt of the SAR in writing and may request additional information where necessary. TalkRemit staff and outsourced partners should ensure that they retain a copy of the confirmation from the MLRO as this is evidence that the report was made and received. 

8.6 It is important to note that employees of TalkRemit and its outsourced partners can provide any suspicious activity report anonymously to the MLRO. 

8.7 The test of whether or not a transaction or pattern of payments are suspicious is not a matter of what an individual employee may consider to be normal or reasonable. The test is to determine whether a transaction would be regarded as being suspicious by any reasonable person expected to have knowledge of the financial transaction concerned. Ignorance and naivety is not an excuse for failure to report any suspicions to the MLRO, and equally importantly, staff are reminded of their obligations in respect of tipping off (see 2.4 (iii)).

 

9 Sanctions – HMT and International Guidance Bodies & PEPs

 

9.1 UK firms are prohibited from providing financial services to persons and businesses on the HMT sanctions list. The Money Laundering Regulations 2017 (“MLR2017”) requires that firms maintain appropriate policies and procedures in order to prevent funds or financial services being made available to those on the sanctions list. Consequently, TalkRemit uses Trullioo’s adverse media checks. These include: Over one million profiles, PEP information covers individuals, family and their acquittances, both family and business. PEP related legal entities, and state-owned enterprises.

  • Sanction lists used, including HM Treasury, European Union, OFAC and CIA
  • All customers are verified against full KYC and sanctions, watchlist and PEP lists (all lists) on onboarding. When a transaction is made the customer and beneficiary are scanned against “all lists”. The entire database of customers is checked against “all lists” every two months.
  • Sanction data coverage includes: HMT Sanction regimes, OFAC & Bureau of International Security and Non-Proliferation Sanctions, UNSC Resolutions & the EU Consolidated list 
  • The risks of conducting business with anyone with an adverse media profile are many and varied. Whether it is regulatory, reputational or transactional, an effective adverse media screening solution can be used to reduce exposure.
  • Sanction list positive matches will cease an application immediately and be reported to the OFSI (Office of Financial Sanctions Implementation)

TalkRemit will screen customers against PEP lists provided by Trulioo that will help to structure information about PEPs. TalkRemit has in place risk management systems and procedures to determine whether a merchant is a PEP, or a family member or known close associate of a PEP. 

A PEP is defined as an individual who is entrusted with prominent public functions, other than as a middle-ranking or more junior official. Individuals entrusted with prominent public functions include:

  • heads of state, heads of government, ministers and deputy or assistant ministers;
  • members of parliaments or of similar legislative bodies;
  • members of supreme courts, of constitutional courts or of other high-level judicial bodies the decisions of which are not subject to further appeal, except in exceptional circumstances; members of courts of auditors or of the boards of central banks;
  • ambassadors, charges d’affaires and high-ranking officers in the armed forces (other than in respect of relevant positions at Community and international level);
  • members of the administrative, management or supervisory boards of State-owned enterprises; and 
  • directors, deputy directors and members of the board or equivalent function of an international organisation.

Family members of a PEP include:

  • a spouse or partner of that person;
  • children of that person and their spouses or partners; and
  • parents of that person. 

Known close associates of a PEP include: 

  • an individual who is known to have joint beneficial ownership of a legal entity or legal arrangement, or any other close business relations, with a PEP; and
  • an individual who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit of a PEP.

TalkRemit’s MLRO will be notified when a PEP has been identified. The MLRO will decide on a case by case basis for (low risk) UK PEPs whether to open PEP accounts based on the risk to the business. Senior Management (the Board) will approve all (high risk) non-UK domicile PEPS.

If a PEP were identified and it is validated, the customer’s account would automatically fall under the requirement of Enhanced Due Diligence. PEP accounts will not be declassified once their tenure in a public office has expired. The MLRO will include within the annual MLRO report to the board any customers identified as PEPs during the previous year.

EDD measures are not applied to family members or close associates of a PEP when the PEP is no longer entrusted with a prominent public function for one year.

