LOM Financial (Bahamas) Ltd. Annual Anti-Money Laundering/CFT/PF Employee Training

LOM Financial (Bahamas) Ltd. Annual Anti-Money Laundering/CFT/PF Employee Training.

Welcome to LOM Financial (Bahamas) Limited, 2023 Annual AML/CFT/CPF Awareness Training. This training is designed to provide you with continuous awareness of money laundering, terrorist financing and other identified risks that threatens the financial system. Here is a snap shot of the impact that criminals, terrorists and money laundering have on our society. These threats the world faces from financial crime, money laundering and terrorism is real. Therefore, we all have a part to play in the fight against it. We must be vigilant and ALWAYS REPORT suspicious behavior..

Today we will review… The following company’s AML policies and procedures used to detect and prevent money laundering and to counter the financing of terrorism: Identification Verification Record keeping Detection and handling of unusual and suspicious transactions and internal reporting and Legislation pertaining to anti-money laundering and countering the financing of terrorism Effects of breaches of money laundering legislation on the Company and its employees..

What is Money Laundering? Money laundering is the activity that takes place following a criminal act such as drug trafficking, corruption, theft, fraud, tax evasion or bribery to make illegal money gained look like clean money. When a criminal activity generates substantial profits, the individual or group involved must find a way to use the funds without drawing attention to the underlying activity or person involved in generating such profits. Criminals do this by disguising the sources, changing the form or moving the money to a place where it is less likely to attract attention from the authorities. Money laundering often involves a complex series of transactions that are usually difficult to separate. We generally consider three phases of money laundering:.

Three Phases of money laundering: Placement – In this phase the launder places the dirty money into a legitimate financial institution by opening a bank account and depositing the cash in the bank. Layering – the separation of illicit money from its source by layers of financial transactions intended to conceal the origin of the proceeds. Integration – the money reenters the economy through bank transfer into a business which the launder has an investment in exchange for the profits. At this stage the criminal can use the money without getting caught. It is very harrd to catch the launderer at this stage if there has not been proper documentation during the earlier stages..

The classic money-laundering paradigm of cash revenue derived from illegal activities deposited into a bank and moved around the financial system before being withdrawn and invested in luxury goods does not apply to capital markets. Most brokers do not accept cash and therefore are not involved in the introduction of illicit funds into the financial system. However the outcome of money laundering in the capital markets looks very different and funds that disappear into capital markets can become almost impossible to trace. The products and service offerings are diverse, numerous and often highly complex. They are constantly reinvented, per investor demand, market conditions and technological advances. Capital markets offer criminals further anonymity with cross border transactions carried out at speed, electronically and /in huge volumes. An issue we face in capital markets are relatively weak compliance controls and low levels of suspicious transaction reporting..

What is Terrorist Financing? Terrorist financing is money generated by the acts of terrorism and money intended for the use in acts of terrorism. The money directly made is hard to spot because it is small in volume as you do not need much money to commit an act of terrorism..

The Impact of Money Laundering on Society and the Economy A reputation for integrity is a valuable asset most businesses strive for. The financial services industry is no different however it depends on the perception that it functions within a framework of high legal, professional and ethical standards. If funds from criminal activity can be easily processed through a particular institution either because the institution turns a blind eye to the criminal nature of such funds. The institution can become part of the criminal network with criminals. The impact of money laundering goes beyond the use of banks and financial institutions to transfer illicit funds. It is the disruption to the day to day society it creates, the trail of crimes, bribes and violence across towns, cities and countries. If not careful organized crime can infiltrate large sectors of the economy through investments, bribes to public officials and entire governments. The economic and political influence of criminal organizations can weaken the social fabric, collective ethical standards and ultimately the democratic institutions of society..

Identification Verification. There is an obligation to identify the applicant (individual or entity), access and manage our risks as customers can present risks for the company. The assessment of a clients risk which is done during the onboarding process (where a prospective customer information is collected and assessed) and during the lifecycle of the business relationship help to ensure that the company do not open accounts for any person with a known criminal history or with blacklisted entities such as terrorist organizations or corrupt corporations. For Natural Person(s) The following are information obtained to verify a natural person identification and assess their risk rating. This information must be documented on the application form: Full and correct name, A minimum of two (2) contact information, (i.e. personal or business address, personal mobile, landline or business landline number, personal, business or residential mailing including street, city, state, or province, postal or zip code and country) Date and place of birth, Account purpose and nature of the business, Nationality, Occupation, Name of employer, (if self-employed, the nature of the self employment) Estimated level of account activity, Evidence of source of funds and source of wealth, (high risk clients) Specimen signature A copy of the relevant identification pages of passport; A driver’s license A voters card A national identity card or an identification document bearing a photographic likeness of the individual..

