AML AND SANCTIONS POLICY
1. INTRODUCTION & POLICY PURPOSE
ARBONUM L.L.C-FZ, a limited liability company registered under the laws of the Dubai, United Arab Emirates with Registration Number 2310797 and registered office at Business Center 1, M Floor, The Meydan, Nad Al Sheba, Dubai, U.A.E
And
ROWLING LIMITED, a limited liability company registered under the laws of the Republic of Cyprus with Registration Number HE 237792 and registered office at Christabel House, 118 AgiasFylaxeos St., 3087, Limassol, Cyprus
Are committed to ensuring that they (jointly referred to as “the Company”) prevent their business from being used to facilitate financial crimes, including money laundering, terrorist financing, and violations of any applicable sanctions laws and regulations in each jurisdiction in which they operate.
The Company has voluntarily adopted this risk-based Anti-Money Laundering (“AML”) and Sanctions Policy (the “Policy”) to protect itself, its directors, and employees, to the extent reasonably possible, from being used to facilitate money laundering, terrorist financing, violations of economic sanctions, and other financial crime.
The Company bases all actions, operations, dealings and transactions undertaken in the course of its business activities on the ethical principles and rules of conduct set out in this Policy.
2. SCOPE OF APPLICATION
This Policy is binding on all Company directors and officers, those who, within the Company (including joint ventures), carry out functions of representation, administration or management or who exercise management and control, as well as on all Company employees and representatives (e.g., freelance consultants, suppliers, agents, distributors, representatives, brokers, etc.) (hereafter "Persons subject to this Policy").
Persons subject to this Policy must, therefore, be aware of the provisions of this Policy and the employees of Company are called upon to play an active role in ensuring that it is complied with. For this purpose, the Company undertakes to ensure that this Policy is distributed as widely as possible and incorporated into employee training to raise awareness of its content.
All Persons subject to this Policy are responsible for reading and understanding the Policy. Any activities by Persons subject to this Policy that violate this Policy or any AML or relevant sanctions requirements are strictly prohibited. Any questions about the Policy or its application to a specific business area should be directed to Company Compliance & Risk Management Function (compliance@Company.com).
3. PERSONS RESPONSIBLE FOR APPROVAL AND IMPLEMENTATION OF THIS POLICY
Company Сomplience Officer (“Сomplience Officer”) will monitor the Company’s compliance with the Policy.
The Policy focuses primarily on compliance with AML and sanctions laws and regulations imposed by the European Union (the “EU”) and UAE.
To ensure that changes to the Company’s business are accurately reflected in the Policy, the Company will regularly review and update the Policy in response to changing risks. Based on the evolving risk profile of the Company and its operations (i.e., products, services, business lines, customers, and geographic locations), the Company will periodically develop and conduct appropriate risk assessments to identify vulnerabilities of the Company to potential violations of the relevant statutes, guidelines and standards, including with respect to abuse by criminals and other bad actors. Such assessments will also be used for providing updates, as necessary, to the Company’s overall AML and sanctions risk profiles. The Сomplience Officer will also work with business areas to identify areas of particular risk and establish appropriate procedures and mitigating internal controls and respond to any questions about the Policy. As appropriate, the risk assessment will be updated to account for the root causes of any apparent violations or systemic deficiencies identified by the Company during the routine course of business. As a part of the risk assessment, the Company shall consider, among other things, how resources should be deployed to address higher risk areas and whether any changes should be made to this Policy. The Сomplience Officer will be responsible for conducting the risk assessments and will review and re-evaluate the Company’s risk assessments as necessary, but not less than once every three years.
The Сomplience Officer will undertake periodic AML and sanctions compliance reviews or audits to test and monitor the ongoing effectiveness of the Policy and its application to the businesses of the Company.
The Сomplience Officer will liaise with local law enforcement and regulatory authorities with regard to any money laundering or sanctions issues.
The Сomplience Officer will ensure the proper retention of AML- and sanctions-related records.