10 Customer Due Diligence (“CDD”)

 

10.1 CDD (also referred to as Know Your Customer or “KYC”) procedures exist to identify and (where necessary using a risk-based approach) verify TalkRemit’s customers and users of its services for the purpose of preventing TalkRemit being used to aid ML and TF. Staff must consider all aspects of CDD including the nature of the business or transaction that the customer is undertaking and be sensitive and alert to any unexpected, unusual or suspicious circumstances. Enhanced Due Diligence (“EDD”) and verification of identity are required when the customer and/or business transactions involved are perceived to represent a high risk for TalkRemit and may even be justified if the risk is perceived as Medium. 

 

10.2. It is the responsibility of each employee to ensure that CDD is performed on all customer relationships, including outsourcing partners. Moreover, it is important to remember that this is not a one-off event. Relationships need to be monitored actively and such monitoring is to form part of the oversight performed on customers and outsourcing partners to ensure compliance with the regulations and TalkRemit’s Policy. The frequency of ongoing monitoring of relationships should be on a risk-based approach that is consistent with the AML/TF risk associated with each individual relationship.  

 

Simplified Due Diligence: This lighter form of CDD is not permissible. 

Standard Due Diligence: Private individuals will normally be subject to Standard Due Diligence (known as CDD) for issuance. 

Enhanced Due Diligence (“EDD”): This is a more intensive CDD and is required in any situation which is deemed to represent a refer from the KYC process. EDD may be required because of the lack of evidence to establish KYC. The profile of the of the individuals associated (e.g. if they are a Politically Exposed Person), the nature of their underlying business (such as the products being traded or the structure of a transaction), or nature of transactions made.    

EDD is required when additional information is required due to:

  • the identify the customer
  • establish the relationship between the customer and the beneficiary
  • the source of funds and wealth of the customer.
  • the reasons for the intended or performed transactions

 

The risk status of the individual is a refer on onboarding or due to subsequent transactional behaviour increases the risk of the individual.

EDD may consist of additional evidence being gained to clarify an individual’s KYC status. It may be gaining evidence of source of funds for a lump sum top up or a High regular income or transactions. EED may also consist of restricting payment volumes and potentially blocking them.

 

10.3 In the case of a private individual the following minimum data must be obtained:    

  • full name;
  • full residential address; and
  • email addresses 
  • date of birth
  • nationality   

 

TalkRemit’s normal approach is to undertake Customer Due Diligence on all customers. 

The above information is to be verified electronically. This overview checks private individuals on the following basis:

  • Using recognised databases accessed through the Trulioo service
  • The 2+2 profile is typically deployed including ID and selfie, requiring 2 x verifications on an individual (name, address and potentially DOB). And 2 verifications on full electoral roll and credit data for the purposes of identity verification in the UK, this will include:
    • Returning names within the household, and years resident at the address 
    • Previous address history 
    • Leaves a soft AML footprint
    • All customers and beneficiaries are check against the sanctions, watchlist & PEP databases.
    • Passports, driving licences, and national ID cards are verified,
      • Receipt/upload of scanned image and selfie used to match photo and provide liveliness check.
      • Multiple reason codes submitted on failed documents
      • Functionality
    • System cross-references against templates
    • Extraction of key data 
    • Database checks on MRZ (machine readable zone), and algorithmic reading of MRZ and MRZ checksums
    • Data comparison
    • Check on expiry date
    • Check against UK law enforcement data
    • Output classifies KYC result as pass, or refer (possible EDD)

 

Agent based on onboarding will comprise all the above with the exception of the selfie check.

 

For the avoidance of doubt, where CDD is carried out by third parties, all such third parties must have a full understanding of the capabilities and limitations of the electronic verification system utilised, ensuring settings fall within TalkRemit’s, regulatory and JMLSG guidance and all records must be made available to TalkRemit on request.

Additionally, TalkRemit will only permit one e-wallet per customer with restricted and controlled access and so the details provided will be checked against the existing customer database to confirm that they do not already hold an account, and they were not previously unsuccessful.

Where identity is verified electronically, or copy documents are used, an additional verification check to manage the risk of impersonation fraud could be carried out, for example: 

  • verifying additional aspects of the customer’s identity, or of his electronic ‘footprint’;
  • communicating with the customer at an address that has been verified (such communication may take the form of a direct mailing of account opening documentation to him, which, in full or in part, might be required to be returned completed or acknowledged without alteration);
  • internet sign-on following verification procedures where the customer uses security codes, tokens, and/or other passwords which have been set up during account opening and provided by mail (or secure delivery) to the named individual at an independently verified address;
  • other card or account activation procedures; 
  • requiring copy documents to be certified by an appropriate person. 

