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Anti Money Laundering & Know Your Customer Policy
Overview:
AML laws are part of a broader Australian government initiative to tackle criminals that use financial institutions to conceal their activity. The goal of AML is to prevent criminal activity such as terrorism, tax evasion, and drug trafficking, where illicit funds are often funneled through legal channels to obscure illegal activity.
AML regulations were implemented worldwide in 1989 with the creation of a Financial Action Task Force to set international standards for fighting against money laundering. As part of compliance with these regulations, financial institutions are obliged to monitor suspicious activity and sometimes verify the origin of funds on behalf of the Australian government.
KYC laws are a subset of AML. These laws involve verifying the identity of an institution’s customers. In recent times, these laws have been made significantly stricter as a means of combating terrorist financing.
Bitsv’s policy is to prohibit and vigorously prevent money laundering and any activity that enables money laundering or the finance of terrorist or criminal activities by observing all applicable requirements under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), and the Anti-Money Laundering and Counter-Terrorism Financing Rules (AML/CTF Rules) and its implementing regulations.
Money laundering is ordinarily defined as engaging in acts intended to conceal or disguise the real origins of criminally resultant proceeds so that the proceeds appear to have resulted from genuine origins or constitute genuine assets. Usually, money laundering occurs in three stages. Money first comes into the financial structure at the “placement” stage, where the cash created from criminal activities is changed into monetary instruments, such as money orders or traveler’s checks, or deposited into accounts at financial establishments. At the “layering” stage, the funds are moved into other accounts or other financial establishments to further separate the money from its criminal origin. At the “integration” stage, the funds are reinstated into the economy and used to obtain legitimate assets or to fund other criminal activities or genuine businesses.
Terrorist bankrolling may not involve the proceeds of criminal conduct but rather an attempt to conceal either the origin of the funds or their intended use, which could be for criminal purposes. Genuine sources of funds are a key difference between terrorist financiers and traditional criminal organizations. In addition to benevolent donations, legitimate sources include foreign government sponsors, business ownership, and personal employment.
Although the incentive differs between traditional money launderers and terrorist financiers, the actual methods used to fund terrorist operations can be the same as or similar to methods used by other criminals to launder funds. Backing for terrorist attacks does not always require large sums of cash, and the related dealings may not be intricate.
Our AML Strategies:
Our AML strategies, measures, and core controls are intended to ensure compliance with all applicable Australian regulations and rules and will be reviewed and updated on a regular basis to ensure appropriate policies, procedures, and internal controls are in place to account for both changes in regulations and changes in our business.
Our Measures on Anti-Money Laundering:
We conduct a strict verification process for customer identification, including the capturing of:
More details of the verification process are set out in Clause 6. Furthermore, a risk-based approach is considered, and a strict customer due diligence process is implemented for any high-risk transactions. Also, Bitsv conducts transaction screening for unfair transactions such as market manipulation, insider trading, and transactions using fictitious names. If a potential unfair transaction is detected through the transaction screening process, appropriate steps will be taken to alert the customer, as necessary.
AML documents, such as the verification process of customer identification and transaction screening, are maintained in line with Australian laws, policies, and procedures.
The Bitsv Customer Acceptance Policy (CAP) reflects the international standard, namely to accept only those clients whose identity is established by conducting due diligence appropriate to the risk profile of the client. Where the investor is a new investor, an account must be opened only after ensuring that pre-account opening KYC documentation and procedures are conducted.
KYC & Verification Procedures:
One of the standards for preventing illegal activity is customer due diligence (“CDD”). According to CDD, Bitsv establishes its own verification procedures within the standards of anti-money laundering and KYC frameworks.
Bitsv KYC policies incorporate the following four key elements:
Bitsv’s identity verification procedure requires the User to provide Bitsv with reliable, independent source documents, data, or information (e.g., state or national ID, passport, bank statement, utility bill). For such purposes, Bitsv reserves the right to collect User’s identification information for the AML/KYC Policy purposes.
Bitsv will take steps to confirm the authenticity of documents and information provided by the Users. All legal procedures for checking ID information will be used, and Bitsv reserves the right to scrutinize certain Users who have been determined to be risky or suspicious.
Bitsv reserves the right to verify User’s identity on an ongoing basis, especially when their identification information has been changed or their activity seemed to be suspicious (unusual for the particular User). In addition, Bitsv reserves the right to request up-to-date documents from the Users, even though they have passed identity verification in the past.