The Сomplience Officer will provide or arrange for the provision of training to employees at least annually. Certain employees will be identified and trained by the Сomplience Officer to perform customer due diligence (“CDD”) and sanctions compliance screening procedures for customers and counterparties (collectively, “customers”) and any other third parties, such as agents, consultants, distributors, licensees, re-sellers, suppliers, and other third parties who operate in any capacity on behalf of the Company (collectively, “third parties”) in compliance with the Policy.
4. LEGAL FRAMEWORK FOR MONEY LAUNDERING
The Company seeks to comply with all applicable anti-money laundering laws, regulations, and conventions, including: the laws of UAE (including Cabinet Resolution No. 74 of 2020, Federal Decree No. 26 of 2021,Federal Decree No. 20 of 2018) EU member states implementing EU Directive 2015/849 (as amended) on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing (the “EU AML Directives”); the International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation issued by the Financial Action Task Force (the FATF Recommendations); and other similar anti-money laundering laws and authorities in other jurisdictions in which the Company operates.
Money laundering is generally defined as engaging in acts designed to conceal or disguise the origins of proceeds derived from criminal activity by creating the appearance that the proceeds are derived from a legitimate source. These proceeds may include profits from drug trafficking, embezzlement, corruption, fraud, or other federal, state, or foreign criminal offenses. Money laundering is not limited to cash transactions – it may include non-cash transactions (such as wire transfers or credit card purchases), foreign exchange transactions, and real estate transactions. Money laundering usually consists of three fundamental components: placement, layering and integration.
UAE as well as each EU member state have their own national legislation that incorporates the provisions of the EU AML Directive into national law. [1] [2]
Placement. Cash first enters the financial system at the placement stage, where cash from criminal proceeds is deposited into a bank or other depository or financial institution, or converted into negotiable monetary instruments, such as money orders or traveler’s checks. To disguise criminal activity, cash sometimes is also routed through a “front” operation business, such as, for example, a check cashing service.
Layering. This stage refers to the creation of complex or multiple layers of transactions that are intended to break the audit trail from the illegal source by further separating the funds from its criminal origin. The funds can be transferred or moved into other accounts, financial institutions, shell Company, or disguised as the proceeds of legitimate business.
Layering sometimes is accomplished by transferring funds to countries that have strict bank secrecy laws, such as, for example, the Cayman Islands, the Bahamas and Panama. These secrecy laws and the high daily volume of wire transfers can make it difficult for law enforcement agencies to trace these transactions. Once deposited in a foreign bank, the funds can be moved through accounts of “shell” corporations that exist solely for money laundering purposes.
Integration. At this stage, funds are moved into the financial system and are made to appear to have been derived from legitimate sources. The money is therefore re-introduced into the economy and may be used to purchase legitimate assets or to fund other criminal activities. Examples include making loan repayments, creating a new business with the laundered money, and mixing laundered money with income from other legitimate income or assets.[3] [4]
5. LEGAL FRAMEWORK FOR SANCTIONS
Sanctions are typically imposed by a government or an international organization to achieve a variety of foreign policy or national security objectives and generally are restrictions on the ability of an entity or individual to engage in certain commercial activities and financial dealings with targeted entities or individuals. Sanctions measures can vary from the comprehensive – prohibiting trade with a target country and freezing the assets of a government, the corporate entities and residents of that country – to targeted asset freezes on specified entities or individuals. The Company will conduct its activities in compliance with the sanctions requirements of UAE and EU, and any other jurisdiction that the Company Сomplience Officer determines.
Certain entities and individuals targeted by Sanctions are identified on lists issued by UAE, EU, United Nations and other governments or international organizations, which are published on websites and are publicly available (“Sanctions Lists”). Sanctions also target certain entities and individuals not included on these Sanctions Lists, including entities owned or controlled by entities or individuals on such lists.
Failure to comply with sanctions can lead to severe civil and criminal penalties, both for our business and individual employees, officers and directors, as well as significant reputational damage to the Company.
