BITCHANGE  

 

AML CTF Compliance Policy 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

1. 

General Definitions 

2. 

Introduction 

3. 

Policy Applicability: Provision of Administrative Services 

4. 

The Responsibilities of the Board of Directors 

5.  

5.1.  

5.2. 

Money Laundering Compliance Officer 

General 

Duties of the AMLCO 

6. 

6.1. 

6.2. 

6.2.1 

6.2.2. 

6.3. 

 

6.4. 

6.5. 

Risk-Based Approach 

General Policy 

Identification of Risks 

General/Principles 

Company Risks 

Design and Implementation of Measures and Procedures to Manage and Mitigate the Risks 

Dynamic Risk Management 

Relevant International Organisations 

7. 

7.1. 

7.2. 

7.2.1. 

7.2.2. 

7.3. 

7.4. 

7.4.1. 

7.4.2. 

7.4.3. 

Client Acceptance Policy 

General Principles of the CAP 

Criteria for Accepting New Clients (Based on their respective risk) 

Normal Risk Clients 

High Risk Clients 

Not Acceptable Clients 

Client Categorisation Criteria 

Low Risk Clients 

Normal Risk Clients 

High Risk Clients 

8. 

8.1. 

8.2. 

8.3. 

8.4. 

8.5. 

 

8.6. 

8.7. 

8.8. 

8.8.1. 

8.8.2. 

8.8.3. 

8.8.4. 

8.8.5. 

8.9. 

Client Due diligence and Identification Procedures 

Application of Client Due Diligence and Identification Procedures 

Transactions that Favour Anonymity 

Failure or Refusal to Submit Information for the Verification of Clients’ Identity 

Time of Application of the Due Diligence and Client Identification Procedures 

Construction of a Profile and General Client Identification and Due Diligence Principles 

Further Obligations for Client Identification and Due Diligence Procedures 

Simplified Client Identification and Due Diligence Procedures 

Enhanced Client Identification and Due Diligence (High Risk Clients) 

General Provisions 

Non Face-to-Face Clients 

Trust Accounts 

‘Politically Exposed Persons’ Accounts 

Clients from Countries Which Inadequately Apply FATF’s Recommendations 

Client Identification and Due Diligence Procedures (Specific Cases) 

8.9.1. 

8.9.2. 

8.9.3. 

8.9.4. 

8.9.5. 

8.10. 

Natural Persons Residing in Estonia 

Natural Persons Not Residing in Estonia 

Unincorporated Businesses, Partnerships and Other Persons with no Legal Substance 

Legal Persons 

Nominees or Agents of Third Persons 

Reliance on Third Persons for Client Identification and Due Diligence Purposes 

9. 

9.1. 

9.2. 

On-going Monitoring Process 

General 

Procedures 

10. 

10.1. 

10.2. 

10.3. 

Recognition and Reporting of Suspicious Transactions/Activities to the FIU 

Reporting of Suspicious Transactions to the FIU 

Anti-Money Laundering Compliance Officer’s Report to the FIU 

Submission of Information to the FIU 

11. 

11.1. 

11.2. 

11.3. 

Record-Keeping Procedures 

General 

Format of Records 

Certification and Language of Documents 

12. 

12.1. 

12.2. 

12.2.1. 

12.2.2. 

Employees’ Obligations, Education and Training 

Employees’ Obligations  

Education and Training 

Employees’ Education and Training Policy  

Money Laundering Compliance Officer Education and Training Program 

13. 

Appendices 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. General Definitions 

 

For the purposes of this Policy, unless the context shall prescribe otherwise: 

 

Money laundering” means: 

- the conversion or transfer of property derived from criminal activity or property obtained instead of such 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 actions; 

- the acquisition, possession or use of property derived from criminal activity or property obtained instead of such property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation therein; 

 - the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property derived from criminal activity or property obtained instead of such property, knowing that such property is derived from criminal activity or from an act of participation in such an activity. 

 
Money laundering also means participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the activities referred to in subsection 1 of this section. 

 

- Money laundering is regarded as such also where a criminal activity which generated the property to be laundered was carried out in the territory of another country. 

 

 - Knowledge, intent or purpose required as an element of the activities referred to in the first three subsections of this section may be inferred from objective facts. 

 

 - Money laundering is regarded as such also where the details of a criminal activity which generated the property to be laundered have not been identified. 