 

10.4 CDD for Firms

Enquiries to establish that the account and business of the customer are not held or undertaken on behalf of any third party and sourced directly through the “app” and then by api for operation of a number of checks.

For UK privately-owned corporate entities (i.e. where the shares of the company are not quoted on a regulated market) the following information is referred to, for this we use the Trullio web service: 

  • Companies House direct and other commercial data providers, 
  • Detailed information returned including:  
  • Verification of entity
  • General information including registered address
  • Ownership structure including identification of beneficial owners owing 25% or more of the firm, and source of funds.
  • Directors 
  • Financial information
  • Company events and recent appointments
  • Debentures and charges
  • Company credit score 

 

The identities of shareholders and/or key executives may need to be verified. Where verification is deemed necessary the same approach as the CDD for Private Individuals is to be adopted. 

If information from primary information sources is found to be incorrect, proof of correct information is sought prior to any account going live. For Companies House correct information will be provided via the web form provided: https://www.smartsurvey.co.uk/s/report-a-discrepancy/  

 

Business Activities – sector risk  

Consideration needs to be given to the nature of the business of the corporate. Some industries or business sectors assessed as representing a higher money laundering/terrorist financing risk are prohibited. If in doubt refer to the MLRO. 

  • Armament and Defence 
  • Boat and plane Brokers/Dealers 
  • Carbon Credits  
  • Casinos, betting shops and other gambling related businesses 
  • Real estate brokers 
  • High value dealers 
  • Precious stones/Precious metals dealers
  • Cash Money Service Businesses
  • Digital wallets (staged – open or closed)
  • Digital wallets (pass through – open only)
  • Non-licensed drug activity
  • Overseas registered companies
  • Political Parties
  • Precious metal dealers
  • Pornography
  • Property Development
  • Investment & Security Firms

 

Politically Exposed Persons (“PEPs”) and Sanctions 

It is a key part of the required CDD on each individual that their details are checked against PEPs and Sanctions lists. For details please see Section 9 Sanctions – HMT and International Guidance Bodies.

Where there is any doubt, assistance must be obtained from the MLRO (or Chief Compliance Officer if the MLRO is not available) as soon as possible in discussions with a potential customer.  Failure to produce such information will be a good reason to decline the opening of an account. 

CDD – Signing Off Process 

CDD procedures must be completed before an account can be opened and business started. Such procedures must be consistent with the overall framework provided by this Policy and Procedures. In the case of any doubt the matter should be referred to the Money Laundering Reporting Officer. 

Currently we only deal with individuals. 

Partnerships: CDD as per the requirements for Private Individuals will be required at least for the principal partners who are signatories to the account.  A copy of the Partnership Agreement should also be obtained. The partnership name will used in CDD for all partnerships.

Clubs and Other Unincorporated Organizations: We would not normally deal with these organisations. 

Specified Customers or Transactions which are Non-Acceptable 

TalkRemit MUST NOT undertake any transactions with: 

any individual listed on HMT’s Sanctions List nor any counterparty list agreed;

customers who are within the gambit of a directive from the HMT’s Financial Sanctions Unit relating to any institutions or countries; a “shell bank” either directly or indirectly.   

 

11 Partners (Bank) Due Diligence

 

The Company will develop banking relationships with UK/EEA banks and partners for the provision of the e-money services. 

Partners will be subject to an initial risk and viability assessment, conducted by the Company’s risk management and compliance officer, to further progress their application. 

The following key areas have been identified as significant in assessing the viability of acquiring banks:

  • Practices and procedures which partners engage in to ensure that the information they maintain is adequately encrypted, securely stored, and being properly treated and communicated through the proper channels.
  • Standards which the partners are complaint with, based not only on their ability to meet the requirements but to exceed the requirements of the standards set.
  • Communication processes of the partners, based on how they are able to communicate with customers in order to communicate requirements, issues, or to answer questions brought to them about the services. 
  • Evidence of regulatory permissions necessary to perform their function (where applicable) 

 

12 Shell banks 

TalkRemit will not enter into any arrangement with any shell bank or special purpose vehicles. TalkRemit will also not enter into or continue any rcorrespondent relationship with a bank that is known to allow its accounts to be used by a shell bank(s).

