Scope
As a Global Policy, the Anti Money Laundering policy applies to Niad Ventures Limited, with its office headquarters in Kampala, Uganda. The Law on preventing the use of the financial system for purposes of laundering money and terrorism financing specifies relevant legal requirements for the financial sector to effectively prevent money laundering and the financing of terrorism. With a growing concern with regard to money laundering and possible financing of terrorism, many countries worldwide have enacted or strengthened their laws and regulations regarding this subject, Uganda being one of those countries.
Purpose
The objective of this policy is to provide guidelines aimed at detecting, identifying and preventing money laundering. This policy shall also provide guidelines to all staff members on the minimum standards for KYC, Due diligence and transaction monitoring among others. Laundering is a global problem and organizations in every country are required to strictly comply with money laundering standards. Regulatory Policies across the globe are focused towards strict compliance to AML and KYC Laws/Regulations according to international standards. Niad Ventures Limited places strong emphasis on having an effective AML Policy and accordingly ensures that the company has the required tools to achieve this objective. It is the responsibility of all staff to establish additional controls to curb money laundering and strengthen KYC Policies and to protect our reputation by ensuring that its services are not utilized to launder the proceeds of crime. The policy aims to establish best practices in an Anti-Money Laundering (AML) Policy. The policy sets out Niad Ventures Limited’s basic goal and purpose so as to permit examination of funds disbursements accordingly and maintain information on the purpose and objectives of Niad Ventures Limited activities.
Definitions
Money laundering is:
The conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an activity to evade the legal consequences of that person’s action;
the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is derived from criminal activity or from an act of participation in such an activity;
the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such an activity; participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the foregoing points.
Terrorism financing is the provision or collection of funds and other assets, by any means, directly or indirectly, with a view to, or in the knowledge that those means will be used in full or in part by a terrorist organization or by a terrorist acting alone, even without any connection to a particular act of terrorism.
Stages of Money Laundering
The first step in laundering process is for the criminals to attempt to get the proceeds of their crimes into a bank or other financial institution, sometimes using a false identity. They can then transfer the proceeds to other accounts, locally and or abroad, or use it to buy goods and services.
It eventually appears to be like any legally earned money and becomes difficult to trace back to its criminal past. The criminals can then invest or spend it or, as often the case, use it to fund more crime. The laundering process is often described to take place in three stages:
Placement – (Injection or Pre-washing) Placement, being the first stage is the means by which funds from a criminal activity are introduced into the financial system, either directly or through using other retail businesses. This can be in the form of large sums of cash or a series of smaller sums. Initial proceeds of drug trafficking or street sales of drugs are always in cash.
Layering – (Stacking or Washing) The aim of the second stage is to disguise the transaction through a succession of complex financial transactions with the purpose of erasing as quickly as possible all links with its unlawful origin. The funds may be converted into shares, bonds or other easily negotiable asset or may be transferred to other accounts in other jurisdictions.
Integration – (Recycling) Complex integration schemes then place the laundered funds back into the economy through real estate, business assets, securities and equities, in such a way that they re-enter the financial system appearing as normal business funds that have been legitimately earned.
Prevention of Money Laundering
Establish clear lines of internal accountability, responsibility and reporting. To this end, Niad Ventures Limited shall take primary responsibility for the prevention of money laundering and will ensure that appropriate effective internal controls are in place as well as escalation channels.
Ensure sufficient KYC documentation is collected from third parties. Niad Ventures Limited shall take all reasonable steps to verify the identity of its clients, investees and contractors. This shall require identification of beneficial owners of all corporate entities (including Trusts), and the principals behind clients or grantees who are acting as agents. Niad Ventures Limited will take all reasonable steps to ensure that KYC information about clients and investees collected and kept up-to-date and that identification information is updated when changes occur in the parties involved in a relationship.
Ensure adequate maintenance and retention of records. Niad Ventures Limited shall establish procedures to retain adequate records of identification for transactions for a minimum of seven years after a relationship has ended. Records relating to training, compliance monitoring and internal and external suspicious transaction reports will also be retained for a minimum of seven years.
Monitor and report suspicious activities and transactions. Niad Ventures Limited shall make prompt disclosures of suspicious transactions, or proposed transactions, through the appropriate internal channels and, where required to the relevant regulatory authorities. Niad Ventures Limited has defined an escalation mechanism in the incident management framework.
Ensure staff receive adequate training. Niad Ventures Limited shall raise awareness on AML and TF including prevention and train its staff on what money laundering is; the recognition of suspicious transactions; the requirements of regulation and legislation; and the contents of this Policy.