 

Terrorism financing” means acts of financing of terrorism as defined in § 237 of the Penal Code of Estonia. 

 

Beneficial Owner” means the natural person or natural persons, who:  

 

  1. Takes advantages of his influence, exercises control over a transaction, operation or another person and in whose interests of favour or on whose account a transaction , act, action, operation or step or over another person and in whose interests or favour or on whose account a transaction or act, action, operation or step is made. 

  1. Ultimately owns or control a legal person through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that person, including through bearer shareholdings, or through control via other means.  
    Direct ownership is a manner of exercising control whereby a natural person holds a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent in a company. Indirect ownership is a manner of exercising control whereby a company which is under the control of a natural person holds or multiple companies which are under the control of the same natural person hold a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent in a company. 

  1. Senior managing official is deemed as a beneficial owner in the case, where it is impossible to identify the person specified in point (a) after applying of all possible attempts of such identification  

  1. In the case of a trust, civil law partnership, community or legal arrangement, the beneficial owner is the natural person who ultimately controls the association via direct or indirect ownership or otherwise and is such associations’: settlor or persons who has handed over property to the asset pool, trustee or manager or possessor of the property, person ensuring and controlling the preservation of property, where such person has been appointed or the beneficiary , or where the beneficiary or beneficiaries have yet to be determined, the class of persons in whose main interest such association is set up or operates. 

  1. In other cases prescribed by the Act. 

 

Client means any legal or physical person aiming to conclude a business relationship with the Company. 

 

FIU” means Financial Intelligence Unit of Estonia. 

 

Compliance officer” or “AMLCO” means a representative appointed by the Board of Directors of the Company who is responsible for the effectiveness of the execution of the rules hereto, conducting compliance over the adherence to the rules and serving as a contact person of the FIU.  

 

Company means BITCHANGE  (incorporated in Estonia with registration number 14338665), a provider of trust and company services, provider of a service of exchanging a virtual currency against a fiat currency, providers of a virtual currency wallet service. 

 

Act means the Money Laundering and Terrorist Financing Prevention Act, passed 26.10.2017. 

 

Transaction” means any cash flow or payment order or virtual currency wiring between a Client and the Company.  

 

Politically exposed person” or “PEP” means a natural person who is or who has been entrusted with prominent public functions including a head of State, head of government, minister and deputy or assistant minister; a member of parliament or of a similar legislative body, a member of a governing body of a political party, a member of a supreme court, a member of a court of auditors or of the board of a central bank; an ambassador, a chargé d'affaires and a high-ranking officer in the armed forces; a member of an administrative, management or supervisory body of a State-owned enterprise; a director, deputy director and member of the board or equivalent function of an international organisation, except middle-ranking or more junior officials. The aforesaid definition also means a person is or who has been entrusted with prominent public functions in Estonia, another contracting state of the European Economic Area or an institution of the European Union. 

 

Family member” means the spouse, or a person considered to be equivalent to a spouse, of a politically exposed person or local politically exposed person; a child and their spouse, or a person considered to be equivalent to a spouse, of a politically exposed person or local politically exposed person; a parent of a politically exposed person or local politically exposed person. 

 

Person known to be close associate” means a natural person who is known to be the beneficial owner or to have joint beneficial ownership of a legal person or a legal arrangement, or any other close business relations, with a politically exposed person or a local politically exposed person; and a natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the de facto benefit of a politically exposed person or local politically exposed person. 

 

High-risk third country” means a country specified in a delegated act adopted on the basis of Article 9(2) of Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC. 

 

Equivalent third country” means a country not a Member State of European Economic Area but applying an equivalent regime to the European Union corresponding (AML) framework. 

 

Virtual currency means a value represented in the digital form, which is digitally transferable, preservable or tradable and which natural persons or legal persons accept as a payment instrument, but that is not the legal tender of any country or funds for the purposes of Article 4(25) of Directive (EU) 2015/2366 of the European Parliament and of the Council on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, pp. 35–127) or a payment transaction for the purposes of points (k) and (l) of Article 3 of the same Directive. 

 

 

 

2. Introduction 

 

The purpose of the Policy is to document the Company’s internal practice, measures, procedures and controls relevant to the prevention of Money Laundering and Terrorist Financing. 

 

The Policy is developed and periodically updated by the AMLCO based on the general principles set up by the Company’s Board of Directors (hereinafter the ‘Board’) in relation to the prevention of Money Laundering and Terrorist Financing. 