13 Transaction Monitoring 

 

After a customer has been approved and onboarded, TalkRemit performs a comprehensive process of transaction monitoring.

TalkRemit utilises a fraud prevention and risk management system. The system is mainly a “Rules Based” system and utilises a limited “weighting” of a relative risk of a transaction. Ongoing development is continuous. 

Key transaction monitoring data points include, but are not limited to:

  • The customer showing unusual apprehension or reservations about TalkRemit’s anti-money laundering policies.
  • The client’s interest in conducting financial transactions which are contrary to good business sense or are inconsistent with the client’s history.
  • The client failing to provide legitimate sources for their funds.
  • The client providing false information regarding the source of their funds.
  • The client having a history of being the subject of news that is indicative of civil or criminal violations.
  • The client seems to be acting as a ‘front man’ for an unrevealed personality or business and does not satisfactorily respond to requests for identifying this personality or business.
  • The client frequently makes large deposits and demands cash pay-outs only.
  • There are variations in volumes of transactions and/or unusually large transactions
  • The client is a native of, or has accounts in, a country on the Financial Action Task Force’s list of Non-Cooperative Countries or Territories.
  • The client’s previously usually inactive account starts receiving or initiating a surge of payment activity.
  • The client is subject a high level of chargebacks and/or refunds

 

The above list is by no means exhaustive. TalkRemit will monitor its client and account activity in the light of other red flags and take appropriate measures to prevent money laundering.

 

14 AML Wallet Controls 

 

Loading Instrument 

TalkRemit will carry out the following checks:

  • Account loads – incoming transfer must come from a bank account registered under the customers’ name, validated by 3DSecure or AVS.
  • External Peer to Peer loads are not permissible

 

Wallet 

TalkRemit will carry out the following checks:

  • Transfers to bank accounts / Standing orders / Direct debits – under Wire Transfers Regulations, TalkRemit will ensure that wire transfers are compliant with the relevant information requirement including screening the sender and beneficiary.

 

Withdrawing Instrument

TalkRemit will carry out the following checks:

  • Transfers to the customer’s or beneficiary’s bank account – subject to internal transaction

monitoring rules

 

  • Transfer to beneficiary’s e-wallet – subject to internal transaction monitoring rules

 

  • Transfer to cash pick-up – subject to copy signature and verified ID being supplied on request.

 

  • External Peer to Peer withdrawals are not permissible

 

In the case of refund requests due to account closure, funds will only be returned to a bank account in the customer’s name. In order, to validate that the customer is in fact the bank account holder, TalkRemit requires the customer to submit a copy of their current bank statement (dated within the past 3 months). Where suspicious grounds are established, a suspicious transaction will be reported to the NCA, as a SAR.

 

15 AML Agent Controls

If an agent breaches any of the wallet controls or becomes the source of suspicious transactions, examples listed in 13, or becomes the source of more than 3 complaints per quarter, then the Agent is placed on EDD. I concerns are still founded after one month of being on EDD, we will call the agent to discuss the issues and possibly suspend activities or terminate the agent if a satisfactory outcome was not resolved.

 

16 Audits

 

TalkRemit will instruct an independent audit of the Compliance Framework no longer than two years and no less than ten months frequency between each audit.

 

17 Whistle Blowing 

 

Under the Public Interest Disclosure Act 1998 (PIDA), TalkRemit is expected to have whistle blowing procedures to support Directors and Employees to disclose suspected or actual unethical behaviour and/or fraud. 

The act provides any individual making a qualified disclosure under the act with legal protection, meaning that a disclosure made in good faith will not have a negative impact on your role within TalkRemit. 

WHAT IS A QUALIFIED DISCLOSURE? 

A Qualified Disclosure is one where there is a reasonable belief that one or more of the following events has occurred or is likely to be occur: 

  • A criminal offence 
  • A failure to comply with any legal obligation 
  • A miscarriage of justice 
  • The health and safety of any individual is endangered 
  • There has been damage to the environment 
  • Deliberate concealment relating to any of the above 

 

HOW DO I DISCLOSE? 

