2024-07-24 CMEFS ABRIDGED FICA RMCP 2024 STAFF TRAINING V1.3003 CMEFS .docx

[The Financial Intelligence Centre Act, 2001] RISK MANAGEMENT AND COMPLIANCE PROGRAMME (RMCP) of CHARLES MERRINGTON EXECUTIVE FINANCIAL SERVICES (PTY) LTD (CMEFS) V1.3003 Contents {#contents.TOCHeading} ======== [GLOSSARY 3](#glossary) [1.1 Acronyms 3](#acronyms) [1.2 Definitions and Interpretation 4](#definitions-and-interpretation) [2. INTRODUCTION 5](#introduction) [3. BUSINESS INFORMATION 7](#business-information) [3.1 FIC Registration 7](#fic-registration) [3.2 Group / ownership structure 7](#group-ownership-structure) [3.3 Products and services 7](#products-and-services) [3. 4 Transactions 9](#transactions) [3.5 Clients 9](#clients) [3.6 Distribution 9](#distribution) [3.7 AML risk classification 9](#aml-risk-classification) [4. RESPONSIBLE PERSONS 10](#responsible-persons) [4.1 Board of directors / senior management 10](#senior-management) [4.2 Money Laundering Compliance Officer ("MLCO") and the Money Laundering Reporting Officer ("MLRO") 10](#money-laundering-compliance-officer-mlco-and-the-money-laundering-reporting-officer-mlro) [4.5 FAIS compliance officer 10](#fais-compliance-officer) [5. BRANCHES AND SUBSIDIARIES 10](#branches-and-subsidiaries) [6. AML/TF RISK MANAGEMENT 11](#amltf-risk-management) [6.1 Process 11](#process) [7. CUSTOMER DUE DILIGENCE - KNOW YOUR CUSTOMER 11](#customer-due-diligence---know-your-customer) [7.1 Verification and screening 11](#verification-and-screening) [7.2 When the client's identity cannot be verified 11](#when-the-clients-identity-cannot-be-verified) [7.3 Politically Exposed Persons/Prominent Influential Persons 11](#_Toc172729207) [7.6 Nominated Beneficiaries on Life Insurance policies 12](#nominated-beneficiaries-on-life-insurance-policies) [7.7 Ultimate Beneficial Owner (UBO) 12](#ultimate-beneficial-owner-ubo) [7.8 Targeted Financial Sanctions 12](#targeted-financial-sanctions) [8. FINANCIAL INTELLIGENCE CENTRE REPORTS 13](#financial-intelligence-centre-reports) [8.1 Types of reports 13](#types-of-reports) [8.2 Reporting obligation 13](#reporting-obligation) [8.2.1 Suspicious transactions 13](#suspicious-transactions) [8.2.2 Cash threshold reports 13](#cash-threshold-reports) [8.2.3 Terrorist property reports 13](#terrorist-property-reports) [8.3 Submission process 14](#submission-process) [8.4 Transactions under investigation / reported on 14](#transactions-under-investigation-reported-on) [8.5 Confidentiality 14](#confidentiality) [8.6 FIC Reports register 14](#fic-reports-register) [9. RECORD KEEPING 14](#record-keeping) [10. OFFENCES 15](#offences) [10.1 Introduction 15](#introduction-1) [10.2 Offenses and penalties 15](#offenses-and-penalties) [11. TRAINING 15](#training) [12. REVIEW and UPDATE 15](#review-and-update) [ANNEXURE A: ML/TF RISK ASSESSMENT PROCESS 16](#annexure-a-mltf-risk-assessment-process) [1. Documentation 18](#documentation) GLOSSARY ======== 1.1 Acronyms ------------ +-----------------------------------+-----------------------------------+ | **Acronym** | **Meaning** | +===================================+===================================+ | "AML" | - **A**nti-**M**oney | | | **L**aundering | +-----------------------------------+-----------------------------------+ | "CDD" | - **C**ustomer **D**ue | | | **D**iligence | +-----------------------------------+-----------------------------------+ | "CFT" | - **C**ombatting **F**inancial | | | **T**errorism | +-----------------------------------+-----------------------------------+ | "CTR" | - **C**ash **T**hreshold | | | **R**eport **OR** | +-----------------------------------+-----------------------------------+ | | - Series of aggregated | | | transactions report | +-----------------------------------+-----------------------------------+ | "DPEP" | - **D**omestic **P**olitically | | | **E**xposed **P**erson | | "DPIP" | | | | - **D**omestic **P**rominent | | | **I**nfluential **P**erson | +-----------------------------------+-----------------------------------+ | "FATF" | - **F**inancial **A**ction | | | **T**ask **F**orce | +-----------------------------------+-----------------------------------+ | "FAIS" | - **F**inancial **A**dvisory | | | and **I**ntermediary | | | **S**ervices Act, 2002 | +-----------------------------------+-----------------------------------+ | "FIC" | - **F**inancial | | | **I**ntelligence **C**entre | +-----------------------------------+-----------------------------------+ | "FPEP" | - **F**oreign **P**olitically | | | **E**xposed **P**erson | +-----------------------------------+-----------------------------------+ | "GN" | - **G**uidance **N**ote | | | | | "IFTR" | - **I**nternational **F**und | | | **T**ransfer **R**eport | +-----------------------------------+-----------------------------------+ | "KYC" | - **K**now **Y**our | | | **C**ustomer | +-----------------------------------+-----------------------------------+ | "ML" | - **M**oney **L**aundering | +-----------------------------------+-----------------------------------+ | "MLCO" | - **M**oney **L**aundering | | | **C**ompliance **O**fficer -- | | | this may be the same person | | | as the MLRO | +-----------------------------------+-----------------------------------+ | "MLRO" | - **M**oney **L**aundering | | | **R**eporting **O**fficer | +-----------------------------------+-----------------------------------+ | "MLTFC" | - **M**oney **L**aundering and | | | **T**errorist **F**inancing | | "PF" | **C**ontrol (Regulations) | | | | | "POCDATARA" | - **P**roliferation | | | **F**inancing | | | | | | - **P**rotection of | | | **C**onstitutional | | | **D**emocracy against | | | **T**errorist and **R**elated | | | **A**ctivities | +-----------------------------------+-----------------------------------+ | "RMCP" | - **R**isk **M**anagement | | | **C**ompliance **P**rogramme | +-----------------------------------+-----------------------------------+ | "STR" | - **S**uspicious and unusual | | | **T**ransaction **R**eport | +-----------------------------------+-----------------------------------+ | "SAR" | - **S**uspicious **A**ctivity | | | **R**eport | +-----------------------------------+-----------------------------------+ | "TF" | - **T**errorist **F**inancing | +-----------------------------------+-----------------------------------+ | "TFAR" | - **T**errorist **F**inancing | | | **A**ctivity **R**eport | +-----------------------------------+-----------------------------------+ | "TFTR" | - **T**errorist **F**inancing | | | **T**ransaction **R**eport | +-----------------------------------+-----------------------------------+ | "TFS" | - **T**argeted **F**inancial | | | **S**anctions | +-----------------------------------+-----------------------------------+ | "UBO" | - **U**ltimate **B**eneficial | | | **O**wner | +-----------------------------------+-----------------------------------+ 1.2 Definitions and Interpretation ---------------------------------- +-----------------------------------+-----------------------------------+ | **Definition** | **Interpretation** | +===================================+===================================+ | "Customer" | in relation to an accountable | | | institution means | | | | | | - **any individual or legal | | | entity** | | | | | | (corporations, non-profit | | | entities, partnership, trust, | | | funds, correspondent banks, | | | investment managers, etc.), | | | | | | - **any person on whose behalf | | | a customer is acting,** | | | **[and] the | | | person acting on behalf of | | | any such person or entity,** | | | | | | **who has entered** **into a | | | relationship or single | | | transaction,** | | | | | | is opening an own account or | | | | | | an account for another individual | | | who lacks legal capacity, or | | | | | | contracting directly with a | | | financial institution | | | | | | **for the provision of financial | | | products and services**. | +-----------------------------------+-----------------------------------+ | "Prospective Customer" | in relation to an accountable | | | institution means **any | | | individual or legal entity** | | | (corporations, non-profit | | | entities, partnership, trust, | | | funds, correspondent banks, | | | investment managers, etc.) **who | | | intends on entering** into a | | | relationship or single | | | transaction, is opening an own | | | account or an account for another | | | individual who lacks legal | | | capacity, or who intends on | | | contracting directly with a | | | financial institution for the | | | provision of financial products | | | and services. **This definition | | | specifically includes a nominated | | | beneficiary on a life insurance | | | policy**; | +-----------------------------------+-----------------------------------+ | "Single transaction" | **Means a transaction** | | | | | | other than a transaction | | | concluded during a business | | | relationship | | | | | | where the value of the | | | transaction is **less than R 5 | | | 000.00**. | +-----------------------------------+-----------------------------------+ | "Cash" | Means | | | | | | - Coin and paper money of the | | | Republic | | | | | | or of another country | | | | | | that is designated as legal | | | tender | | | | | | and that circulates as, and is | | | customarily used and accepted as, | | | a | | | | | | medium of exchange | | | | | | in the country of issue; and | | | | | | - Traveler's cheques. | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ 2. INTRODUCTION =============== **Money laundering** (ML) is the practice of disguising illegally obtained funds so that they appear