 

All amendments and/or changes of the Policy must be approved by the Board. 

 

The Policy shall be communicated by the AMLCO to all the employees of the Company that are responsible for the application of the practices, measures, procedures and controls that have been determined herein. 

 

The Policy has been prepared to comply with the provisions of the Act and all the relevant guidelines of the FIU.  

 

3. Policy Applicability: provision of services. 

 

The Policy applies to all various types of services provided by the Company to the clients. 

In this respect, the AMLCO shall be responsible to update the Policy so as to comply with FIU’s further requirements, as applicable, regarding the Client Identification and Due Diligence Procedures which the Company must follow. 

 

4. The Responsibilities of the Board of Directors 

 

The responsibilities of the Board in relation to the prevention of Money Laundering and Terrorist Financing include the following: 

 

  1. To determine, record and approve the general policy principles of the Company in relation to the prevention of Money Laundering and Terrorist Financing and communicate them to the AMLCO; 
     

  1. To appoint the AMLCO, and where necessary, AMLCO’s assistant(-s) and determine their duties and responsibilities which are stated in this Policy; 

 

  1. To approve the management and procedures Policy, which is communicated to all employees of the Company responsible for the application of the practices, measures, procedures and controls that have been determined; 

 

  1. To ensure that all requirements of the Act are applied, and assure that appropriate, effective and sufficient systems and controls are introduced for achieving the abovementioned requirement; 
     

  1. To ensure that the AMLCO and his/her assistant(-s), if any, and any other person who has been assigned with the duty of implementing the procedures for the prevention of Money Laundering and Terrorist Financing have complete and timely access to all data and information concerning clients’ identity, documents (as and where applicable) and other relevant files and information maintained by the Company so as to be fully facilitated in the effective execution of their duties, as included herein; 

 

  1. To ensure that all employees are aware of the person who has been assigned the duties of the AMLCO, as well as his/her assistant(-s) (if any), to whom they report any information concerning transactions and activities for which they have knowledge or suspicion that might be related to money laundering and terrorist financing; 

  1. To establish a clear and quick reporting chain based on which information regarding suspicious activities is passed without delay to the AMLCO for its explicit prescription in the Policy; 
     

  1. To ensure that the AMLCO has sufficient resources, including competent staff and technological equipment’s, for the effective discharge of his duties; 

 

  1. To inform The Financial Intelligence Unit about the appointment of the Compliance officer in accordance with the requirement of (5) § 17 of the Act; 

 

  1. To complete an annual audit in order to check the accuracy, completeness, efficiency and quality of the Policy execution, which includes: receipt and inspection of the AMLCO annual return, spot-check inspection, issuance of audit results. Each audit shall be completed within 1 month from the end of the previous business year.  

 

5. Money Laundering Compliance Officer  

5.1. General 

The AMLCO shall belong hierarchically to the higher ranks of the Company’s organisational structure so as to command the necessary authority. The AMLCO shall lead the Company’s Money Laundering compliance procedures and processes and report to Senior Management. The AMLCO shall also have access to all relevant information necessary to perform his/her duties. 

The level of remuneration of the AMLCO shall not compromise his objectivity. BITCHANGE OÜ AMLCO is Mr. Aleksandr Bezus. 

 

5.2. Duties of the AMLCO 

All company’s employees shall report to the AMLCO their knowledge of suspicion of transactions involving money laundering terrorist financing. 

The AMLCO shall be part of the management of the Company so as to command the necessary authority. The AMLCO shall lead the Company’s Money Laundering Compliance procedures and processes and report to the Senior Management of the Company. 

Once a Company’s employee reports his/her suspicion to the AMLCO he/she shall be considered to have fully satisfied his/her statutory requirements, according to the Act. 

The AMLCO shall always approve the client file before accepting a new client. 