  • In the first instance you should report any concerns you may have to the Mohamed Abdisamad Omar who will treat the matter with complete confidence. If you are not satisfied with the explanation or reason given to you that has given rise to the concern in question, you should raise the matter with the appropriate official organisation or regulatory body.

 

  • If you do not report your concerns to Mohamed Abdisamad Omar, you should take them directly to the appropriate organisation or body, such as the regulator(please see overleaf). Please remember to give as much information as possible (names, dates, times etc.) to enable them to investigate the matter fully. If you would prefer not to be contacted at home then just say so and supply them with an alternative number where you can be reached. 

 

WILL I BE ANONYMOUS? 

If you do not want to identify yourself, preferring to remain anonymous, that is fine. However, please provide as much information as possible. Leaving a message on the Hotline number asking us to ‘keep an eye on someone’ or that ‘someone is ‘up to something’ is not sufficient information to start an investigation, although it will be noted. 

 

CALL THE HOTLINE 

TalkRemit maintains a whistleblowing hotline which is an unmanned messaging system that can be used by all staff looking to make a qualified disclosure. This line is frequently monitored by the Chief Compliance Officer. 

 

Hot Line:  Number to be supplied

 

CONTACTING THE REGULATOR 

If you are concerned about something which you have escalated internally and it is relevant to the functions of the FCA, where you have disclosed your concerns internally but are not happy with how it was handled or feel unable to talk to anybody within the firm you can contact the FCA by the following means: 

Hotline: 0207 066 9200 

Email: [email protected] 

Post: Intelligence Department (ref PIDA), Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS 

Further information is available at: https://www.fca.org.uk/firms/whistleblowing

18 Appendix 1 – Acceptable Documents

 

Proof of Identity

At least one of the following documents:

  • Current signed passport
  • EEA national ID card
  • National ID card (non-EEA)
  • UK Residence Permit
  • UK Provisional driving licence
  • UK Full driving licence 

 

Proof of Address

At least one of the following documents issued within the last three (3) months showing the Customer’s name and current address: 

  • Bank, building society (bank or mortgage statement)
  • Credit card statement
  • Driving licence 
  • Utility Bill – council tax bill, electricity, water or gas bill
  • Council Tax Bill
  • Valid Insurance Certificate
  • Inland Revenue Coding Notice
  • An official letter from a third party (e.g. employer, solicitor) confirming address

 

19 Appendix 2 – The UK Framework Overview 

 

The Financial Action Task Force is an international organisation that sets standards in the fight against money laundering and terrorist financing. The EU translates these standards into EU law through its Money Laundering Directives. These directives have been implemented into UK law through the Proceeds of Crime Act and Money Laundering Regulations. Detailed guidance relating to the application of regulations by financial services businesses is provided by the Joint Money Laundering Steering Group.   

 

2.1 Money Laundering Regulations 2017 and updates

The Money Laundering Regulations 2017 (“MLR2017”) requires firms to put in place robust, appropriate and risk-sensitive policies and procedures to prevent and detect money laundering. The main aim of the MLR2017 is to prevent the abuse of the financial system in order to commit Financial Crime. This is achieved through firms having a robust system of internal controls, particularly around the application of appropriate customer due diligence (CDD). Appropriate customer due diligence means that it is risk-based, customers have been identified, there is initial due diligence before starting a relationship with a prospective customer as well as ongoing monitoring of the business once the relationship has started and that this can be evidenced through adequate record-keeping. The 2019 implemented in January 2020 built on the 2017 act by restricting further anonymous use of pre-paid cards and crypto-currency wallets. Central Registers were also obliged to publish details of UBO owning more than 20% of a firm to increase transparency.

 

2.2 Proceeds of Crime Act 2002 (“POCA2002”)  

POCA2002 provides for the confiscation or civil recovery of the proceeds of crime. It includes provision for confiscation orders against convicted individuals (requiring payment to the State of the benefit obtained from their crimes), civil recovery of proceeds of crime from unconvicted individuals, taxation of profits generated from crime and investigation into suspected proceeds of crime offences. 

 

2.3 Terrorism Acts   

The Terrorism Act 2000 (as amended) and the Counter-Terrorism Act 2008 relate to terrorist crime and funding and the powers of the HM Treasury (“HMT”), the police and other authorities. The Terrorism (United Nations Measures) Order 2009 provides additional and amended powers to HMT regarding designated individuals, the freezing of accounts and the disclosure of information which would otherwise be confidential. 