legal. In SA law, money laundering is defined as the practice of taking any action with property of any form, which is either wholly or in part the proceeds of a crime, such that - it disguises the fact that the property is the proceeds of a crime or - it obscures the ultimate beneficial ownership of said property. Money Laundering is a criminal offense in SA as in other jurisdictions with similar anti-money laundering (AML) laws. **Terrorist financing** refers to the act of providing financial support to individuals or groups that engage in terrorist activities. This support can come in various forms, including the provision of - money - goods or - services that are used to carry out terrorist attacks or other related activities. Terrorist financing is often associated with money laundering, which involves the process of disguising the proceeds of illegal activities as legitimate funds. **Proliferation financing** refers to the act of providing financial support to individuals or entities that are involved in the - development - production - or acquisition of - weapons of mass destruction (WMDs) - or the means to deliver them. This can include the provision of - Money - Goods or - Services (Same as terrorist financing) that are used to further these activities. Proliferation financing is a significant concern for national and international security, as the development and spread of WMDs pose a significant threat to global stability and security. Like terrorist financing, proliferation financing is often associated with money laundering and other illicit financial activities CMEFS manages the continuing threat of being used for - money laundering - terrorist financing and - proliferation financing purposes by developing a thorough understanding of its own business activities and by then addressing the potential money laundering risks associated with such activities. The law requires that CMEFS has in place **systems and controls** that enable it to - identify - assess - monitor and - manage money laundering, terrorist financing, and proliferation financing risk. These systems and controls must be both comprehensive and proportional to the - nature - scale and - complexity of its activities. The law also requires CMEFS to have a risk-based customer identification and verification procedures in place for - all business relationships - new and existing - specifically including even a single transaction. These procedures are intended to prevent CMEFS from being used for any money laundering, terrorist, or proliferation financing activity. [All] employees are responsible for awareness of, and compliance with, CMEFS policies and procedures to prevent money laundering. 3. BUSINESS INFORMATION ======================= 3.1 FIC Registration -------------------- All accountable and reporting institutions are obliged to register with the Centre in terms of section 43B of the FIC Act. (Org ID) is: **24502** 3.2 Group / ownership structure ------------------------------- CMEFS is an independent company, with no parent, no brokerage or investment banking affiliates. The firm is not affiliated to any other companies and therefore being relied on for collecting KYC documentation etc. 3.3 Products and services ------------------------- CMEFS Provides the following range of financial advice and services. **Table A** shows those products and services that CMEFS view as **high risk** of being used for money laundering, terrorist and proliferation financing purposes. **Table B** shows those products and services that CMEFS view as **medium risk** of being used for money laundering, terrorist and proliferation financing purposes. **Table C** shows those products and services that CMEFS view as **low risk** of being used for money laundering, terrorist and proliferation financing purposes. **Table D** shows those products and services that CMEFS view as **no risk** of being used for money laundering, terrorist and proliferation financing purposes. +-----------------------------------+-----------------------------------+ | **Table A** -- **High Risk** - | **Notes** | | Advisory and Intermediary | | | Services relating to | | +===================================+===================================+ | - Pre-retirement lump sum | | | investments | | | | | | - of a discretionary nature | | | | | | - into discretionary products | | | | | | - such as collective investment | | | schemes | | | | | | - irrespective of the stated | | | purposes and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ | - Pre-retirement lump sum | | | investments | | | | | | - of a discretionary nature | | | | | | - into endowments | | | | | | - irrespective of the stated | | | purposes and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ | - Pre-retirement investments | | | with a monthly (or | | | equivalent) contribution | | | | | | - into either a discretionary | | | product or endowment | | | | | | - where the monthly | | | contribution amount equals or | | | exceeds R25 000 per month | | | | | | - irrespective of the stated | | | purpose and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ +-----------------------------------+-----------------------------------+ | **Table B** -- **Medium Risk** - | | | Advisory and Intermediary | | | Services relating to | | +===================================+===================================+ | - Post-retirement lump sum | | | investments | | | | | | - of a discretionary nature | | | | | | - into discretionary products | | | | | | - such as collective investment | | | schemes | | | | | | - irrespective of the stated | | | purposes and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ | - Post-retirement lump sum | | | investments | | | | | | - of a discretionary nature | | | | | | - into endowments | | | | | | - irrespective of the stated | | | purposes and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ | - Post-retirement investments | | | with a monthly (or | | | equivalent) contribution | | | | | | - into either a discretionary | | | product or endowment | | | | | | - where the monthly | | | contribution amount equals or | | | exceeds R25 000 per month | | | | | | - irrespective of the stated | | | purpose and | | | | | | - term of the investment | | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ Table C -- **Low Risk** - Advisory, intermediary and administrative services relating to ------------------------------------------------------------------------------------------ -- Endowments with a monthly (or equivalent) premium payment less than R25 000 per month Life policies with an incidental savings element Life and other long-term risk policies with no savings element All pre-retirement retirement products such as Retirement Annuities & Preservation Funds All post-retirement products such as life annuities, whether voluntary or compulsory Table D -- **No Risk** - Advisory, intermediary and administrative services relating to ----------------------------------------------------------------------------------------- -- Medical Aid and Gap Cover Short term Insurance -- Domestic or Commercial Compilation of Wills and Estate Plans eFiling of tax returns 3. 4 Transactions ----------------- CMEFS is involved in between 1 and 100 transactions per month. 3.5 Clients ----------- At present all of our clients' are natural persons We meet all of our clients face to face. Our interaction with clients thereafter is also mainly face to face but may also be electronic or telephonic. We have approximately 650 Clients with whom we have business relationships. 3.6 Distribution ---------------- Our high ML risk products and services are only distributed by authorised representatives, all of whom are employees of CMEFS. At this time, we continue to rely on referral business only for new business. 3.7 AML risk classification --------------------------- IN GENERAL, OUR CLIENTS / TRANSACTIONS/BUSINESS MODEL/LOCATION AND CLASS OF BUSINESS WRITTEN POSE A LOW AM/TF/PF RISK. [Of the following factor(s) ] - Type of client - Type of product / service - Distribution channel - Geographic location - Source of funds - Source of Wealth - Client behaviour - Proliferation financing status [The factor weighted as the highest risk is the:] Source of funds. In conclusion it is a key priority for CMEFS to perform appropriate Customer Due Diligence, and to be alert to and to monitor client transactions for suspicious transactions and/or behaviour. 4. RESPONSIBLE PERSONS ====================== 4.1 Senior Management --------------------- The CEO, Charles Merrington, is ultimately responsible for ensuring that CMEFS maintains an effective internal Anti-Money Laundering ("AML"), Combatting Financial Terrorism ("CFT") and Proliferation Financing (PF) control structure through this Risk Management Compliance Programme ("RMCP"). Charles has created a culture of compliance within CMEFS ensuring that: - All members of staff are constantly on the alert for any activity on the part of it clients that may give rise to the suspicion that CMEFS may be being used for illegal and/or illegitimate client transactions. - the institution\'s policies, procedures and processes are designed to limit and control risks of money laundering and terrorist financing; and - that such policies, procedures and processes are fully consistent with the law; and - that staff adhere to them. 4.2 Money Laundering Compliance Officer ("MLCO") and the Money Laundering Reporting Officer ("MLRO") ---------------------------------------------------------------------------------------------------- Charles Merrington **("the MLCO") is** the person appointed at CMEFS who is responsible to ensure compliance by: i. the employees of CMEFS with provisions of FICA and the RMCP applicable to them ii. CMEFS with its obligations under FICA. Charles Merrington is also the MLRO. The MLCO has also been tasked with ensuring that the controls as described in this document continue to be proportionate to business risks. 