Introduction
Chesnara plc and its divisions (the ‘Company’) are committed to operating an effective Anti-money laundering (including terrorist financing) framework across its operations. We believe that the proper identification and combating of money laundering practices is key to delivering our products and services to customers. Each of our divisions utilise respective policies and procedures which adhere to relevant jurisdictional laws and regulations. We commit to prohibiting money laundering at all levels, actively work to reduce our exposure to this risk, and have a clear stance against AML breaches.
Group Principles
To ensure that we meet our commitments relating to anti-money laundering activities, we have created a number of group principles which are applicable across all divisions. As such, we require that each entity:
- Have an anti-money laundering policy signed off by the appropriate board, and have instructions which clearly define how customer due diligence requirements will be met along with a process to report suspicions of money laundering activities.
- Have designated persons with clear responsibility and accountability for money laundering controls.
- Ensure that a clear audit trail of all due diligence, suspicions raised, and investigations completed are kept for all policyholders.
- Ensure that any outsourced activities have suitable AML controls and monitoring.
- Ensure that all staff, including part time and contractors, are appropriately and regularly trained to meet their AML obligations.
- Monitor, at least annually, all AML controls.
- Carry out, at least annually, a risk assessment to identify the key AML risks and whether any internal or external changes have affected those risks.
- Report to the relevant board the results of the risk assessment and monitoring activities.
- Where required, cooperate fully with relevant enforcement agencies.
Regulatory and Legislative Requirements
Across the Company we remain compliant with relevant laws and regulations in relation to anti-money laundering requirements.
We take reasonable care to establish and maintain effective systems and controls for compliance with applicable requirements and standards under the regulatory system and for countering the risk that the firm might be used to further financial crime.
We must ensure that these systems and controls:
- Enable us to identify, assess, monitor and manage money laundering risks; and
- Are comprehensive and proportionate to the nature, scale and complexity of its activities.
What constitutes money laundering?
We believe in effectively identifying suspicious transactions and believe that the following conduct, when committed intentionally, is money laundering:
- The conversion or transfer of 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 action;
- The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to or ownership of, property, knowing that such property is derived from criminal activity or from an act of participation in such an activity;
- Participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions referred to in points (a), (b) and (c).
Money laundering also refers to measures related to property that is typically intended to conceal that someone intends to enrich themselves or someone else through a future criminal activity.
Suspicious or unusual transactions may take a number of different forms. Our divisions in the Netherlands, in line with Wwft, review transactions as potentially suspicious against the following indictors on an ongoing basis:
- A transaction where the institution has reason to believe it may be related to money laundering or terrorist financing;
- A transaction by or on behalf of a legal person residing, established or having its registered office in a state designated under Article 9 of the Fourth Anti-Money Laundering directive of the European Parliament and of the Council as a state with a higher risk of money laundering or terrorist financing.
Risk-based approach
General risk assessment
Throughout our divisions, we utilise a risk-based approach to the management of money laundering. We carry out regular risk assessments relating to the products we offer, customers and methods of distribution to understand the risks which we are exposed to and to help mitigate such risks through proportionate policies and procedures.
Individual risk assessment
Several of our divisions operate a closed book of portfolios and therefore do not offer new products to clients. However, those that do offer new business assess the risks for money laundering associated with each new and specific customer relation (the customer’s risk profile). At the beginning of the relationship, the customer is assigned a risk rating classified as either low, medium or high risk depending on a number of factors, such as the domicile of the individual or nature of product offered. Risks for new and existing customers are then monitored during the term of the relationship in accordance with the monitoring policy of the respective division.
Customer Due diligence
When entering new business relationships, we undertake substantive customer due diligence in the proper management of money laundering risk. For our divisions which rely on Outsourced Service Providers to administer policies (‘OSPs’), we ensure that sufficient documentation is held in accordance with our due diligence practices. In the UK and Movestic for example, where an identity cannot be satisfactorily verified in accordance with normal procedures or where exceptions arise, the MLRO must be consulted as to whether the relationship can proceed or whether alternative procedures should be adopted.
When entering into new business relationships with customers we maintain a need to be satisfied with their identity, including relevant verification being established prior to the commencement of a new contract or agreement. We shall determine the ownership and control structure of legal entities, including identifying and verifying the identity of any natural persons who ultimately owns or controls the customer.
Some of our divisions, such as Waard in the Netherlands, are always introduced to customers through an introducing third party which has the initial responsibility for identification and verification of the customers identify. Despite this, we continue to seek customer verification prior to conversation. Similarly, Scildon in the Netherlands will not enter into a business relationship with customers if their identity is not established and verified prior to the conclusion of an insurance or pension agreement.