 

2.4 JMLSG Guidance 

The JMLSG is made up of the leading UK Trade Associations in the Financial Services Industry. Its aim is to promulgate good practice in countering money laundering and to give practical assistance in interpreting the MLR. The JMLSG Guidance, which was last updated in December 2017, is recognised by the Financial Conduct Authority (‘’FCA’’) and the Prudential Regulatory Authority (‘’PRA’’) as playing an integral part in combating money laundering and terrorist financing.  

Among the key purposes of the Guidance is to provide a base from which a firm’s management can develop tailored policies and procedures appropriate to their business. 

 

2.5 FCA and PRA 

The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) are the financial regulators for the UK. The FCA focuses on the regulation of conduct by both retail and wholesale financial services firms. The PRA is part of the Bank of England and carries out the prudential regulation of financial firms, including banks, investment banks, building societies and insurance companies. The FCA issues the Financial Crime Guide for regulated firms which sets out guidance for financial services firms which they are expected to follow.

 

20 Appendix 3 – FINANCIAL ACTION TASK FORCE (“FATF”)  

 

FATF is an inter-governmental body established in 1989 by the ministers of its member jurisdictions. The objectives of FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating Money Laundering, Terrorist Financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. 

FATF has developed a series of 40 recommendations that are recognised as the international standards for combating ML and TF and the proliferation of weapons of mass destruction. FATF issues the recommendations to its members and in turn the members implement the recommendations into local regulation.  

The 40 recommendations are divided into 7 sections: 

AML/CTF Policies and Coordination: R1&2 – The application of a risk based approach, national cooperation and coordination.  

ML and Confiscation: R3&4 – ML and predicate offences. Tax crimes now form part of such predicate offences. 

TF & Financing of proliferation: R5-8 –  TF sanctions including the requirement to freeze funds immediately.

Preventative Measures: R9-23 – Covers a wide range of topics e.g. CDD, Record Keeping, PEPs, Wire Transfers, reliance, suspicious activity reporting. 

Transparency and Beneficial Ownership of legal persons and arrangements: R24-25 – Beneficial ownership must be transparent, adequate, accurate and timely information must be obtained

Powers and responsibilities of competent authorities: R26-35 – Powers and responsibilities spanning from regulatory supervision to operational and law enforcement cooperation. 

International Cooperation: R36-40 – International cooperation between jurisdictions enabling more effective and rapid communication.

FATF Members with Equivalence Status 

The list of the countries, territories, and organisations that make up the current membership of the FATF can be found on the FATF website: 

http://www.fatf-gafi.org/pages/aboutus/membersandobservers/

FATF Non-Cooperative Countries and Territories (“NCCT”):  

In order to protect the international financial system from ML and TF risks and to encourage greater compliance with best practice standards, FATF has identified a number of jurisdictions that have strategic deficiencies. Such countries and areas are referred to as NCCTs. 

FATF works with these to try and address those deficiencies that pose a risk to the international financial system and the make-up of the NCCT list does therefore change over time. In line with JMLSG Guidance “enhanced scrutiny” must also be undertaken in any dealings with corporate entities in countries which, while not on the current NCCT list, were on it prior to 2000.  The current list of NCCTs can be found on the FATF website: 

http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/

 

21 Appendix 4 – SUSPICIOUS ACTIVITY 

 

Guidance on Suspicious Circumstances 

When must a Suspicious Activity Report (SAR) be submitted?  A SAR must be submitted if you know or suspect, or have reasonable grounds to know or suspect money laundering or terrorist financing has, or is about to occur.  

What is meant by “knowledge”? If you know something to be true you have “actual knowledge”. A criminal court must prove that a defendant in fact knew money laundering was taking place to make a conviction. The court can also ask the jury to imply or assume knowledge was gained from the obvious surrounding circumstances which the defendant was aware of but willingly chose not to see or question. In civil law, knowledge is defined by a classification which includes actual knowledge, purposefully shutting out the obvious, and purposefully not asking reasonable questions.  

 

What is meant by “Suspicious” or “Suspicion”? 