4.5 FAIS compliance officer --------------------------- The person responsible for monitoring FAIS compliance in terms of Section 17 of the Financial Advisory and Intermediary Services Act, 37 of 2002 ("FAIS") at CMEFS is Seshini Magan **("The FAIS Compliance Officer")** who is contactable on 0844477451 and/or seshini\@compliserve.co.za. 5. BRANCHES AND SUBSIDIARIES ============================ CMEFS not have any branches or subsidiaries and therefore the branches and subsidiary requirements do not apply to us. 6. AML/TF RISK MANAGEMENT ========================= 6.1 Process ----------- Our AML Risk Management Process can be illustrated as per the below: [Please refer to:] - [Annexure A](#annexure-a-mltf-risk-assessment-process) for CMEFS risk assessment process; - [Annexure B](#_ANNEXURE_B:_CUSTOMER) for CMEFS Customer due diligence process and - [Annexure C](#_ANNEXURE_C:_KNOW) for related Know Your Client requirements; and - [Annexure D](#_ANNEXURE_D:_INVESTIGATION) for CMEFS investigation and reporting procedures. 7. CUSTOMER DUE DILIGENCE - KNOW YOUR CUSTOMER ============================================== CMEFS, as a financial institution, shall at the time of commencement of an account-based relationship and before the conclusion of a transaction, identify its Clients, verify their identity and obtain information on the purpose and intended nature of the business relationship. 7.1 Verification and screening ------------------------------ CMEFS will establish and verify the identity of every client. The nature and extent of verification of Client/Entity's identity is determined by taking the assessed ML/TF risk associated with the relevant business relationship or single transaction into account. It is important that verification (where required) be done using information obtained from a reliable and independent third-party source and, as far as possible, the original source of the information. 7.2 When the client's identity cannot be verified ------------------------------------------------- In the instance when a client does not provide the requested documentation or information within **30** days of being requested to do so, the client should be informed that the business relationship will be terminated and alerted to potential implications. CMEFS will not enter into a business relationship or conclude a single transaction with or on behalf of an anonymous client, or any client who provides insufficient or false information. 7.3 Politically Exposed Persons/Prominent Influential Persons ------------------------------------------------------------- CMEFS is required to establish whether any Prospective or existing Customer is a Domestic Politically Exposed (DPEP) Person or Foreign Politically Exposed Person FPEP) or a known associate or family member of the PEP, and domestic prominent influential persons (DPIPs) [Once a Customer has been identified as a prominent person the Act requires the following:] - that senior management approval is obtained for establishing the business relationship. - that we take reasonable measures to establish the source of wealth and source of funds of the client; and - that we conduct enhanced ongoing monitoring of the business relationship. 7.6 Nominated Beneficiaries on Life Insurance policies ------------------------------------------------------ CMEFS is aware that the beneficiaries nominated on life insurance policies may pose a terrorist financing risk. When we facilitate an insurance pay-out to a beneficiary, the beneficiary will fall within the definition of a client of CMEFS and our CDD KYC process will be completed. 7.7 Ultimate Beneficial Owner (UBO) ----------------------------------- CMEFS is required to identify the natural person who ultimately owns or controls a client and/or the natural person on whose behalf a transaction is being conducted. CMEFS will require clients to declare the identity of the Ultimate Beneficial Owner and provide evidence to the effect. [The Ultimate Beneficial Owner is the:] - person who holds 25% or more of share capital; or - person who exercises 25% or more of the voting rights; or - beneficiary of 25% or more of the legal entity's capital; or - '*nominee director'* appointed on behalf of another person and used to conceal the identity of the true owner of the company or some illicit activity; or - company or other legal entity who is a '*corporate director'*, who may be used to construct complex and opaque corporate structures across multiple jurisdictions to facilitate illicit activity; or - holder of 'bearer shares' which do not require registration of the owner and can be transferred simply with changing hands of the share certificate. This anonymous ownership may be used for tax evasion, money laundering or illegal activities. CMEFS will require an Ultimate Beneficial Owner declaration (as part of the CDD process) (see [Annexure J](#_ANNEXURE_J:_UBO)) from each entity / legal person with whom it concludes a business relationship as envisaged in this document. 