The duties of the AMLCO include the following: 

(a) To design, based on the general policy principles of the Company, the internal practice, measures, procedures and controls relevant to the prevention of money laundering and terrorist financing, and describe and explicitly allocate the appropriateness and the limits of responsibility of each department that is involved in the abovementioned; 

(b) To develop and establish the clients’ acceptance policy and submit it to the Board for consideration and approval; 

(c) To develop/update Anti-Money Laundering and Counter Terrorist Financing Policy (hereinafter “Policy”) 

(d) To monitor and assess the correct and effective implementation of the policy, the practices, measures, procedures and controls of point (a) above, and, in general, the implementation of the Policy of point (c) above. In this respect, the AMLCO shall give appropriate monitoring mechanisms. In cases that weaknesses are identified in the application of the required practices, measures, procedures and controls, the AMLCO shall give appropriate guidance for corrective measures and, where deemed necessary, inform the Board; 

(e) To receive information from the Company’s employees which is considered to be knowledge or suspicion of money laundering and terrorist financing activities or might be related with such activities. The information shall be received in a written report form called the “internal suspicion report”; 

(f) To examine and assess the information received as per (e) above, in the light of other relevant information and discuss the circumstances of the case with the informer and his/her managers. The evaluation of the information of point (e) above shall be done on a report (hereinafter, the “Internal Evaluation Report”); 

(g) If following the evaluation described in point (f) above, AMLCO decision is to notify the FIU; 

(h) If following the evaluation described in point (f) above, the MLCO decides not to notify the FIU, then he/she shall provide sufficient explanations as to the reasons for such a decision. The said reasons shall be clearly recorded on the AMLCO’s internal evaluation report; 

(i) To be a contact person with the FIU, upon commencement of and during an investigation as a result of filing a report to the FIU according to point (g) above; 

(j) To ensure the preparation and maintenance of the lists of clients categorised following a risk-based approach, which shall contain the names of clients, their company number (if applicable); 

(k) To detect, record and evaluate, at least on an annual basis, all risks arising from existing and new clients and update and amend the systems and procedures applied by the Company for the effective management of the aforementioned risks; 

(l) To evaluate the systems and procedures applied by a third person on whom the Company may rely for client identification and due diligence purposes, and approve the cooperation with it, as applicable; 

(m) To provide advice and guidance to the employees of the Company on subjects related to money laundering and terrorist financing; 

(nTo respond to all requests and queries from the FIU, to provide all requested information and to fully cooperate with the FIU; 

(o) To issue and submit to management an annual return needed to complete an audit in accordance with the point (j) of clause 4. 

 

6. Risk-Based Approach 

6.1 General Policy 

The Company shall apply appropriate measures and procedures, by adopting a risk-based approach, so as to focus its effort in those areas where the risk of Money Laundering and Terrorist Financing appears to be comparatively higher. 

Further, the AMLCO shall monitor and evaluate, on an on-going basis, the effectiveness of the measures and procedures of Section 6 of the Policy. 

The adopted risk-based approach that is followed by the Company, and described in the Policy, has the following general characteristics:  

  1. Recognises that the money laundering or terrorist financing threat varies across clients, countries and services; 

  1. Allows the Board to differentiate between clients of the Company in a way that matches the risk of their particular business, source of wealth, country of residence; 

  1. Allows the Board to apply its own approach in the formulation of policies, procedures and controls in response to the Company's particular circumstances and characteristics; 

  1. Helps to produce a more cost-effective system; 

  1. Promotes the prioritisation of effort and actions of the Company in response to the likelihood of Money Laundering and Terrorist Financing occurring through the use of the administrative and ancillary services. 

The risk-based approach adopted by the Company, and described in the Policy, involves specific measures and procedures in assessing the most cost effective and appropriate way to identify and manage the Money Laundering and Terrorist Financing risks faced by the Company. 

Such measures include: 

  1. Identifying and assessing the Money Laundering and Terrorist Financing risks emanating from particular clients or types of clients, services, and geographical areas of operation of its clients; 

  1. Managing and mitigating the assessed risks by the application of appropriate and effective measures, procedures and controls; 

  1.  Continuous monitoring and improvements in the effective operation of the policies, procedures and controls. 

The application of appropriate measures and the nature and extent of the procedures on a risk-based approach depends on different indicators. Such indicators include the following: 

 

  1. The scale and complexity of the services offered; 

  1. Geographical spread of the services and clients; 

  1. The nature (e.g. non face-to-face) and economic profile of clients as well as of services offered; 

  1. The nature of business activities and source of wealth; 

  1. The volume and size of transactions; 

  1. The degree of risk associated with each area of services; 

  1. The country of origin and destination of clients' funds; 

 

 

 

The AMLCO shall be responsible for the development and implementation of the policies, procedures and controls on a risk-based approach. 

 

6.2 Identification of Risks 

 

6.2.1 General/Principles 

 

The risk-based approach adopted by the Company involves the identification, recording and evaluation of the risks that have to be managed. 