Suspicious circumstances are generally regarded as circumstances beyond mere speculation and should be based on some foundation. Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking. However, it is recognised that suspicious circumstances, or a suspicion, may not be capable of proof based on firm evidence. Suspicion does therefore not need to be clear or firmly grounded, and you are not expected to know the exact nature of the criminal offence or that particular funds were definitely arising from a crime. However, there must be a reasonable belief, based on at least some foundation that an offence has, or is about to occur.  

The process of becoming suspicious  

Becoming suspicious is usually gradual and follows the following stages: 

Comfort – “No issues at all”; 

Concern / Speculation – “Something appears to be a little odd”. 

Review of information at hand and ask questions; 

Suspicion. 

The key to recognising possibly suspicious circumstances is to learn about the nature of a customer’s activities to determine whether a transaction should be regarded as suspicious or abnormal.  For example, it would be unusual, abnormal or suspicious if: 

The business being undertaken is out of line with the customer’s pre-advised or established pattern of business in terms of turnover, frequency or geographical location; offshore accounts, where the customer’s needs do not appear to support such patterns;

Funds are unnecessarily routed through third party accounts;

The customer refuses to provide satisfactory explanations to any questions raised;

Customer due diligence checks do not match what the customer has stated. 

An unusual transaction or activity does not immediately make it criminal. Many customers have unusual transactions or activities which are not linked to criminality. The fact that it is unusual only means that further investigation and review is required.   

Once unusual activity or transactions have been encountered, the next step is to review the information to determine if there is any real foundation for concern. Review of information should include (where applicable); all customer due diligence information and any other information normally available, the customer file and any system notes if applicable, internet / media searches, discussions with colleagues / managers with relevant knowledge, or questions asked of the customer to determine whether there is a reasonable explanation. If a response is received from a customer, their response must promptly be recorded on the transaction file by way of a note, recording the member of staff taking the note.  

An employee who considers activities to be suspicious is not necessarily expected to know the exact nature of the criminal offence or that particular funds are definitely those arising from a crime, or are being paid for the benefit of crime or the financing of terrorism. 

 

What are reasonable grounds to suspect?   

The test of what is reasonable is whether or not a reasonable person applying sound common sense and having regard to the facts and circumstances surrounding the transaction would conclude that it was suspicious. Would an honest and reasonable person, knowing what they know and seeing what they saw, have suspected? This is the “objective” test whereby the courts only need to demonstrate that you ought to or should have known of or suspected money laundering. Failure to act reasonably will imply one or more of the following: 

  • wilful blindness – turning a blind eye.
  • negligence – wilfully and recklessly failing to make the adequate enquiries that an honest person would be expected to make in the circumstances; or 
  • failing to assess adequately the facts and information that are either presented or available. 

Therefore if it is likely to be obvious to the vast majority of people that a transaction or customer is suspicious, it will almost certainly not be a valid defence on the part of the individual(s) handling the transaction if they cite the reason for failing to make a report to the MLRO as simply being that they did not consider it to be suspicious.  

Staff are reminded that failure to report a suspicious transaction is a criminal offence under POCA.

So if in any doubt, report it. 

 

When should a Suspicious Activity Report (“SAR”) be submitted?  

 A SAR should be submitted as soon as knowledge of, or suspicion of money laundering or terrorist financing becomes apparent. This means that a report can be submitted before activity or transactions take place, whilst it is taking place, or after completion of the transaction. A transaction or activity may have appeared to be normal at the time, but after review something raises suspicion.  There is no time limit on how long after an event can a report be made.    

May a manager be consulted? 

Yes, however bear in mind if you discuss an issue with your manager, there is still a legal obligation on you to report if you remain suspicious. If you consult with a manager, they are not required to file a separate report.  

How must a Suspicious Activity Report be submitted? All internal suspicious activity reports must be completed in the format contained within Appendix 6 and sent via email directly to the MLRO with the subject “Internal SAR”. A verbal discussion with the MLRO is not sufficient – a report must be documented to prove that a report has been made, providing you with statutory protection.  

What occurs after a report has been submitted? 

You will receive written confirmation of receipt, and your legal obligations will have been fulfilled. Any further instructions will be provided by the MLRO. Remember to never inform a customer that a report has been filed – this is tipping off and a criminal offence.    

