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MLRO Officer Service and AML Service

MLRO Compliance Officer

MLRO stands for Money Laundering Reporting Officer. The MLRO is a key position within organizations, especially in financial institutions, that are required to adhere to anti-money laundering (AML) regulations. The primary responsibility of the MLRO is to oversee and manage the organization’s anti-money laundering and counter-terrorist financing (AML/CTF) activities.

The MLRO is tasked with ensuring that the organization has effective policies, procedures, and controls in place to detect and prevent money laundering and other financial crimes. They are also responsible for reporting suspicious activities to relevant authorities in accordance with regulatory requirements. The MLRO plays a crucial role in promoting compliance with AML laws and regulations, conducting risk assessments, and implementing measures to mitigate the risk of money laundering within the organization

Benefits of Hiring an MLRO for Cryptocurrency Exchange Services and Fintechs πŸš€πŸ”’

In the dynamic landscape of cryptocurrency exchange services and fintechs, having a dedicated MLRO (Money Laundering Reporting Officer) provides numerous advantages:

Cryptocurrency Regulatory Expertise: MLROs bring specialized knowledge of cryptocurrency regulations, ensuring that the organization stays compliant with the unique AML and CTF requirements in the rapidly evolving crypto space. πŸ“ˆπŸ“š

Adaptability to Technological Changes: Fintechs often leverage cutting-edge technologies. An MLRO can adapt AML processes and controls to align seamlessly with the technological advancements within the organization, ensuring continued compliance. πŸ’»πŸ”„

Efficient Compliance with Global Standards: For fintechs with a global presence, MLROs with international expertise ensure adherence to AML standards across various jurisdictions, facilitating smoother international operations. πŸŒβœ…

Proactive Risk Management in Cryptocurrency Transactions: MLROs play a critical role in assessing and managing the risks associated with cryptocurrency transactions, contributing to the development of robust risk management strategies. πŸ›‘οΈπŸ”„

Navigating Regulatory Uncertainties: The cryptocurrency landscape often faces regulatory uncertainties. MLROs help fintechs navigate these uncertainties by staying informed about regulatory changes and guiding the organization in adapting to new requirements. πŸŒβ“

Enhanced Security Measures for Digital Assets: MLROs oversee the implementation of stringent security measures, safeguarding digital assets against potential threats and unauthorized activities within the fintech platform. πŸ”πŸ’Ό

Cryptocurrency-Specific Training Programs: MLROs design and conduct training programs tailored to cryptocurrency-related AML and CTF risks, ensuring that employees are well-equipped to identify and respond to suspicious activities specific to digital assets. πŸŽ“πŸ’°

Collaboration with Legal Professionals in Crypto Law: MLROs collaborate with legal professionals specializing in cryptocurrency law, providing the organization with legal guidance and ensuring alignment with both regulatory requirements and legal standards in the crypto space. πŸ€βš–οΈ

Efficient Reporting and Auditing for Digital Transactions: MLROs take responsibility for the timely reporting of suspicious activities related to digital transactions, as well as coordinating audits specific to cryptocurrency exchange services and fintech operations. πŸ“ŠπŸ“£

Law Enforcement Collaboration in the Crypto Environment: MLROs actively collaborate with law enforcement authorities, alerting them to any knowledge or suspicion of money laundering in the cryptocurrency space, facilitating swift and effective responses. πŸš“πŸ”

In summary, the role of an MLRO is especially crucial for cryptocurrency exchange services and fintechs, ensuring compliance, mitigating risks specific to digital assets, and navigating the unique challenges presented by the intersection of financial technology and the crypto industry.

KYC and AML RULES – Example

 

Example content:

I. OBJECTIVE 3
II. DEFINITIONS 3
A. MONEY LAUNDERING 3
B. FINANCING OF TERRORISM 3
C. TERRORISM 4
III. RESPONSIBILITIES OF THE AML RESPONSE PERSON 4
IV. MINIMUM REQUIREMENTS: 4
V. CORE ELEMENTS OF CDD 5
VI. CLIENT DUE DILIGENCE 6
1. KYC (Know Your Client) Natural Persons Identification Information: 6
2. KYCB – (Know Your Clients’ Business) Legal Entities Identification Information: 6
3. KYT – (Know Your Clients’ Transaction) – Transaction Monitoring 8
VII. ENHANCED DUE DILIGENCE 8
VIII. RISK PROFILES 8
IX. RISK INDICATORS 9
X. SUSPICIOUS ACTIVITY 9
XI. SUSPICIOUS ACTIVITY REPORT 10
XII. RECORD KEEPING