User’s identification information will be collected, stored, shared, and protected strictly in accordance with Bitsv’s Privacy Policy, applicable laws, and regulations. After the User’s ID has been substantiated, Bitsv is able to remove itself from possible legal liability in circumstances where its Services are used to conduct illegal activity.
Compliance Officer:
The Compliance Officer is the individual, properly authorized by Bitsv, whose duty is to ensure the effective execution and enforcement of the AML/KYC Policy. It is the Compliance Officer’s duty to oversee all aspects of Bitsv’s anti-money laundering and counter-terrorist financing, including but not limited to everyday:
Users are identified not only by authenticating their ID but, more significantly, by scrutinizing their transactional arrangements. Bitsv relies on data analysis as a risk-assessment and suspicion detection tool. Bitsv does a selection of compliance-related responsibilities, comprising capturing data, filtering, record-keeping, investigation management, and reporting. System functionalities include:
This list is not comprehensive, and the Compliance Officer will monitor Users’ transactions on a day-to-day basis to decide whether transactions are to be reported and treated as suspicious or not.
Risk Assessment:
Bitsv, in line with the international requirements, has adopted a risk-based approach to combating money laundering and terrorist financing. By implementing a risk-based method, Bitsv is able to make sure that procedures to stop or lessen money laundering and terrorist financing are appropriate to the identified risks. This will allow resources to be apportioned in the most effectual ways. The principle is that resources should be directed in accord with importance so that the greatest risks (if any) receive the main attention.
Giving AML Information to Law Enforcement Agencies:
Bitsv will respond to any lawful request concerning accounts and transactions by complying with such requests in a timely manner, including searching our records to determine whether we maintain or have maintained any account for, or have engaged in any transaction with, each individual, entity, or organization named in any request.
We will not disclose the fact that there has been such a request or whether information has been obtained from us, except to the extent necessary to comply with the law. We will review, maintain, and implement procedures to protect the security and confidentiality of requests from such agencies with regard to the protection of customers’ non-public information.
Checking for Foreign Assets Control Listings:
Before opening an account and on an ongoing basis, Bitsv may check the Consolidated List on the DFAT website [https://dfat.gov.au/internationalrelations/security/sanctions/Pages/consolidated-list.aspx] being a list of all persons and entities who are subject to targeted financial sanctions or travel bans under Australian sanctions laws to ensure that a customer or prospective customer does not appear there.
If we determine that a customer or prospective customer is on the Consolidated List or is engaging in transactions that are prohibited by the economic sanctions and embargoes administered and enforced by the Australian government, we will, in the case of an existing customer, reject the transaction and/or block the customer’s assets and file a blocked assets and/or rejected transaction form with the appropriate government agency forthwith, or in the case of a prospective customer, reject the application for an account.
The Consolidated List consists of all persons and bodies relating to the Charter of the United Nations Act 1945 and the Autonomous Sanctions Act 2011. This shadows the transition of
Australia’s targeted financial sanctions from the Banking (Foreign Exchange) Regulations 1959 to the Autonomous Sanctions Regulations 2011.
Customer Identification Program:
In addition to the information we need to collect under KYC requirements, Bitsv has established, documented, and maintained a written Customer Identification Program (CIP).
We will collect certain minimum customer ID information from each customer who opens an account, utilize risk-based procedures to verify the identity of each customer who opens an account, record customer identification information and the authentication methods and results, provide the required adequate CIP notice to customers that we will seek ID information to validate their IDs, and match customer ID information with government-provided lists of suspected terrorists.
Required Customer Information:
Prior to completing any fiat transaction, Bitsv will collect the following information for all accounts, if applicable, for any person, entity, or organization that is opening a new account and whose name is on the account:
If a would-be or current customer either declines to provide the material defined above when demanded or appears to have intentionally delivered deceptive information, we will not process any fiat transactions and, after bearing in mind the risks involved, consider closing any existing account. In either case, our Compliance Person will be informed so that we can decide whether we should report the situation to any government agency.
Verifying Information:
Founded on the possibility, and to the extent judicious and realistic, we will ensure that we have a sound belief that we know the true identity of our customers by using risk-based processes to verify and document the accurateness of the information we get about our customers. We will analyze the material we obtain to decide whether the information is sufficient to form a realistic belief that we know the true identity of the customer (e.g., whether the information is logical or contains inconsistencies).