The Company shall assess and evaluate the risks it faces, for the use of the Administrative and Ancillary Services for the purpose of Money Laundering or Terrorist Financing. The particular circumstances of the Company determine suitable procedures and measures that need to be applied to counter and manage risk. 

 

In the cases where the services that the Company provides are relatively simple, involving relatively few clients or clients with similar characteristics, then the Company shall apply such procedures which are able to focus on those clients who fall outside the 'norm'. 

 

The Company shall be, at all times, in a position to demonstrate to FIU that the extent of 

measures and control procedures it applies are proportionate to the risk it faces for the use of 

the administrative and ancillary services, for the purpose of Money Laundering and 

Terrorist Financing. 

 

6.2.2 Company Risks 

 

The following, inter alia, are sources of risks which the Money Laundering and Terrorist Financing: 

 (a) Risks based on the clients nature: 
 

  1. Clients from high risk countries known for high level of corruption or organised crime or trafficking; 

  1. Clients engaged in transactions which involve significant amounts of cash; 

  1. PEPs; 

  1. Companies incorporated in offshore centres; 

  1. Companies with bearer shares. 

 

 

(b) Risks based on the clients behaviour:  
 

  1. Client transactions where there is no apparent legal financial/commercial rationale; 

  1. Situations where the origin of wealth and/or source of funds is not verified;  

  1. Unwillingness of clients to provide information on the Beneficial Owners of a legal person. 
     

(c) Risk based on the clients initial communication with the Company: 
 

  1. Non face-to-face clients; 

  1. Clients introduced by a third person. 

 

Detailed basis for risk categorization mention in s.7.4 of this Policy. 

 

 

6.3 Design and Implementation of Measures and Procedures to Manage and Mitigate the Risks 

 

Taking into consideration the assessed risks, the Company shall determine the type and extent of measures it will adopt in order to manage and mitigate the identified risks in a cost effective manner. 

 

These measures and procedures include: 

 

  1. Adaption of the Client Due Diligence Procedures in respect of clients in line with their assessed Money Laundering and Terrorist Financing risk; 

 

  1. Requiring the quality and extent of required identification data for each type of client to be of a certain standard (e.g. documents from independent and reliable sources, third person information, documentary evidence); 

 

  1. Obtaining additional data and information from the clients, where this is appropriate for the proper and complete understanding of their activities and source of wealth and for the effective management of any increased risk emanating from the particular business relationship or the occasional transaction; 

 

  1. On-going monitoring of high risk clients' transactions and activities, as and when applicable. 

 

In this respect, it is the duty of the AMLCO to develop and constantly monitor and adjust the 

Company's policies and procedures with respect to the Client Acceptance Policy and Client 

Due Diligence and Identification Procedures of Sections 6 and 7 of the Policy, respectively, as well as via a random sampling exercise as regards existing clients. These actions shall be duly documented. 

 

6.4 Dynamic Risk Management 

 

Risk management is a continuous process, carried out on a dynamic basis. Risk assessment is not an isolated event of a limited duration. Clients' activities, as well as the services provided by the Company, change. The same applies to the activities used for money laundering or terrorist financing. 

 

In this respect, it is the duty of the AMLCO to undertake regular reviews of the characteristics of existing clients, new clients, services as well as the measures, procedures and controls designed to mitigate any resulting risks from the changes of such characteristics. These reviews shall be duly documented. 

 

6.5 Relevant International Organisations 

 

For the development and implementation of appropriate measures and procedures on a risk based approach, and for the implementation of Client Identification and Due Diligence Procedures, the AMLCO shall consult data, information and reports that are published in the following relevant international organisations: 

 

(a) FATF (Financial Action Task Force’s) – www.fatf-gafi.org 

(b) The Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering (c) Measures (hereinafter ‘MONEYVAL’)- www.coe.int/moneyval 

(d) The EU Common Foreign & Security Policy (CFSP) http://europa.eu/rapid/press-release_IP-19-781_en.htm 

(e) The UN Security Council Sanctions Committees- www.un.org/sc/committees 

(f) The International Money Laundering Information Network (IMOLIN)- www.imolin.org 

(g) The International Monetary Fund (IMF)- www.imf.org  

(h) The Office of Foreign Asset Control - http://worldpopulationreview.com/countries/ofac-countries/ 

 

 

The Client Acceptance Policy (hereinafter the ‘CAP’), following the principles and guidelines described in this Policy, defines the categorisation and acceptance criteria for clients, to be followed by the Company. 