In some cases, where the customer is assessed as being a high risk, enhanced and ongoing due diligence procedures may be appropriate. An example of where such enhanced customer due diligence may be appropriate is where there is a particularly complex transaction or an unusually larger transaction with an unusual pattern.
Third parties
Within our UK division we rely on OSPs. As such, we take active steps to ensure that OSPs maintain documented procedures relating to reliance on third parties and the acceptance of introduced business.
The procedures shall ensure that the institution or agent effecting the introduction is:
- Known to be trustworthy
- A regulated professional firm or institution
- Regulated for money laundering purposes to equivalent standards
And shall require that
- An introduction certificate, confirming that
- Identity has been verified to the required standards
- Relevant records are held on file and filed with the customer records is obtained, or that
- If the introducer is not regulated to equivalent standards, underlying documentary evidence of identity accompanies the introduction certificate.
An assessment of money laundering risk is made prior to the commencement of business relationships with such introducers.
Governance, roles and responsibilities
Throughout our operations, we appoint appropriate individuals (for our overseas divisions, on a case-by-case basis) responsible for the assessment of respective anti-money laundering policies, effectiveness of current processes, controlling and reporting obligations, and the audit function.
Within our UK division, the Money Laundering Reporting Officer (MLRO) is appointed to fulfil this role, being an individual with sufficient knowledge, competence and authority. They have a number of duties, including:
- Assessing all Money Laundering regulatory changes and identifying changes required in our internal policies.
- Reviewing the OSP procedures and training to ensure they meet our internal policy and are reasonably based on our risk profile.
The MLRO also ensures that a review is completed, at least annually, of our AML arrangements. This review includes:
- A risk assessment of our products, customers and methods of distribution
- Our organisational arrangements
- Available, relevant Management Information, such as available and accurate reporting
- The results of past reviews and findings
Responsibilities
We ensure that effective governance procedures are in place throughout our operations. Our AML policies are approved by the respective divisional boards, which includes ensuring that adequate and effective controls in place for the management of risks are correctly implemented. We maintain a culture of compliance with all AML regulations which are applicable to our business and conduct ourselves with honesty and integrity when dealing with regulators.
Transaction monitoring
In certain circumstances where exceptional conditions are identified, it may be necessary to conduct continued transaction monitoring. We maintain established systems to ensure that AML risk is properly identified on a continued basis.
Sanctions list
Across our divisions we remain compliant with any relevant sanctions legislation applicable to our operations as a financial entity.
Employee training
We maintain formal money laundering awareness and regular training regimes for all employees, including part time staff and contractors and ensure that the OSP’s we work with operate an appropriate regime. Ensuring that all staff are sufficiently aware of money laundering practices and know how to identify and report potential instances is a key aspect of our anti-money laundering practices.
Record keeping
Each of our divisions ensure that all records and copies of documents relating to suspicions are kept securely and confidentially. Records are archived for a number of years depending on circumstance, and are in line with current legal and regulatory requirements.
Reporting
Each of our divisions maintain a formal reporting system in line with local laws and regulations. For example, within Scildon and Waard, our divisions based in the Netherlands, any unusual transactions are reported to FIU-the Netherlands. This also applies to Movestic, our division based in Sweden, which uses the goAML (go Against Money Laundering) IT system for reporting to the FIU. This system, provided by the United Nations, is utilised by numerous countries across Europe and around the globe.
Within our UK division, the MLRO will promptly report any major AML issues to the Chief Executive Officer, CA Executive Committee and the Board as appropriate.
A formal Board report is produced on an annual basis. The MLRO will report, as required, any MLRO suspicions to the appropriate enforcement agency in a timely manner. All communications shall give due regard to customers’ rights to confidentiality.
The reporting of suspicions of money laundering to the Serious Organised Crime Agency (SOCA) shall be made on a full and timely basis once considered as reportable, being an appropriate measure taken against customers suspected of money laundering.
We will respond to requests for information from the relevant anti-money laundering enforcement agencies on a full, positive and timely basis. With respect to requests received from such agencies within the UK, we will provide relevant information on the production of a court order or on a written request from an investigating officer of a recognised government institution, who has proper accreditation with SOCA. With respect to any other request arising from enforcement agencies within the UK and to all requests arising from outside the UK, the response to the request will be made after reasonable enquiries have been made as to the bona fide nature and source of the request.