We will validate customer ID through documentary means, non-documentary means, or both. We will use documents to validate customer identity when appropriate documents are available. In light of the amplified occurrences of ID fraud, we will complement the use of documentary evidence by using the non-documentary means defined below whenever necessary. We may also use non-documentary methods if we are still uncertain about whether we know the true ID of the customer. In verifying the information, we will consider whether the identifying information that we receive, such as the customer’s name, street address, post code, telephone number, date of birth, and Medicare number, allowing us to determine that we have a reasonable belief that we know the true identity of the customer. The information provided needs to be logical and not contain inconsistencies to avoid any adverse outcome.
Proper documents for validating the identity of customers include, but are not limited to, those set out in Clause 6.
We are not obligated to take steps to decide whether the document that the customer has provided to us for ID verification has been validly issued, and we may be dependent on a government-issued identification as verification of a customer’s identity. If, however, we note that the document shows some apparent form of fraud, we must consider that factor in determining if we can form a reasonable belief that we know the customer’s true identity.
The following non-documentary methods may be used to verify ID:
The information will be verified within a realistic time before or after the account is opened. Contingent on the type of the account and requested transactions, we will refuse to complete a transaction before we have verified the information, or in some instances when we require more time, we may, pending authentication, limit the types of transactions or dollar amount of transactions. If we find suspicious information that points to possible money laundering, terrorist financing activity, or other suspicious activity, we will, after internal consultation with Bitsv’s AML Compliance Person, file a report with the appropriate government agency in accordance with applicable laws and regulations.
Lack of Verification:
When we cannot form a reasonable belief that we know the true identity of a customer, we may do one or more of the following: (1) not approve an account; (2) close an account after attempts to verify a customer’s identity fail; and (3) determine whether it is necessary to file a report in accordance with applicable laws and regulations.
Record Keeping:
We will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancies identified in the verification process. We will retain records having a depiction of any document that we relied on to verify a customer’s ID, observing the type of document, any ID number contained in the document, the place of issue, and if any, the date of issue and expiry date. With regard to non-documentary authentication, we will keep documents that describe the procedures and the outcomes of any actions we took to validate the ID of a customer. We will also keep records containing a description of the resolution of each substantive discrepancy discovered when validating the identifying information acquired. We will keep records of all identification information for five years after the account has been closed; we will keep records made about verification of the customer’s identity for five years after the record is made.
Notice to Customers:
We will provide notice to customers that Bitsv is requesting information from them to verify their identities, as required by Australian law. Notices will be by email unless a preferred contact address is indicated.
Monitoring Accounts for Suspicious Activity:
We will monitor account activity for unusual size, volume, pattern, or type of transactions, taking into account risk factors and red flags that are appropriate to our business monitoring. This will be conducted through automated as well as manual methods. The customer risk profile will serve as a baseline for assessing potentially suspicious activity. The AML Compliance Person or his or her designee will be responsible for this monitoring, will review any activity that our monitoring system detects, will determine whether any additional steps are required, will document when and how this monitoring is carried out, and will report suspicious activities to the appropriate authorities.
Emergency Notification to Law Enforcement by Telephone:
In situations involving violations that require immediate attention, such as terrorist financing or ongoing money laundering schemes, we will immediately call an appropriate government agency. If a customer appears on the Consolidated List, we will do likewise.
Red Flags:
Indicators for likely money laundering or terrorist financing include, but are not limited to:
Bitsv’s AML Compliance Person and designee will be in control for ensuring that AML records are maintained properly and that required reports are filed as required. We will maintain documentation for at least six years.
Training Programs:
We will advance constant employee training under the management of the AML Compliance Person and senior management. Bitsv’s training will occur as frequently as may be determined by management. It will be based on our size, its customer base, and its resources and be updated as necessary to reflect any new developments in the law with the underpinning motive to remain compliant with applicable laws.
Our training will include, at a minimum:
(1) methods to recognize red flags and indications of money laundering that arise during the course of the employees’ duties;
(2) action to be taken when the risk is recognized;
(3) employees’ roles in Bitsv’s compliance determinations and how to perform them;
(4) Bitsv’s record retention policy; and
(5) the corrective consequences (including civil and criminal penalties) for non-compliance.