As a general rule, employees and representatives of the Company are not permitted to engage in any transactions or dealings with a party that is the target of applicable sanctions, such as the sanctions programs of UAE and EU, or any jurisdiction that is the target of comprehensive sanctions. That does not, however, mean that all transactions involving a jurisdiction that is targeted by any sanctions will be off limits for the Company; some jurisdictions, such as the Russian Federation and the People’s Republic of China, are targeted by more nuanced sanctions, and in those cases, certain transactions and dealings may be permissible, although caution is warranted. The relevant sanctions programs and targets, and how to identify them and the scope of coverage of the applicable sanctions, will be specified by the Company Сomplience Officer (collectively, the “Relevant Sanctions Programs”), and all questions regarding scope of coverage should be directed to the Company Сomplience Officer.
5.1 EU SANCTIONS
The Council of the European Union takes decisions on the adoption of EU sanctions. The European Commission gives effect to these decisions into EU law through proposals for regulations, which are in turn adopted by the Council. There is, however, no central EU enforcement body, and enforcement of EU sanctions is a matter for individual Member States.
EU sanctions comprise a range of financial and trade measures. The main financial sanctions involve the designation of individuals or legal entities, resulting in their assets being frozen and a prohibition on funds or economic resources being made available to them. The EU maintains a consolidated list of individuals and legal entities subject to financial sanctions (The EU’s consolidated list is available here: https://data.europa.eu/data/datasets/consolidated-list-of-persons- Companys-and-entities-subject-to-eu-financial-sanctions?locale=en). Legal entities that are majority-owned or controlled by a person or entity included in the EU consolidated list are treated as if they were also included in the list.
EU trade restrictions differ from country to country, but can extend to prohibitions on the import or export of a wide range of goods, services and technology.
EU Sanctions apply to:
• EU Company and EU nationals in relation to activities anywhere in the world – even if an EU national is employed by a non-EU company; and
• Non-EU Company and non-EU nationals in relation to activities in the EU and any business they conduct wholly or partly in the EU.
The EU does not impose secondary sanctions.
6. AML AND SANCTIONS COMPLIANCE PROGRAM
The Company has voluntarily adopted this Policy to combat money laundering, terrorist financing, violations of economic sanctions, and other financial crime (the “Program”). The elements of the Program are discussed in the sections below:
(1) Employee Awareness and Training
All employees are responsible for reading and having access to the Policy. All employees will receive compulsory Policy training upon joining the Company [and then refresher training at least annually. In addition, all employees who are identified as responsible for administering CDD questions or otherwise engaging in CDD functions will receive training on the appropriate processes and the use of tools that will be necessary or useful in performing their duties.
The training will cover factors that employees who handle or supervise the handling of customers, transactions and/or funds that may involve suspicious activity should be aware of. The training will also cover, at a minimum, the following:
• The employees’ responsibilities under the Policy, including the responsibility for obtaining sufficient CDD, and for identifying and escalating suspicious activity to the Сomplience Officer.
• Red flags and signs of money laundering, terrorist financing, and other financial crimes that arise during the course of the employee’s duties.
• The identity and responsibilities of the Сomplience Officer.
• The potential consequences for employee non-compliance with applicable laws and regulations, including disciplinary action by the Company, as well as civil and criminal penalties.
The Company, in conjunction with the Сomplience Officer, will review its businesses to see if certain employees, depending on the business area in which they work, may need to receive further or more specific training, which will be recorded and retained in the same manner as the Company-wide Policy training. Additionally, the Company’s senior management will receive high-level training and awareness that will be designed to foster the Company’s top-level commitment to complying with the Policy.
(2) Audits
The Сomplience Officer will undertake periodic AML and sanctions compliance reviews or audits to test and monitor the ongoing effectiveness of the Program and the Program’s application to the Company. To the extent deemed useful and appropriate, the Сomplience Officer will arrange for external audits performed by a third-party provider for purposes of gap analysis and testing the appropriateness of the Company’s controls in light of the risk profile of the Company. To the extent that such external audits are undertaken, the scope will be defined by the Сomplience Officer, working with the external auditor.