The AMLCO shall be responsible for applying all the provisions of the CAP. In this respect, the heads of Other Departments shall also be assisting the AMLCO with the implementation of the CAP, as applicable. 

 

7. General Acceptance Policy 

 

The Client Acceptance Policy (hereinafter the ‘CAP’), following the principles and guidelines described in this Policy, defines the categorisation and acceptance criteria for clients, to be followed by the Company. 

The AMLCO shall be responsible for applying all the provisions of the CAP. In this respect, the heads of all departments of the Company shall also be assisting the AMLCO with the implementation of the CAP, as applicable. 

 

 

7.1 General Principles of the CAP 

 

The General Principles of the CAP are the following: 

 

  1. The Company shall classify clients into various risk categories and, based on the risk perception, decide on the acceptance criteria for each category of client; 

 

  1. Where the client is a prospective client, services shall be provided only after the relevant Due Diligence and Identification Measures and Procedures have been conducted, according to the principles and procedures set out in Section 7 of the Policy; 

 

  1. All documents and data described in Section 7 of the Policy must be collected before accepting a new client; 

 

  1. No business relationship shall be established between the Company and anonymous or fictitious names(s); 

 

  1. No transactions shall be made unless the prospective client is approved by the AMLCO. 

 

7.2 Criteria for Accepting New Clients (based on their respective risk) 

 

This Section describes the criteria for accepting new clients based on their risk categorisation. 

 

7.2.1 Normal Risk Clients 

 

The Company shall accept clients who are categorised as normal risk clients as long as the general principles under Section 6 of the Policy are followed. 

 

7.2.2 High Risk Clients 

 

The Company shall accept clients who are categorised as high risk clients as long as the general principles under Section 6 of the Policy are followed. 

 

Moreover, the Company, when dealing with high risk clients, shall apply the enhanced client identification and due diligence measures as well as the Due Diligence and Identification Procedures for the specific types of high risk clients in accordance to Section of the Policy as applicable. 

 

7.3 Not Acceptable Clients 

 

The Company does not accept the following types of clients: 

 

  1. Clients who fail or refuse to submit the requisite data and information for the verification of identity and the creation of a company profile, without adequate justification, are not acceptable for establishing a business relationship with the Company. 

  1. Shell companies and/or shell banks.  

 

 

7.4 Client Categorisation Criteria 

 

This Section defines the criteria for the classification of clients based on their risk. The AMLCO shall be responsible for such classification of clients, into one of three (3) types set below: 

 

7.4.1 Low Risk Clients 

The following types of clients can be classified as low risk clients with respect to the Money 

Laundering and Terrorist Financing risk which the Company faces: 

 

  1.  Legal persons covered by the EU Directive; 

  1. Listed companies who are regulated by a relevant authority in Estonia; 

  1. Public companies listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means), which impose requirements to ensure adequate transparency of beneficial ownership; 

  1. Credit institutions or financial institutions acting on its own behalf or a credit institutions or financial institutions located in a contracting state of the European Union Area or a third country, which in its country of location is subject to requirements equal to those established in Directive (EU) 2015/849 of the European Parliament and of the Council and subject to state supervision; 

  1. Persons who are residents of the following countries or geographical areas: 

1) a contracting state of the European Economic Area; 

2) a third country that has effective AML/CFT systems; 

3) a third country where, according to credible sources, the level of corruption and other criminal activity is low; 

4) a third country where, according to credible sources such as mutual evaluations, reports or published follow up reports, AML/CFT requirements that are in accordance with the updated recommendations of the Financial Action Task Force (FATF), and where the requirements are effectively implemented. 

 

It is provided that, in the cases mentioned above, the Company has to gather sufficient information to establish if the client qualifies as a low-risk client. In this respect, the AMLCO shall be responsible to gather the said information. The said information shall be duly documented and filed, as applicable, according to the recording keeping procedures described in Section 11of the Policy. 

 

The client information updating is required every 5 years.  

 

7.4.2 Normal Risk Clients 

 

The following types of clients can be classified as normal risk clients with respect to the Money Laundering and Terrorist Financing risk which the Company faces: 

(a) Face-to-face client; 

(b) Existing well known client; 

(c) Client represented by well-known Business Partner; 

(d) Companies that have open bank account in EU banks for more than 3 years; 

(e) Clients that are resident in geographical areas of lower risk (third countries that having effective AML/CFT system; third countries identified by credible sources as having a low level of corruption or other criminal activity). 