7.8 Targeted Financial Sanctions -------------------------------- Targeted financial sanctions are measures taken by governments and international organizations to restrict or prevent financial transactions involving specific individuals, entities, or countries. Regarding the freezing of assets- The Financial Intelligence Centre Act (FICA) in South Africa includes provisions for the freezing of assets as a measure to combat money laundering and terrorist financing activities. Under the FICA, the FIC can issue a directive to a reporting institution (such as a bank or financial institution) to freeze any assets or funds that are suspected to be related to money laundering or terrorist financing activities. The directive can be issued if the FIC has reasonable grounds to suspect that the assets or funds are the proceeds of a crime or are related to terrorist activities. Once a directive to freeze assets has been issued, the institution is required to freeze the assets or funds immediately, and to notify the FIC of the freeze within three business days. The freeze remains in place until the FIC revokes the directive or until a court orders the release of the assets or funds. 8. FINANCIAL INTELLIGENCE CENTRE REPORTS ======================================== 8.1 Types of reports -------------------- [The following types of reports must be lodged with the FIC:] a. [Activity reports which include:] - Suspicious activity report (SAR); and - Terrorist financing activity report (TFAR). b. [Transaction reports which include:] - Suspicious and unusual transaction report (STR); and - Terrorist financing transaction report (TFTR) c. [Cash Threshold Reports which include:] - Cash threshold report (CTR); and - Series of aggregated transactions report (CTRA) 8.2 Reporting obligation ------------------------ ### 8.2.1 Suspicious transactions The obligation to report arises when a person knows of certain facts, on the one hand, OR in circumstances in which a person **ought reasonably to have known** or suspected that certain facts exist on the other. This means that any person associated with a business, as described above, must report his or her knowledge or suspicion to the centre whenever: - - The requirement to report also applies to situations where the business or transaction has been turned down or has not proceeded if the circumstances were suspicious. ### 8.2.2 Cash threshold reports The obligation to report within 3 days in terms of section 28 of the FIC Act arises when a transaction ("CTR"), or series of aggregated transactions ("CTRA"), is concluded with a client by means of which cash in excess of the prescribed amount, that is, R49 999, 99: - **is paid by the accountable or reporting institution to the client, or to a person acting on behalf of the client, or to a person on whose behalf the client is acting; or** - **is received by the accountable or reporting institution from the client, or from a person acting on behalf of the client, or from a person on whose behalf the client is acting.** **Cash is defined in section 1 of the FIC Act as:** **a) Coin and paper money of the Republic or of another country that is designated as legal tender and that circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue; and** **b) Traveler's cheques.** ### 8.2.3 Terrorist property reports The Section 28A "TPR" obligation of the FIC Act applies to a purely factual situation. The fact that an accountable institution has for example the property of a sanctioned entity in its possession or under its control is sufficient to prompt a report and no activity relating to that property is required to trigger the reporting obligation. 8.3 Submission process ---------------------- **CMEFS will submit the full particulars and readily available information via the online reporting platform (GOAML system ) of the Financial Intelligence Centre. Additionally, the report can be sent electronically by the registered person.** Please refer to Annexure D for CMEFS internal investigation and reporting procedures. 