(3) Customer Due Diligence
The CDD process is an important process to held enable the Company to know more about the parties with which it is transacting and dealing and is an important part of the tools that the Company uses to detect, prevent, and where appropriate, report money laundering, terrorist financing, and other illicit activity. The CDD process also assists the Company to comply with AML laws and sanctions applicable to the Company.
As a general rule, the Company applies a risk-based approach to AML and sanctions compliance. Only those counterparties and transactions which present identified risk factors are further examined to determine whether they implicate applicable AML laws or sanctions. If there is any doubt, consult the Compliance & Risk Management Function, available at compliance@arbonum.com.
Although the process is referred to as the “customer due diligence” process, the scope of the CDD process is not limited to retail customers. The Company will perform CDD on customers, but also on transaction parties, such as suppliers, distributors, wholesalers, marketing representatives and other counterparties, based on appropriate risk assessments. The party responsible for identification and independent verification of the identity of such parties, and, where appropriate, their owners, controlling parties and potential nexus to any sanctioned jurisdiction or person will vary depending on the situation. Counterparties at the Company level typically will be reviewed by or at the direction of the Сomplience Officer. Local relationships may be reviewed by local Company personnel, although the Сomplience Officer may provide important guidance to local Company personnel.
Based on the Company’s risk assessments, the Сomplience Officer will generally determine appropriate screening, customer declarations, and other measures appropriate to the risk profile of the Company that can be used to perform CDD. The Company generally will conduct enhanced due diligence on counterparties whom it determines to be high-risk, including Politically Exposed Persons (“PEPs”). For certain low-risk and standard-risk customers it may be appropriate for the Company to conduct no, or only limited, due diligence. Time to time it may be difficult to obtain detailed CDD information in the ordinary course of transactional expectations. Company personnel should nevertheless be sensitive to “red flags” exhibited by the customers and be prepared to report to the Сomplience Officer for further action.
Identification and verification requirements will vary between the Company’s business lines, and responsibility for the completion of the CDD process may fall on employees, third parties who operate and manage the Company’s business lines, or contractors the Company hires to complete the CDD process.
In circumstances where a business transaction involves a potential AML violation or nexus to a sanctioned party or country, the transaction or any attempted transaction must be reported to the Сomplience Officer, who will ensure to keep of a record of relevant details and, as appropriate, in consultation with external counsel, determine if the activity should be reported to the relevant authorities or if the transaction should be blocked or rejected in compliance with Relevant Sanctions Programs.
military officials or senior executives of state-owned corporations, as well as immediate family members, or persons known to be close associates, of such persons.
As part of the CDD process, before entering into a relationship with any customers or other third parties such as suppliers, licensors, licensees, resellers, distributors, or other service providers, the Company will consider whether it needs to include relevant contract provisions stating that the third party is compliant with applicable AML laws and Relevant Sanctions Programs.
Additionally, the Company will periodically screen its customer base for any nexus to a Relevant Sanctions Program. Such screening will be based on the evolving risk profile of the Company and will occur as appropriate and annually on the Company’s customer base.
(4) Provision of CDD/UBO Information Regarding the Company
In certain situations, the Company may be asked to provide CDD or ultimate beneficial owner (“UBO”) information about the Company. For example, financial institutions regularly solicit CDD and UBO information as part of those institutions’ AML and sanctions compliance programs. In order to ensure consistency and appropriate responses to such questions, any request received by a member or employee of the Company should be referred the request to the Сomplience Officer, who will ensure that information is provided for the Company as necessary and appropriate for the relationship in question.