Corporate Entity The following are information to obtain to verify the existence of an entity: Certified copy of Board resolution authorizing the opening of the account and the signatories authorized to sign on the account; Evidence of identity of all signatories, including details of their relationship with the company, and where they are not employees, an explanation of the relationship. Evidence of identity for the natural person who will operate the facility Evidence of identification of each natural person with a beneficial interest of 10% or more (except public companies); with principal control over the company’s assets; or who exercises control over the management of the company Certified copy of the certificate of incorporation (equivalent), Confirmation that the company has not been or is not in the process of being dissolved, struck off the register, wound up or terminated (i.e. copy of a certificate of Good Standing) Certified copy of the Memorandum & Article of Association (or equivalent) of the entity, Location of the registered office and, the location of the principal place of business (if different) Register of Share Members & Directors, (i.e.name and address of all officers and directors of the entity) CRS-E & CP forms and W8BENE , latest Audited Financial Statement, proof of identity of all directors and shareholders owning 10% or more, directors and shareholders utility bill/bank statement (not more than 3 months old). Description of the nature of the business (i.e. date of commencement of business, a description of the products or services provided by the business and the location of the principal place of business Purpose of the account and potential parameters of the account (i.e. size, balance ranges, the expected transaction volume of the account. Written confirmation that all credits to the account are and will be beneficially owned by the account holder except in circumstances where the account is being operated by an intermediary for the purpose of holding funds in his professional capacity. In addition to the above, the following is applicable according to a partnership and an unincorporated business. Evidence of identification of all partners or beneficial owners Copy of a partnership agreement, or any agreement establishing a unincorporated business. Mandate from partnership or beneficial owner authorizing the opening of the account and conferring authority on those who will operate the account.

For Trust Evidence of identity of the – Settlor Beneficiaries or class of beneficiaries Protector Natural person exercising effective control over the trust.

Recognizing red flags and actions to take Red Flags at Onboarding When assessing a potential new customer there are behaviors and warnings we should be mindful of at the time of performing the initial due diligence or continuing to engage with the client. These warning include: Client Behavior- You are contacted about a great opportunity but can not disclose too much information on the client as yet. There is a high level of secrecy by the client about the new relationship with a legitimate reason. Source of Funds - A significant amount of funding comes from an individual or entity running a cash-intensive. The involvement of a third party private funder without an apparent connection to the business or a legitimate explanation for their association. Nature of the business If the ownership structure is overly complicated or complex when there is no legitimate or economic reason. Business transactions involve countries where there is a high risk of money laundering and/or terrorist financing..

Suspicious and Unusual Transactions. During the lifespan of the customer relationship as a Broker you should always be aware of the following behaviors that indicate a customer might be undertaking money laundering or terrorist financing. A red flag on its own is not an indication of money laundering or terrorist financing, however if you are suspicious about the activity of your customer or there has been a change in their transactional behavior, you should raise this to you Money Laundering Reporting Officer “MLRO” via a formal report to the MLRO Reports shall be made on the Suspicious Transaction Reporting (“STR”) form located on the LOM Hub. Any report submitted in accordance with the suspicious transaction reporting procedures will not result in the breach of any data protection laws, confidentiality, contractual or statutory provisions. It is an offense for anyone who knows or suspects a suspicious transaction has been made to make any disclosure in that regard to anyone. If in performing CDD measures, a client (new or existing) may be “tipped off” of a suspicion, CDD measures shall not be performed, instead a STR should be filed with the Financial Intelligence Unit (“FIU”) by the Money Laundering Reporting Officer (“MLRO”). The Money Laundering Reporting Officer is Jalinka Strachan and the Deputy Money Laundering Reporting Officer is Craig Lines.

Proceeds of Crime Act, 2018 (“POCA”) – designed to combat identified risks, prevent and facilitate the investigation of money laundering, terrorism financing, terrorism, corruption, proliferation of weapons of mass destruction and human trafficking as well as grant the court powers to compel the forfeiture of the proceeds of crime including cash among other penalties for violations under the Act. Requires persons to inform the Financial Intelligence Unit (FIU), the Police and other relevant agencies of any suspicious transactions that come to light during the course of their activities. The reporting of suspicious transactions is mandatory and a person who fails to report a suspicious transactions is liable to prosecution. Section 18 of the Act provides for protected disclosure of information in the course of a person’s trade, profession, business or employment. Please note tax crimes.

POCA, governs the handling of money that originates from criminal activity (money laundering). This act constitutes that money laundering is an offense. It addresses the concealing, arrangement, and use and possession of criminal property. If someone knowingly helps to hide or transfer the proceeds of crime, they are breaking the law..

E. Financial Intelligence (Transaction Reporting) Regulations, 2001 Require financial institutions to establish and maintain employee training procedures, identification procedures, record-keeping procedures and internal reporting procedures, also appoint a Money Laundering Reporting Officer..

Record Keeping. All books and records of the company relating to account holders and transactions (customers) shall be kept and made available on a timely basis for a period not less than 7 years from the date the customer account closes or its last transaction. This includes records obtain through customer due diligence measures including account files, business correspondence and copies of identification documents for account holders and beneficial owners. The information shall be kept in the English Language or readily convertible in English Language. Such records are also required to be destroyed as soon as practicable after the expiry of 7 years, unless the retention of records is lawful..

Offences and Penalties. The following are the offenses and penalties for breach of complying with the regulations and guidelines:.

Administrative Penalties. Not withstanding the above penalties, failure to comply with any provisions of the POCA, 2018, and the FTRA, 2018, financial institutions, including employee, director or senior manager may be subject to an administrative penalty imposed by the Supervisory Authority (SCB and/or FIU), in the case of a company to a maximum penalty of $200,000 and in the case of an employee, director or senior manager a maximum penalty of $50,000..

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