8.4 Transactions under investigation / reported on -------------------------------------------------- Suspicious transactions under investigation must be delayed if possible and without tipping off the relevant **client**. If the transaction cannot be delayed it must be approved by senior management and the Money Laundering Reporting Officer before finalization. If a Terrorist Property Report is made to the Centre it is an offence (by virtue of Section 4 of the POCDATARA Act) to continue dealing with that property in any way. No further transactions on behalf of the **client** may be undertaken. 8.5 Confidentiality ------------------- A person involved in submitting a report may not inform anyone, including the **client** or any other person associated with a reported transaction, of the contents of a transaction or activity report or even the fact that such a report has been made. Section 29 of the FIC Act prohibits any reporter as well as any other person who knows or suspects that a report has been made from disclosing any information regarding that report except for information disclosed: - within the scope of the powers and duties of that person in terms of any legislation. - for the purpose of carrying out the provisions of the FIC Act. - for the purpose of legal proceedings, including any proceedings before a judge in chambers. - in terms of an order of court. Communication within CMEFS will be limited to appropriate persons necessary to finalize this process. 8.6 FIC Reports register ------------------------ Transactions escalated for investigation as well as transactions submitted to the FIC must be recorded in the relevant FIC Reports register. (Please see [Annexure E](#_ANNEXURE_E:_FIC) for template registers). 9. RECORD KEEPING ================= All records will be stored securely in a manner that allows for easy retrieval. Records referred to in this document will be kept for the following periods: **Record description** **Period** -------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- Records of a transaction or activity which gave rise to a suspicion, escalated internally for investigation and if relevant the FIC report **at least five years** from the date on which the report was submitted to the FIC. Records confirming the identity of Clients and details of Customer transactions will be retained for **at least 5 years** or longer after the business relationship has been terminated. Records relating to an on-going investigation will be retained until it is confirmed that the **case has been closed** by the relevant authorities. Copies of all relevant records are also available electronically Backups are done daily to an external hard drive kept off site 10. OFFENCES ============ 10.1 Introduction ----------------- Individuals and firms are subject to severe criminal, civil and regulatory penalties if they facilitate or participate in money laundering activities. An individual may be deemed to be facilitating or participating in money laundering simply by engaging in a transaction with a **client** when they are aware of, or deliberately ignore the fact that, the **client** is engaged in illegal activities or tax fraud. It is an offense for any person (individual or corporate) to provide assistance to a criminal to obtain, retain, transfer, remit, conceal or invest funds. If any person knows, suspects or has reasonable grounds for knowing or suspecting that a transaction is related to crime or tax fraud, or involves the proceeds of criminal activity, he/she must report it immediately, even if he/she is not personally involved in the transaction. Failure to do so is an offense. It is also an offense to \"tip off\" the subject or anyone else that a report has been made or that an investigation is underway. 10.2 Offenses and penalties --------------------------- Assisting a money launderer is a criminal offense punishable by imprisonment, an unlimited administrative penalty, or both. Failure to report known or suspected money-laundering activities is punishable by imprisonment, an unlimited fine, or both. CMEFS may take disciplinary action, including possible dismissal, against any employee for failure to comply with any relevant law or regulation, or the firm\'s money laundering prevention policies or procedures. 11. TRAINING ============ Employees must fully understand CMEFS AML/CFT obligations and have access to this RMCP. CMEFS ensures that all employees receive relevant AML training as part of the induction program and refresher training throughout their careers (at least once a year). CMEFS AML RMCP is *always* accessible to all staff. The training material will be developed further as relevant changes in industry or procedures occur, but at least annual AML training is an explicit requirement. All participants will sign an attendance list to confirm their participation. All training is logged in the training register. The MLCO will conduct compliance checks on an annual basis to ensure all relevant staff participated in