(f) Any client who does not fall under the 'low risk clients' or 'high risk clients' categories set in Sections 7.4.1 and 7.4.3, respectively. 

 

The client information updating is required every 3 years. However, simplified information and documents check shall be arranged every year. 

 

7.4.3 High Risk Clients 

 

The following types of clients can be classified as high risk clients with respect to the Money Laundering and Terrorist Financing risk which the Company faces: 

 

  1. Clients whose own shares or those of their parent companies (if any) have been issued in bearer form; 

  1. Trusts, Foundations & Charities; 

  1. Clients acting through a third person; 

  1. PEPs'; 

  1. Companies deal with electronic gambling / gaming (internet); 

  1. Clients engaged in transactions which involve significant amounts of cash; 

  1. Clients from countries which inadequately apply FATF's recommendations; 

Clients that are indicated in at least one of the following lists: Consolidated sanctions list (UN), OFAC-SDN (USA), FSE (OFAC-Consolidated: FSE, SSI,Palestinians, Non-SDN etc.) (USA),  Consolidated list of sanctions (EU), HM Treasury Consolidated (UK), PEP list (Globally 

  1. Any other clients that their nature entail a higher risk of money laundering or terrorist financing; 

  1. Any other client determined by the Company itself to be classified as such. 

 

The client information updating is required every 6 months 

 

 

8. Client Due Diligence and Identification Procedures 

 

8.1 Application of Client Due Diligence and Identification Procedures 

 

The Company shall duly apply client identification procedures and client due diligence measures in the following cases: 

 

  1. upon establishment of a business relationship; 

 

  1. upon making or mediating occasional transactions outside a business relationship where a cash payment of over 15 000 euros or an equal amount in another currency is made, regardless of whether the financial obligation is performed in the transaction in a lump sum or in several related payments over a period of up to one year, unless otherwise provided by law; 
     

  1. upon verification of information gathered while applying due diligence measures or in the case of doubts as to the sufficiency or truthfulness of the documents or data gathered earlier while updating the relevant data; 

 

  1. upon suspicion of money laundering or terrorist financing, regardless of any derogations, exceptions or limits provided for in the Act. 

 

In this respect, it is the duty of the AMLCO to apply the relevant Client Due Diligence Identification Procedures described in Section 7 of the Policy for the four (4) cases mentioned above. Furthermore the departments responsible to collect and file the relevant client identification documents shall to do so in accordance to the recording keeping procedures described in Section 10.1 of the Policy. 

 

Further, the AMLCO shall be responsible to maintain at all times and use during the application of Client Due Diligence and Identification Procedures template-checklists (Appendix 1 of the Policywith respect to required documents and data from potential clients, as per the requirements of the Act. 

 

8.2 Transactions that Favour Anonymity 

 

In the case of clients' transactions via internet, telephone, fax or other electronic means where the client is not present so as to verify the authenticity of his/her identification documents, or his/her signature, or the fact that he is the Ultimate Beneficial Owner, the Company applies reliable methods, procedures and control mechanisms so as to ensure such verifications. 

 

8.3 Failure or Refusal to Submit Information for the Verification of Clients' Identity 

 

Failure or refusal by a client to submit, before the establishment of a business relationship, the requisite data and information for the verification of his identity and the creation of his / his company profile, without adequate justification, constitutes elements that may lead to the creation of a suspicion that the client is involved in money laundering or terrorist financing activities. In such an event, the Company shall not proceed with the establishment of the business relationship or the execution of the occasional transaction while at the same time the AMLCO considers whether it is justified under the circumstances to submit a report to the Financial Intelligence Unit, according to Section 10 of the Policy. 

 

During the business relationship, a client fails or refuses to submit, within a reasonable timeframe the required verification data and information according to Section 7 of the Policy, the Company shall terminate the business relationship with the client while at the same time shall examine whether it is justified under the circumstances to submit a report to the Financial Intelligence Unit, according to Section 10 of the Policy. 

The provisions of this section are not applied where the Company has notified the Financial Intelligence Unit of the establishment of a business relationship, transaction or an attempted transaction in accordance with the procedure provided for in § 49 of the Act and section 10 of the Policy and received from the Financial Intelligence Unit a specific instruction to continue the business relationship, the establishment of the business relationship or the transaction.