Co-operate with all lawful government agencies. Niad Ventures Limited shall co-operate with all lawful requests for information made by government agencies during their investigations into money laundering.
Minimum Requirement
The following standards are to be considered as minimum requirements and are elaborated in more detail in the Niad Ventures Limited policy with respect to “Know Your Customer” and “Know Your Transactions”.
1. Enterprise-wide Risk Assessment (EWRA)
As part of Niad Ventures Limited’s risk-based approach, the Society is required to assess on a yearly basis the risks of money laundering and terrorism financing, taking into account risk factors relating to members, geographic areas, products, services, transactions and delivery channels. These enterprise-wide risk assessments are documented and kept up-to-date.
2. Know Your Customer (KYC)
Customer Identification and Verification, Niad Ventures Limited has established standards regarding Know-Your-Customer in its membership. These standards require due diligence on each prospective member before entering into a business relationship:
via identification and verification of his identity and, as the case may be, his representatives and beneficiaries on the basis of documents, data or information obtained from a reliable and independent source compliant with the anti-money laundering legislation and regulations;
via obtaining information on the purpose and intended nature of the business relationship
Niad Ventures Limited does not allow its entities to operate anonymously.
3. Individual Risk Assessment
The factors taken into account for the individual risk assessment and classification (very high–high-medium-low risk) of our clients on a risk-sensitive basis are the ones that are in scope of the Enterprise-Wide Risk Assessment as mentioned above and relate to the same categories of risk:
Delivery channel risk
Product, service or transaction risk
Customer risk
Geographical risk
4. Ongoing Customer Due Diligence
Periodic and risk-based reviews are carried out to ensure that member-related documents, data or information are kept up-to-date.
5. Monitoring of Transactions (Know your Transactions (KYT))
The risk management policy and internal control policy should ensure that ongoing transaction monitoring is conducted to detect transactions which are unusual or suspicious compared to the member’s risk profile (expected versus real transactional behaviour). This transaction monitoring is conducted on two levels:
each business line (first line of control) monitors all customers and their financial behaviour and applies an enhanced due diligence on those customers who are considered as a higher ML/TF risk;
the first line of control is supplemented by a risk-based second line of control, including an increased monitoring of transactions of customers regarded as a higher ML/TF risk.
In a number of circumstances described in the KYC-rule, measures need to be taken to block the accounts or to terminate the business relationship.
Record keeping Records
of personal data obtained for the purposes of the prevention of money laundering and terrorist financing are processed and kept and shall not be further processed in a way that is incompatible with those purposes.
Classification of AML High Risk parties
Certain characteristics carry much higher money laundering risks as compared with others. Accordingly, the following will be considered high risk;
1. Unregulated Charities, NGO and Not for Profit Organizations especially those operating on cross border basis;
2. Entities from countries:
subject to sanctions, embargoes or similar measures by the United Nations, the African Union and East African Community;
identified by FATF as not cooperative in the fight against money laundering,
or as lacking appropriate money laundering laws and regulations;
identified as providing funding/support for terrorist activities;
identified as having significant levels of corruption, drug trafficking or other criminal activity.
Prohibited Customer Types
As a policy, Niad Ventures Limited shall not undertake business with:
Anonymous individuals or institutions
Individuals or entities subject to UN / OFAC or local country sanctions
Shell companies
Companies whose beneficial ownership is not known or not clear
Unauthorized money changers / prize bond dealers.
Risk Management Operational Measures
Suspicious Transactions Reporting (STR)
An Internal Auditor is appointed to ensure that unusual transactions that have been detected are reported. The reporting of suspicious transactions must comply with the laws and regulations of the respective local jurisdiction.
Procedures
The Society policies, where applicable must have AML/CTF rules, including minimum KYC standards, into operational procedures taking into account their type of activities, their volume and their size together with the local legal and regulatory requirements.
Training
The society must put in place a coherent training program, including follow-up trainings on a regular basis (in-class trainings, E-learnings, webinars,…), in order to create and maintain a satisfying AML/CTF awareness. The content of this training program has to be worked out in accordance with the kind of business the trainees are working for and the kind of functions they hold.
Compliance Monitoring Program
In order to assure the effectiveness of instructions, procedures and processes, recurrent quality controls are performed in the AML/CTF-domain pursuant to a Compliance Monitoring Program. Reviews and quality controls can be executed by the society at its own initiative.
Reporting
AML/CTF issues and activity reports are submitted on a regular basis to the Supervisory Committee and the BOD. On a yearly basis the BOD shall assess the quality of coverage of the internal control in this respect.
Internal Audit
Compliance with the policy, the minimum KYC standards and the procedures falls within the scope of Internal Audit who verifies if they are correctly implemented and obeyed.