AML/CFT training and has access to the AML/CFT and all other policies and procedures manuals held with respect to AML/ CFT. 12. REVIEW and UPDATE ===================== This Risk Management and Compliance Programme will be reviewed at least annually to ensure that the Programme and risk management measures provided remain relevant to the business operations and aligned to the business strategy. ANNEXURE A: ML/TF RISK ASSESSMENT PROCESS ========================================= The probability of our client being involved in money laundering activities will be assessed using the below. The outcome will determine the *Know Your Client* requirements and the frequency at which the ongoing due diligence process must be performed.. **FICA RISK RATING** ------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------ ----------- -- **Client:** **Date:** **Representative:** **RISK RATING CRITERIA** **1. Client profile** Client is a natural person 0 Client is a legal entity or partnership 100 \< 2year relationship 15 \> 2year relationship 0 Client acting as representative on behalf of a third party 100 Client on UN Security Council Consolidated List or FIC List 100 Client is a DPEP/FPEP/DPIP 100 **2. Country** Resident 0 Non-resident 100 **3. Product type and investment amount/ premium** Irrespective of amount to be invested, funds are sourced from a retirement fund 0 Investment amount R0 million -- R5 million 0 Investment amount R5 million -- R10 million 10 Investment amount \> R10 million 50 **4. Source of funds** Legitimate source 0 Illegitimate source 100 **5. Client conduct** Client has unnecessary and unexplained financial structure or exposure 100 Client is curious about internal systems, controls measures and policies and is reluctant to complete documentation required 100 Client admits or makes statements about involvement in money laundering activities 100 Client produces seemingly false, altered or inaccurate identification documents 100 Suspicious transaction due to various factors 100 Sudden change in circumstances not in line with client's current risk profile 100 No improper client conduct identified 0 **TOTAL** **RISK** **SUMMARY OF ANALYSIS** 0 Little to no risk 1 -- 49 Low risk 50 -- 99 Medium risk 100 and higher High risk -- Place on High Risk Register **Type of Due Diligence** **Information to be obtained** --------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --- **Enhanced Due Diligence Procedures (EDD)** **High Risk** Identify Client as usual Obtain specific information on: -Source of funds -Obtain approval from Management -Follow Ongoing EDD **Ongoing Due Diligence (ODD)** -Ongoing scrutinizing of transactions throughout course of relationships e.g. source of funds, purpose and complex transactions. Documents, data and information to identify identities of clients to be kept up to date **Domestic and Foreign Politically exposed persons/ DomesticProminent Influential Person and their families** **Determine the risk (use above checklist)** Obtain specific information on: -Origin/Source of wealth/ funds -Obtain senior management approval -Ensure ongoing enhanced due diligence procedures followed **Standard Customer Due Diligence (CDD)** **Low & Medium Risk (this now includes the beneficiary on a life policy** Identify Client as usual and obtain information on: -Nature of business relationship -Purposes of business relationship -Source of funds **Simplified Due Diligence Procedures (SDD)** **Low risk -- (only where product is a short term, life or health i.e. simple product as per rules)** -No need to apply with all CDD measures **Additional Due Diligence (ADD)** **High Risk** If a Legal person, Trust or Partnership, then obtain specific information on: -Nature of business relationship -Ownership and control structures -Beneficial owners []{#_ANNEXURE_B:_CUSTOMER.anchor} CMEFS, as a financial institution, shall at the time of commencement of an account-based relationship, identify its Client/Entities, verify their identity and obtain information on the purpose and intended nature of the business relationship as per the measures set out below. 1. Documentation ---------------- - Documentation should be legible, have a valid expiry date and a distinguishable picture and specimen signature. - A SA ID documentation should be a bar-coded colour copy or smart card. - Certification or "Sighting" is required to ensure that all documentation received is reliable and that all copies are true copies of the original documents. "Sighting" allows the recipient of the document to sign the copy as a true reflection of the original. - Utility Bills should be no older than 3 months.[]{#_ANNEXURE_E:_FIC.anchor}

2024-07-24 CMEFS ABRIDGED FICA RMCP 2024 STAFF TRAINING V1.3003 CMEFS .docx

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