It is the policy of PAXUM INC. (the “Company”) to comply with the "Money Laundering (Prevention) Act, 2011".
This policy statement is integral part of PAXUM’s Anti-Money Laundering Policy, which includes procedures and personnel responsible for complying with this policy and applicable laws.
The purpose of this policy is to ensure PAXUM’s compliance with anti-money laundering laws and regulations, to assist law enforcement in combating illegal money laundering, and to minimize the risk of PAXUM’s resources being used for improper purposes. Failure to comply with anti-money laundering regulations could result in civil and criminal penalties to PAXUM INC. and/or individual employees and Directors.
All PAXUM’s Staff, Management and its Directors need to know this policy.
Money laundering is the process of concealing the existence, illegal source, or application of income derived from criminal activity, and the subsequent disguising of the source of that income to make it appear legitimate. PAXUM is committed in assisting the Financial Intelligence Unit in detecting, preventing and eradicating terrorist financing and terrorist and criminal activity. PAXUM INC. will evaluate all financial transactions and take all necessary steps to comply with anti-money laundering laws and regulations, listed in detailed in the Company’s Policy and Procedure Manual.
As part of PAXUM INC.'s AML policy, the Company has established procedures to ensure that all clients’ identities are verified prior to opening an account. Before opening an account for an individual client, PAXUM INC. will require satisfactory documentary evidence of a client’s name, address, date of birth, and either but not limited to the following forms of identification:
For a corporation or other legal entity, PAXUM INC. will require Satisfactory legal evidence of the entity’s name, address and that the beneficiary and operators have been duly authorized to open the account. The AML Compliance Officer will retain records of all documentation that have been relied upon for client/corporation identification.
PAXUM INC. will not open accounts or accept funds or securities from, or on behalf of, any person or entity nor accept high-risk clients (with respect to money laundering or terrorist financing) without conducting enhanced, well-documented due diligence regarding such prospective client.
The AML Compliance Officer will conduct Semi-annual employee training programs for all personnel regarding the AML policy. Such training programs will review applicable laws, regulations and recent trends in money laundering and their relation to PAXUM INC.'s business. Attendance at these programs is mandatory for all personnel, and session and attendance records will be retained for a three-year period.
Board of Directors - PAXUM INC.
The prevention of money laundering in Canada is governed by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17). This document is available to all staff. Staff is required to review the information contained in these documents as well as these internal guidelines at least quarterly. The Company’s internal guidelines also adopt the best international standards including the anti- money laundering objectives of Section 313 (a) and 319 (b) of the US Patriot Act of 2001 without incorporating foreign laws into the overall Banking regimes of Canada or into PAXUM INC., so that the Company is in compliance with its US correspondent Companys.
These anti-money laundering provisions are designed to meet international standards and have been adopted and approved unanimously by the Board of Directors at a Board meeting held September 10th, 2016 and shall be updated and enforced through the executive management committee comprising representatives of the Board along with the Company’s President, Chief Operating Officer and Chief Compliance Officer, who shall report directly to the Company’s Chief Operating Officer and Chairman on all compliance issues Section 2(1) of the Canada Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17) defines “money laundering” as:
Money Laundering is punishable by a fine of between twenty-five thousand to one hundred thousand dollars and/or imprisonment for a term of between three and five (5) years.
Attempts are sometimes made to use the Banking system for the purpose of money laundering. Most such attempts involve either inducement or deception of Company staff to accept deposits or the transfer of funds, securities and other negotiable instruments, which are the proceeds of crime, or to provide safe custody facilities for such funds or assets.
The most common form of Money Laundering encountered on a day-to-day basis takes the form of accumulated cash transactions deposited in the Banking system or exchanged for value items. Electronic fund transfer systems increase the vulnerability of the Banking system by enabling the cash deposits to be switched rapidly between accounts in different names and between different jurisdictions.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17) creates specific procedures and standards that, when adhered to, will ensure that our Company, and the Canada Banking system at large, remains free of tainted funds and other assets. The Act requires that we maintain a business transaction record. This record includes, where relevant, the following:
It is the Company’s policy to ascertain the above information as required by law and to effectively maintain client records for a period of not less than five years from the termination of the Company / customer relationship. A financial institution commits a criminal offence if it fails to keep a financial transaction record as required by the Act.
The Director of the Financial Service Unit may, on reasonable suspicion, that a money laundering offence is being committed or has been or is about to be committed, enter or authorize someone to enter into the premises of any financial institution during normal business hours to inspect the institution’s financial transaction record and ask any questions relevant to such record and to make any notes or take any copies of the whole or any part of such record. The Act also requires that financial institutions pay special attention to all complex, unusual or large business transactions, or unusual patterns of transactions whether completed or not, and to all unusual patterns of transactions and to insignificant but periodic transactions, which have no apparent economic or lawful purpose.
Management must review the Large Transactions Report from the DDA Module and all incoming and outgoing wire transfers. It is a criminal offence for a financial institution to fail to report or to report falsely such suspicion. It is also a criminal offence to inform or “tip off’ the person or institution which is the subject of the report or investigation.
To conduct all necessary due diligence procedures in order to ascertain the true identity of all the Company’s customers, or potential customers. In this way we will ensure that assets are not invested in our Company anonymously or under assumed or fictitious identities;
To provide for enhanced due diligence on any client deemed to be a “politically exposed person” (PEP); a client engaged in a high risk business such as Internet commerce, or money services businesses; a client engaged in business in any jurisdiction in which there is active military conflict, suspicion of large scale drug production or terrorist activity; and/or a recurring high dollar volume of business activity or unexpectedly large “one-off” business transactions. In addition to the Company’s standard account opening and monitoring procedures, when a client or transaction falls into an “enhanced due diligence” category, the specific transaction(s) must be reviewed by the Company’s Chief Compliance Officer for determination as to whether a suspicious transaction report shall be filed with the Canada FINTRAC’s Financial Intelligence and the Financial Intelligence Unit (FIU);
To take steps to verify that all assets deposited into the Company are from legitimate sources so as to ensure that assets that are the proceeds of crime are not deposited in or otherwise invested in our Company;
To ensure that Company personnel comply with the need to maintain the financial transactions record required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17);
To ensure that Company personnel are properly trained to maintain vigilance regarding all unusual transactions or series of transactions. Where there is reasonable suspicion that any such transaction or series of transactions constitute money laundering, to forthwith report such suspicions on Form STR to the FINTRAC’s Financial Intelligence, as required by law;
To comply fully with the guidelines and training requirements promulgated by the FINTRAC’s Financial Intelligence in an effort to maintain Canada’s good reputation as an ethical financial center committed to combating economic crimes;
To define and confirm with the established rules of good conduct in Company management;
To ensure that the Company maintains a comprehensive client information system that establishes the proper identification of both individual and institutional customers, as well as a thorough description of business activity and source of wealth/funds;
In addition to the establishment of initial KYC documentation when the client account is opened, the client shall be cross checked against OFAC “watch lists” not less than once annually with clients falling into the “enhanced due diligence” category being subject to being cross checked against the OFAC list not less than quarterly. To the extent practical, the Company shall engage Company software able to cross check clients against the OFAC lists automatically;
KYC documentation shall also include a client profile to allow the Company to understand typical and expected transaction types and levels for all clients. Unexpected transactions shall automatically trigger scrutiny of the Compliance Officer in undertaking enhanced due diligence on the transaction;
To have the Company AML policies and procedures reviewed by an independent outside auditor not less frequently than once a year as well as to be constantly prepared for periodic scheduled and unscheduled audits by the FINTRAC’s Financial Intelligence and the FIU;
These guidelines constitute the official policy of the Company. They will remain in force until amended by the Board of Directors in compliance with legislation or subsidiary legislation enacted by the Government or FINTRAC’s Financial Intelligence. They are, however, subject to the following conditions:
Incorporate foreign currency, fiscal or other economic regulations into our law and thereby make them to be applicable to our Company (unless this is already the case under existing international treaties and the law of Canada); Affect the current legal and fiduciary relationship that has traditionally existed between Company and its customers (save as if necessary to comply with the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17) or other relevant laws).
Company personnel shall be prohibited from performing the following acts:
ASCERTAINING THE IDENTITY OF THE BENEFICIAL OWNER
The Company will not open payment accounts, unless it has ascertained with such care as is reasonably possible in the circumstances the identity of the person beneficially entitled to the funds to be credited or to be invested;
The staff’s obligation is to verify the identity of the prospective customer before opening of accounts, irrespective of whether such accounts are maintained under the name of an individual or a corporation.
In the case of cash equivalent transactions (exchange, purchase and sale of precious metals, cash subscriptions to Company issued medium term notes and bonds, etc.), the obligation of staff is to check the identity of the contracting party and verify the source of funds in any transaction which exceeds US $10,000 or equivalent).
The Company checks the identity of the contracting party having no fixed domicile or being domiciled abroad by means of an official identity document (i.e. passport, identity cards, driving license, etc).
All account signatories for a company must be duly accredited. In the case of a of an account for clubs, societies, and charities, the Company will satisfy itself as to the legitimate purpose of the organization by, for example, requesting a copy of the constitution. Where there is more than one signatory to the account, the identity of at least two signatories should be verified initially and, when signatories change, care will be taken to ensure that the identity of at least two current signatories have been verified.
The identity of the beneficial owner of the assets to be deposited is to be ascertained at the time of opening the account or deposit.
All reasonable care must be exercised in identifying the beneficial owner. The Company may assume that the contracting party and the beneficial owner are identical. This can no longer be assumed, however, if unusual circumstances are brought to the attention of the Company;
If the contracting party acts for the account of a legal entity or company, the Company shall register the entity’s name, address and country of domicile.
If any doubts arise, the procedure set out below shall be implemented.
The Company has to ensure that its internal control department and its auditing firm can check as to the indication procedure being carried out.
Verify clients’ background via World Compliance and The US Department of Treasury - Office of Foreign Assets Control (OFAC) databases.
Appropriate records are to be kept of the name, registered name, address and country of domicile of the contracting party as well as of the means used to establish identity. Any documents obtained in the case of legal entities are to be preserved; The details as to the identity of the beneficial owner of the individuals controlling the company must also be preserved.
In cases of doubt, when opening accounts or deposits, the Company shall require a written declaration from the customer as to whether he is acting for his own account or for the account of a third party and in the latter case, for whose account. For example, doubt is justified in the following cases:
The opening of an account or deposit is requested, and, at the same time, a power of attorney is going to a person not recognizable as being closely enough related to the account holder (e.g., to a foreigner), or if any other unusual aspects arise;
The opening of an account or a deposit is requested by a person whose financial situation is known to the Company. The assets handed over or to be remitted are beyond the limits of the customer’s recognized financial ability;
The opening of an account or a deposit is requested by a person domiciled abroad, who has been introduced to the Company. At the same time, a power of attorney is given to a person who is recognized as not being in a sufficiently close relationship to the account holder
The opening of an account or a deposit is requested by a person domiciled abroad, who has been introduced to the Company and whose financial situation is known to the Company. The assets, handed over to be remitted are beyond his final situation;
The opening of an account or a deposit is requested by a person domiciled abroad who has not been recommended to the Company. The discussion the Company must have with the customer at the time of opening the account or deposit brings to light unusual aspects; The opening of an account or a deposit is requested by a person domiciled abroad by way of correspondence, accompanied by an attestation of the signature but the potential customer is not personally known to the Company.
Where serious doubt remains as to the accuracy of the customer’s written declaration, which cannot be eliminated by further clarification, the Company must decline the request for the opening of the account or deposit.
It is the policy of the Company to report all suspicions of Money Laundering transactions to the supervisory authority which has been designated by law as the Financial Intelligence Unit. (No 35 of 2002 Part IV, Section 20) It is further the Company’s policy to file suspicious transaction reports with the FIU on all complex, unusual or large business transactions, unusual patterns of transactions (whether completed or not) and insignificant but periodic transaction that have no apparent economic or lawful purpose. The Company may also consider the following indicators in determining whether a STR report should be filed:
These records are to include customer identification and related transactions. Specifically showing the identity of any or all customers as well as particulars for each transaction carried out for each customer.
These records are to be kept in a secure environment for a period of at least five years after the institution has carried out the last relevant financial business. The objective is to allow authorities to retrieve relevant available information without undue delay. If there is an ongoing investigation when the five-year limit occurs, the records should be kept until the authorities have closed the case.
The customer identification records should clearly show the type of evidence of identification obtained from the customer and specifically show sufficient details of the customer’s identity. A copy of this evidence must be kept as a part of the customer’s record.
The transaction records must be admissible in court proceedings and are to include all related information necessary to carry out the transactions. These refer to any records or information that leads to entries into the accounts of the financial institution or the customer’s specific account. For example, properly prepared cheques, telegraphic transfers, credit/debit slips, etc. In the case of wire transfers, all information related to senders and beneficiaries should be included in the payment messages.
In maintaining the customer identification records and the transaction records - keep in mind that they may be used to develop an audit trial. They should include enough information to allow authorities to locate:
The purpose of this guide is twofold:
The Financial Institution must adopt appropriate measures to keep abreast of policies and procedures as governed by law regarding the prevention of money laundering in an effort to protect its interests.
The Financial Institution must ensure that staff be familiar with current policies and procedures in place to prevent any possibilities of money laundering occurrence. In so doing, staff must be reminded of the responsibility of their role within the organization. The guide is classified into three main categories:
The Company will never establish a relationship with a customer until it knows the customer’s true identity. If a potential customer is unwilling to provide the necessary information, the relationship should be reconsidered. If the Company has established a customer relationship, it should be alert for any unusual business transactions. The Company has, therefore, provided formats, which adequately cover all criteria required for the establishment of such a relationship. At the onset of interviewing a customer, should there be a reluctance to provide information as set in our Banking requirements; the proper thing to do is to obtain Management’s decision as the ultimate decision. A caution note can be discretely put in this customer’s file for future referral. Pointers For a Personal Account
Requirements are the same as the above and the following:
A customer file is to be immediately established in which all personal or company data will be lodged. Along with this, copy of the complete transaction including copies of entries is to be kept for at least five years. In respect to cheques deposited, a copy of this item will be lodged for referral. No funds will be released. Funds will be “frozen” for the appropriate period until clearance as stipulated in the Company’s manual. In respect to wire transfers, a copy of incoming/outgoing telex will be placed on file. Information such as Company source, sender’s name, reference number, transaction date, and dollar amount is to be logged. At a minimum, we should have on hand information on:
Customers that walk in with large dollar amounts must present evidence of declaration of funds brought into the country either at the International Airport, the borders, or at the FINTRAC’s Financial Intelligence. The Company must retain this form duly stamped by a Government Body to protect its interests. This form will or should show where the source of funds originated. Our Source of Funds form must be completed. In addition, the following lists of internal reports routinely produced are of major support:
While it is difficult to define what is a suspicious transaction, a simple hint would be when in doubt, query. Look out for anything out of the ordinary on the basis of “know your customer.” It is therefore, recommended that staff familiarize themselves with customer’s activities in order to recognize when a transaction is unusual. Bear in mind, however, an unusual transaction may not necessarily be a suspicious transaction. Some helpful hints are:
Again, any of the above may not be illicit activity; it only means that the transaction may require closer scrutiny. Nevertheless, as a precautionary measure, should a situation arise, it should be properly documented or authorized by senior management for reporting purposes. It is the Company’s objective to provide refresher training at regular intervals in an effort to:
Staff sessions to discuss these issues are to be encouraged in order to get feedback coupled with added training support provided by the FINTRAC’s Financial Intelligence.
This is the first stage in the washing cycle. Money Laundering is a “cash-intensive” business, generating vast amounts of cash from illegal activities (for example: street dealing of drugs where payment takes the form of cash in small denominations). The monies placed into the financial system or retail economy or are smuggled out of the country. The aims of the launderer are to remove the cash from the location of acquisition so as to avoid detection from the authorities and to then transform it into other assets forms, (for example: travelers checks, postal orders, etc.).
In the course of layering, there is the first attempt at concealment of disguise of the source of the ownership of the funds by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity. The purpose of layering is to disassociate the illegal monies from the source of the crime by purposely creating a complex web of financial transactions aimed at concealing any audit trail as well as the source and ownership of funds.
Typically, layers are created by moving monies in and out of the offshore Company accounts of bearer share shell companies through electronic funds transfers. Given that there are over 500,000 wire transfers – representing in excess of $1 trillion – electronic circling the globe daily, most of which is legitimate, there is not enough information disclosed on any single wire transfer to know how clean or dirty the money is, therefore providing an excellent way for launderers to move their dirty money. Other forms used by launderers are complex dealings with stock, commodity, and future brokers. Given the sheer volume of the daily transactions, and the high degree of anonymity available, the chances of transactions being traced is insignificant.
The final stage in the process. It is this stage at which the money is integrated into the legitimate economic and financial system and is assimilated with all other assets in the system. Integration of the “cleaned” money into the economy is accomplished by the launderer making it appear to have been legally earned. By this stage, it is exceedingly difficult to distinguish legal and illegal wealth. Methods popular to money launderers at this stage of the game are:
How the basic steps mentioned in the Stages Of The Process are used depends on the available laundering mechanism and the requirements of the criminal organizations. The table below provides some typical examples. Placement Stage Layering Stage Integration Stage Cash paid into Company (sometimes with staff complicity or mixed with proceeds of legitimate business). Wire transfers abroad (often using shell companies or funds disguised as proceed of legitimate business). False loan repayments or forged invoices used as cover for laundered money. Cash exported Cash deposited in overseas Banking system. Complex web of transfers (both domestic and international) makes tracing original source of funds virtually impossible. Resale of good/assets. Cash used to buy high value goods, property or business assets. Income from property or legitimate business assets appears “clean”.
These are a small selection of the ways that people clean their “dirty money”. These schemes are still being used on unsuspecting businesses as even though the authorities know about them, not many people do, or even have access to this type of information.
Firm “Know Your Customer” policies are a Company’s most effective weapon against being used unwittingly to launder money. Knowing customers, including depositors and other users of Company services, requiring appropriate identification, and being alert to unusual or suspicious transactions can help deter and detect laundering schemes.
Helps detect suspicious activity in a timely manner; Promotes compliance with all Banking laws; Promotes safe and sound Banking practices; Minimizes the risk that the Company will be used for illicit activities; Reduces the risk of Government seizure and forfeiture of a customer’s loan collateral when the customer is involved in criminal activity, and Protect the Company’s reputation.
Generally, a Company should never establish a relationship with a customer until it knows the customer’s true identity. If a potential customer is unwilling to provide the necessary information, the relationship should be reconsidered. If the Company has established a customer relationship, it should be alert for any unusual business transactions. What We Should Look For
The following situations may indicate money laundering. These lists are not all-inclusive, but can help us recognize ways launderers may approach them.
Transactions like those mentioned above may warrant attention. Just because a transaction appears on the list does not mean that it involves illicit activity. It only means that the transaction requires close scrutiny. Many of these activities are suspicious only because they are inconsistent with the normal customer behavior. Such transaction may upon closer examination be found to be legitimate business activity. Similarly, other transactions note mentioned may be suspicious if they are inconsistent with the normal activity of a particular customer.
Two important aspects of knowing your customer are:
PAXUM’s(PAXUM’s) Compliance Officer under the supervision of its COO is to understand the relationship between individuals responsible for monitoring AML and Company management. PAXUM’s Compliance Officer or its COO is to ensure that the individuals responsible for monitoring AML do not have sufficient authority (real and perceived) and influence in PAXUM INC. (PAXUM).
Compliance Officer under the supervision of its COO will conduct annual assessment and administered by our Compliance Officer. PAXUM will look at risk as a product of volume, regulation, staff turnover, regulator focus. PAXUM will also look at more than simply cash transactions, we will also analyzed each of the Company's lines of business to determine how it might be abused by money launderers.
Compliance Officer under the supervision of its COO will maintain records of when the Board of Directors last reviews PAXUM’s policy and procedures. The Board of Directors supports the PAXUM's AML efforts and is committed to provide the staffing and other assets needed to implement this policy. PAXUM will ensure the AML policy reflects the current regulatory environment and are review annually.
Compliance Officer, under the supervision of its COO will update any future changes and assure that the policy is being followed by our staff, by providing semi-annual training. PAXUM will engage FINTRAC’s Financial Intelligence for any current updates in regards to AML and will make the necessary updates in the PAXUM Policy and Procedure Manual.
Compliance Officer under the supervision of its COO will review how PAXUM handles SAR responsibilities. Ensuring all departments understand their roles in forwarding suspicions for centralized consideration and filing. Share lessons learned in documents, particularly those about reporting illegal or suspect actions that may affect the Company.
Compliance Officer under the supervision of its COO will reviewed the most recent audit to determine whether, in our opinion, our Company is obtaining a thorough job.
Records will be maintained by the Compliance Officer or COO. Meetings at which these topics are discussed will be documented as part of these records. Ensure and determine whether there are employees who require initial or additional training.
Compliance Officer under the supervision of its COO will include information that has been distributed to inform Company employees of AML requirements.
Compliance Officer under the supervision of its COO will maintain in a file with any follow-up SARs, and of all of the reports or other documents used in the Company's research of the activity described in the reports. In addition, PAXUM should also maintain a file of any activity that the Company investigated and on which the Company determined not to file a SAR, including the rationale behind that decision.
Compliance Officer under the supervision of its COO will analyze and determine whether such patterns of large wires-in followed by wires-out from a same client are justified based on the business or customer involved. Also analyze the types and volume of wire transfer activities conducted by the Company. Include methods of payment accepted for such transfers and also acceptable remitters (for example, accountholders versus non-accountholders).