7. RETENTION OF RECORDS
If a customer comes under investigation by the authorities for activity related to AML or sanctions compliance, Company must be able to provide an audit trail of the processes undertaken pursuant to the Policy. The the Сomplience Officer, responsible for AML- and sanctions-related compliance, must retain all customer AML and sanctions due diligence records, including records on the customer’s identity and transactions, and Company reports on such customers and transactions, in accordance with the Company’s record retention policies related to the Policy. These include:
• Records in relation to the identity of the customer obtained in the CDD process, including a copy of the evidence of identity obtained or a record of where a copy of the evidence of identity can be obtained;
• Records of action taken or reports made with respect to the internal and external reporting of suspicious activities;
• Records relating to the Company’s screening processes for sanctions compliance with respect to its customers;
• Records of the dates of and topics covered by Policy training;
• Copies of any reports generated by the Company Сomplience Officer with respect to
any exemptions from or any waivers of any of the Policy requirements; and
• Other books and records as required by the Company’s record retention policies.
Complete and accurate records must be retained by the Сomplience Officer, and kept retrievable during the relationship with the customer and until at least five years from the date when the relationship with the customer ends.
All records concerning hits or matches to a relevant Sanctions List, as well as records concerning blocked property or rejected transactions, will be maintained for a period of five years. Records that relate to current investigations, or activities that have been disclosed to the authorities, should be retained pending agreement by the authorities that records may be destroyed.
8. OBLIGATIONS OF PERSONS SUBJECT TO THIS POLICY
Persons subject to this Policy, regardless of their location or position, and all those acting on their behalf, have the following obligations:
• Adhere to all applicable AML and sanctions laws and regulations, in all jurisdictions in which the Company operates.
• Familiarize themselves with this Policy, distribute and explain the Policy to subordinates and third parties acting on the Company’s behalf, and act at all times in accordance with this Policy.
• Raise questions to the Company’s Сomplience Officer regarding any uncertainty as to whether a transaction or activity would violate an applicable AML or sanctions law or regulation.
• Accurately record all transactions, particularly all required details and approvals of transactions, and maintain complete and accurate books and records.
• Conduct appropriate customer due diligence and sanctions screening before engaging with any new business partner or retaining any third party to act on behalf of the Company.
• Manage and monitor business activities conducted on behalf of the Company by third parties.
• Be alert to indications or evidence of suspicious transaction activity or structuring in connection with the Company’s business.
• Participate in required compliance training related to this Policy.
• Promptly report violations or suspected violations of this Policy or any AML or sanctions law or regulation to the Сomplience Officer.
9. RED FLAGS
Be alert to the following “Red Flags” and seek the assistance of the Сomplience Officer in resolving any doubts before proceeding with the transactions or activity to which the concerns relate.
Red Flags:
• A customer provides insufficient or suspicious information.
• A customer uses suspicious identification documents that cannot be readily verified.
• A business is reluctant to provide complete information about the nature and purpose of its business, anticipated account activity, prior banking relationships, the names of its officers and directors, or information on its business location.
• The customer’s background differs from that which would be expected on the basis of his or her business activities.
• Payments for services are made by checks, money orders, or bank drafts not drawn from the account of the entity that made the purchase.
• Use of corporate vehicles (i.e. legal entities, such as shell Company, and legal arrangements) to obscure (i) ownership, (ii) source of funds, or (iii) countries involved, particularly sanctioned jurisdictions.
• Use of third parties to shield the identity of sanctioned persons and/or PEPs seeking to hide the origin or ownership of funds, for example, to hide the purchase or sale of real estate.
• Use of shell Company to conduct international wire transfers, often involving financial institutions in jurisdictions distinct from company registration.
• A customer or Company tries to persuade an employee not to maintain required records.
• A customer is reluctant to provide information needed to file a mandatory report, to have the report filed, or to proceed with a transaction after being informed that the report must be filed.
• A business or customer asks to be exempted from reporting or recordkeeping requirements.
• Goods or services purchased by the business do not match the customer’s stated line of business.
10. REPORTING VIOLATIONS
It is the responsibility of all individuals working with or for the Company to report any potential violations of this Policy or any anti-money laundering or sanctions laws. If you suspect that a violation of this Policy or any anti-money laundering or sanctions laws has occurred, you must immediately report that suspicion through to the Сomplience Officer.
No employee will suffer demotion, penalty or any other adverse consequence for making a report in good faith or otherwise following the Policy, even if such actions results in a loss of business or other adverse consequence to the business.