AML policy

Scope of Policy

This policy applies to all ForexFairs officers, employees, appointed producers, and products and services offered by ForexFairs. All business units and locations within ForexFairs will collaborate to create a cohesive effort in the fight against money laundering. Each business unit and location has implemented risk-based procedures reasonably expected to prevent, detect, and report transactions. All efforts exerted will be documented and retained. The AML Compliance Committee is responsible for initiating Suspicious Activity Reports (‘SARs’) or other required reporting to the appropriate law enforcement or regulatory agencies. Any contacts by law enforcement or regulatory agencies related to the Policy shall be directed to the AML Compliance Committee.

The committee shall:

  1. Receive internal reports of (suspicions of) money laundering.
  2. Investigate reports of suspicious events.
  3. Make reports of relevant suspicious events to the relevant authorities.
  4. Ensure the adequacy of arrangements made for the awareness and training of staff and advisers.
  5. Report at least annually to the firm’s governing body on the operation and effectiveness of the firm’s systems and controls.
  6. Monitor the day-to-day operation of anti-money laundering policies in relation to: the development of new products; the taking on of new customers; and changes in the firm’s business profile.

Policy

It is the policy of ForexFairs to actively pursue the prevention of money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities. ForexFairs is committed to AML compliance in accordance with applicable law and requires its officers, employees, and appointed producers to adhere to these standards in preventing the use of its products and services for money laundering purposes.

For the purposes of the Policy, money laundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have been derived from legitimate origins or constitute legitimate assets.

What is money laundering?

Money laundering is the process by which criminally obtained money or other assets (criminal property) are exchanged for “clean” money or other assets with no obvious link to their criminal origins.

Criminal property may take any form, including money or money’s worth, securities, tangible property, and intangible property. It also covers money, however come by, which is used to fund terrorism.

Money laundering activity includes:

  1. Acquiring, using, or possessing criminal property.
  2. Handling the proceeds of crimes such as theft, fraud, and tax evasion.
  3. Being knowingly involved in any way with criminal or terrorist property.
  4. Entering into arrangements to facilitate laundering criminal or terrorist property.
  5. Investing the proceeds of crimes in other financial products.
  6. Investing the proceeds of crimes through the acquisition of property/assets.
  7. Transferring criminal property.

There is no single stage of money laundering; methods can range from the purchase and resale of luxury items such as a car or jewelry to passing money through a complex web of legitimate operations. Usually, the starting point will be cash, but it is important to appreciate that money laundering is defined in terms of criminal property. This can be property in any conceivable legal form, whether money, rights, real estate, or any other benefit; if you know or suspect that it was obtained, either directly or indirectly, as a result of criminal activity and you do not speak up, then you too are taking a part in the process.

The money laundering process follows three stages:

  1. Placement: Disposal of the initial proceeds derived from illegal activity (e.g., into a bank account).
  2. Layering: The money is moved through the system in a series of financial transactions to disguise the origin of the cash with the purpose of giving it the appearance of legitimacy.
  3. Integration: Criminals are free to use the money as they choose once it has been removed from the system as apparently ‘clean’ funds.

No financial sector business is immune from the activities of criminals, and firms should consider the money laundering risks posed by the products and services they offer.

What is Counter Terrorist Financing (CTF)?

Terrorist financing is the process of legitimate businesses and individuals that may choose to provide funding to resource terrorist activities or organizations for ideological, political, or other reasons. Firms must, therefore, ensure that: (i) customers are not terrorist organizations themselves; and (ii) they are not providing the means through which terrorist organizations are being funded.

Terrorist financing may not involve the proceeds of criminal conduct but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.

Risk-Based Approach

The level of due diligence required when considering anti-money laundering procedures within the firm should take a risk-based approach. This means the amount of resources spent in conducting due diligence in any one relationship that is subject risk should be in proportion to the magnitude of the risk that is posed by that relationship.

These can be broken down into the following areas:

Customer Risk

Different customer profiles have different levels of risks attached to them. A basic Know your Customer (KYC) check can establish the risk posed by a customer. For example, near-retired individuals making small, regular contributions to a savings account in line with their financial details pose less of a risk than middle-aged individuals making ad-hoc payments of ever-changing sizes into a savings account that does not fit into the profile of the customer’s standing financial data. The intensity of the due diligence conducted on the latter would be higher than that carried out on the former as the potential threat of money laundering in the second case would be perceived as being greater. Corporate structures can be used as examples of customers that could carry a higher risk profile than the one just seen, as these can be used by criminals to introduce layers within transactions to hide the source of the funds, and like that, clients can be categorized into different risk bands.

Product Risk

This is the risk posed by the product or service itself. The product risk is driven by its functionality as a money laundering tool.

The Joint Money Laundering Steering Group has categorized the products with which Firms typically deal into three risk bands – reduced, intermediate, and increased. Typically, pure protection contracts are categorized as reduced risk, and investments in unit trusts as increased risk. Additionally, a factor that will contribute to the classification of the risk category is the sales process associated with the product. If the transaction in the product takes place on an advisory basis as a result of a KYC, this will carry less risk than an execution-only transaction, whereby you know significantly less about the customer.

Country Risk

The geographic location of the client or origin of the business activity has a risk associated with it, this stems from the fact that countries around the globe have different levels of risk attached to them.

A firm would determine the extent of their due diligence measure required initially and on an ongoing basis using the above four risk areas.

Customer identification program

ForexFairs has adopted a Customer Identification Program (CIP). ForexFairs will provide notice that they will seek identification information; collect certain minimum customer identification information from each customer, record such information and the verification methods and results.

Notice to customers

ForexFairs will provide notice to customers that it is requesting information from them to verify their identities, as required by applicable law.

Know your customer

When a business relationship is formed, to establish what might constitute normal activity later in the relationship, it is necessary for the company to ascertain the nature of the business a client expects to conduct.

Once an ongoing business relationship has been established, any regular business undertaken for that customer can