General Principles of Monitoring Procedures to assist CDD 

Ongoing monitoring of a customer or its activities is an integral aspect of CDD procedures. The level of ongoing monitoring required needs to be assessed taking the High risk accounts i.e. those classified at least as High, will generally require more frequent and intensive monitoring. The following questions should be considered in any CDD review process: 

  • Is there a suspicion that transactions are being undertaken on behalf of undisclosed third parties?
  • Is the business relationship with persons or companies that are clearly associated with PEPs e.g. via directors, shareholders, and/or beneficiaries?
  • Has the nature of the business or the countries or parties with whom the customer is dealing changed? 
  • Are there a series of linked payments being made or chargebacks when these are outside the pattern of normal behaviour for that customer or location.
  • Are payments being requested to be made to third parties for no apparent reason?

 

22 Appendix 5 – JMLSG – EQUIVALENCE STATUS OF OTHER COUNTRIES OR TERRITORIES 

 

EU and FATF Members: All member countries of the EU (including Gibraltar as part of the UK) are required to enact legislation and financial sector procedures in accordance with the European ML Directives.  

All EU member states therefore can be considered to have equivalent AML measures to the UK.  

Countries that belong to the FATF have committed themselves to implementing the FATF Forty Recommendations which are in several respects more wide-ranging in nature than the provisions of the European Money Laundering Directive.  

FATF members can be assumed to have passed the equivalence test but it must be noted that the FATF Recommendations are not mandatory and thus assessments must be made with respect to each country.   

UK Crown Dependencies: The Isle of Man, Guernsey, and Jersey have all enacted AML legislation and financial sector regulatory measures that are equivalent to the UK. Successful FATF-style mutual evaluations were undertaken during 2000 and all three jurisdictions can be regarded as having Equivalence Status to the UK. 

 

23 Appendix 6 – HM TREASURY DIRECTIVES & SANCTIONS REGIME  

 

Current Sanctions Regimes & FATF Warnings – see HM Treasury website on:

The HM Treasury Sanctions List: This lists all persons with whom TalkRemit should have no dealings or involvement. TalkRemit’s on-line subscription to Bridger system will identify any individual on the Sanctions List.    

HM Treasury issues directives, orders and warnings from time to time under the Counter Terrorism Act 2008 and the Terrorism (United Nations Measures) Order 2009.  Relevant directives will be advised to staff by the MLRO. 

Obligation to Report to the Authorities: If TalkRemit has any customer relationship or other business dealings with any specified person mentioned in a Freezing Order or Sanctions list, the name of such person and details of all funds to be frozen must be advised promptly to the Financial Sanctions Unit at HMT(OFSI) via the MLRO.  Staff must immediately advise the MLRO of all such names and the MLRO will co-ordinate the report to HMT(OFSI).   

Reports as to the freezing of assets relating to any of the above should be directed to the Financial Sanctions Unit by: email: [email protected] or Facsimile: 020 7451 7677; and by post to: Financial Sanctions Unit, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.

 

 

24 Internal Suspicious Activity Report Form

 

To: Money Laundering Reporting Officer

 

From: ……………………………………………………………… (name of employee)

 

Date:

This SAR is (circle which applies):

  1. A request for consent for a transaction which is not yet completed 
  2. A report on a transaction which has taken place which I consider suspicious
  3. Report on other business-related activity which I consider suspicious

 

I consider the following transaction suspicious and report to you under the internal reporting procedure:

1) Date of transaction: _____________________________________

2) Amount: _____________________________________

3) Customer name/ID: _____________________________________

4) Transaction number: _____________________________________

5) Reason for suspicion: _____________________________________

 

Signature of reporting staff _____________________________________

 

25 Appendix 8 – Suspicious Activity Recording Form

 

MLRO Resolution

Private and Confidential

From: Money Laundering Reporting Officer

Transaction number:

Customer:

Amount:

Internal SAR received from:

Date SAR received:

I confirm that I have reviewed the internal SAR and customer ID for this customer plus transaction history (all documents attached)

I confirm that, based on the information received and reviewed, I have:

  1. submitted a Consent request to NCA
  2. submitted a post transaction SAR to NCA
  3. decided not to submit any kind of SAR to NCA for the following reason: 

 

Signature of MLRO:

Date: