The Stock Central ANTI MONEY-LAUNDERING (AML) POLICY
The objective of KNOW YOUR CUSTOMER (KYC) guidelines is to prevent banks from being used,
intentionally or unintentionally, by criminal elements for money laundering activities.
KYC procedures also enable banks to know/understand their customers and their financial
dealings better, which in turn, help them to manage their risks prudently.
Financial institutions need to implement effective ‘Know-Your-Customer’ (KYC) standards as
an essential part of risk management practices.
A key challenge in implementing sound KYC policies and procedures is how to put in place
an effective approach. The legal and reputation risks are global in nature and as such, it
is essential that each financial institution develop a global risk management program
supported by policies that incorporate KYC standards.
It is important that the adoption of customer acceptance policy and its implementation
should not become too restrictive and must not result in denial of services to the general
public, especially to those, who are financially or socially disadvantaged.
The term money laundering activities’ covers not only the criminals who try to launder
their ill-gotten gains, but also the bank/financial institutions and their employees who
participate in their transactions and have knowledge that the property is criminally
derived. Knowledge includes the concept of conscious avoidance of knowledge.
DEFINITION OF A CUSTOMER
For the purpose of KYC policy, a customer may be defined as:
A person or entity that maintains an account and/or has a business relationship with
The Stock Central.
On whose behalf the account is maintained (i.e. the beneficial owner)
Beneficiaries of transactions conducted by professional intermediaries, such as stock
brokers, charted accountants, solicitors, etc. as permitted under the Law.
Any person or entity connected with a financial transaction, which can pose significant
reputation or any other risks to The Stock Central, for example, a wire transfer or issue
of
high-value demand draft as a single transaction.
KYC policy includes the following eight key elements
- Customer Identification Procedures
- Monitoring of Transactions
- Risk Management
- Training Program
- Internal Control System
- Record Keeping
- Evaluations of KYC guidelines by internal audit and inspection system; and
- Duties/responsibilities and accountability
INDICATIVE GUILDLINES
Accounts of companies and firms
The Stock Central Compliance Department needs to be vigilant against business entities
being used by individuals as a front for maintaining accounts with banks.
The Stock Central may examine the control structure of the entity, determine the source of
funds and identify the natural persons who have controlling interest and who comprise the
management. These requirements may be moderated according to the risk perception e.g. in
the case of a public company it will not be necessary to identify all the shareholders.
Customer Identification Procedure (CIP)
CIP can only be carried out on the following stages:
- While establishing the relationship;
- While carrying out a financial transaction;
- When The Stock Central has a doubt about the authenticity/veracity or the
- adequacy of the previously obtained customer identification data.
Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information.
The Stock Central needs to obtain sufficient information necessary to establish, to its
satisfaction, the identity of each new customer, whether regular or occasional, and the
purpose of the intended nature of banking relationship.
Being satisfied means that The Stock Central must be able to satisfy the competent
authorities that due diligence was observed based on the risk profile of the customer in
compliance with the extant guidelines in place.
Risk Assessment
An effective KYC program should be put in place by establishing appropriate procedure and
ensuring their effective implementation. It should cover proper management oversight,
systems and controls, segregation of duties, training and other related matters.
Responsibility should be explicitly allocated within the company for ensuring that the
companys policies and procedures are implemented effectively.
The nature and extent of due diligence will depend on the risk perceived by the The Stock
Central Securities Limited. A customer profile will be a confidential document and details
contained therein shall not be divulged for cross-selling or any other purpose.
The Stock Central’ internal audit and compliance have an important role in evaluating and
ensuring adherence to the KYC policies and procedures. The compliance function should
provide an independent evaluation of the The Stock Central’ own policies and procedures,
including legal and regulatory requirements. It should be ensured that the audit machinery
is staffed adequately with individuals who are well versed in such policies and
procedures.
Internal inspectors should specifically check and verify the application of KYC procedures
at the branched/offices and comment on the lapses observed in this regard.
Specially Designated Nationals and Sanctioned Parties Screening
All customers are to be screened through various independent risk intelligence databases.
CUSTOMER IDENTIFICATION
Natural Persons
For customers that are natural persons, The Stock Central should obtain sufficient identification (passport, ID, government identification, etc.) data to verify the identity of the customer, his address/location (utility bill, bank statement, etc.) as well as his recent photograph (if possible).
Legal Persons
For customers that are legal persons or entities, The Stock Central should verify the
legal status of the legal person/entity through proper and relevant documents, verify that
any person purporting to act on behalf of the legal person/entity is so authorized and,
identify and verify the identity of that person. The Stock Central should understand the
ownership and control structure of the customer and determine who are the natural persons
who ultimately control the legal person.
If The Stock Central decides to accept such accounts, in terms of the customer acceptance
policy, it should take reasonable measures to identify who the beneficial owner(s) is/are.
For new accounts
KYC procedure should be the key principle for identification of an individual/corporate account. The customer identification should entail verification through an introductory reference from an existing account holder/ a person known to the bank or on the basis of documents provided by the customer.
Record Keeping
All identification documentation and services records shall be kept for a minimum period of no less than 7 years.
Training
All new employees shall receive anti-money laundering training as part of the mandatory new-hire training program. All applicable employees are also required to complete AML training annually. Participation in additional targeted training programs is required for all employees with day to day AML responsibilities.
Administration
For the purposes of this AML Policy, The Stock Central shall appoint an AML Compliance
Officer. The Stock Central’ AML Compliance Officer shall be responsible for the
administration, revision, interpretation, and application of this Policy. The AML Policy
will be reviewed annually and revised as needed.
The duties of the AML Compliance Officer with respect to the AML Policy shall include, but
shall not be limited to, the design and implementation of, as well as, updating the Policy
as required; training of officers and employees; monitoring the compliance of The Stock
Central affiliates, maintaining necessary and appropriate records; and independent testing
of the operation of the Policy.