I. OBJECTIVE

The standards set out in this Procedure are the minimum requirements based on applicable legal and regulatory requirements and are mandatory for all business activities. Thesme requirements are intended to prevent me and my clients from:
being misused for money laundering, terrorist financing or other financial crime, both directly and indirectly
incurring unnecessary sanctions & or fines for me
and will help me to:
protect from reputational risk
manage all compliance issues & risks for my activity
enter relationships with companies/platforms on the international level and ensure compliance with local AML requirements
improve efficiency of contact with regulatory supervisory authorities concerning fight against crime, money laundering & terrorism.
Evidence for all authorities that [COMPANY IN ESTONIA] have adequate controls & procedures

II. DEFINITIONS

A. MONEY LAUNDERING

Money laundering means:

the concealment or disguise of the true nature, source, location, disposition, movement, right of ownership or other rights related to property derived from criminal activity or property obtained instead of such property;
the conversion, transfer, acquisition, possession or use of property derived from criminal activity or property obtained instead of such property for the purpose of concealing or disguising the illicit origin of the property or of assisting a person who is involved in criminal activity to evade the legal consequences of his or her action.

Money laundering also means a situation whereby the criminal activity that generated the property to be laundered was carried out in the territory of another state

B. FINANCING OF TERRORISM

In the sense of the law, it is the direct or indirect, illegal and deliberate provision and/or collection of pecuniary resources, financial assets or other property and/or provision of financial services intended to be used or consciously as to their future use, fully or partially, for committing terrorism in the sense of the Law.

C. TERRORISM

As “terrorism” can be understood the implementation, incitement and / or support of actions that:
1. cause serious violence affecting the individual or pose serious risks to the health and safety of the society or parts of it;
2. cause serious destruction of property;
3. create serious risks and / or destruction of the technical, technological and software support of the electronic systems;
4. aim to gain influence over the management of the country or destroy the security of society and the common legal order, or gain political, religious or ideological advantages over the existing governance and legal order.
III. RESPONSIBILITIES OF THE AML RESPONSE PERSON

Responsible for formulation of AML strategy, implementation and supervision.
Maintains relationship between AML regulatory and other authoritative bodies
Ensures AML policy, guidelines and operational procedures are in line with the local AML laws/ regulations and the applicable EU regulations
Oversees AML planning & forecasting processes
Oversees AML related IT-systems, AML Risk Analysis, and all AML-specific processes
Performs AML training with all future employees/agents

IV. MINIMUM REQUIREMENTS:
[COMPANY IN ESTONIA] incorporate the following basic principles to ensure proper AML controls:
1. Ascertainment of client identity:
When entering into a lasting business relationship, or
When performing a single transaction or deal, or
amounts to 15 000 EUR (or equivalent), whether that transaction is carried out in a single operation or in several operations which appear to be linked; or

2. Establishment of purpose of business relationship: When entering into a lasting business relationship, [COMPANY IN ESTONIA] must obtain information on kind and purpose thereof, if this is not clear from the business relationship itself.
3. Identification & Verification of Ultimate Beneficial Owner (UBO): When [COMPANY IN ESTONIA] required to identify a client, it must establish and verify the identity of the ultimate natural person,
– Who is entering into business relationship with me?

– who owns more than 25% or controls the client or its assets or

4. Reporting of suspicious circumstances/transactions: Such circumstances/transactions must be reported to the competent authorities according to local law.
5. Anti Money Laundering controls: The AML response person must ensure by adequate client- and business related controls that all applicable AML requirements are being adhered to and security measures are properly functioning.
6. Anti Money Laundering Training: Me and all employees/agents (including trainees and temporary personnel) responsible for carrying out, initiating or establishing business. Initial training must be attended within one month after an employee has joined the team and subsequently every year or when there are major changes in the AML requirements from the regulator.

Minimum content training requirements defined by the AML response person have to be adhered to.

1. Anti Money Laundering Risk Analysis: different levels of risk exposure & suspicious activity
2. Elements of CDD & requirements for EDD
3. UN, EU Sanctions lists, OFAC, Interpol etc.

V. CORE ELEMENTS OF CDD

1. KYC (Know Your Client) Natural Persons Identification Information:

Name (ID card/Passport/Driving License etc.)
Permanent address (evidence – Utility bill, bank statement, government letter less than 90 days old)
Date and place of birth
Nationality
Residence
An official personal identification number from unexpired official documents

What is verified?

Does this person appear on any of the Sanctions list (EU, UN, OFAC, Interpol etc.) – screening is done first when the person apply for a service and on periodical basis based on risk classification & monitoring rules. No Activity is conducted in a country subject to any of the above mentioned sanctions programs that impact payment services.

Authenticity of the identification document
Address verification match

2. KYCB – (Know Your Clients’ Business) Legal Entities Identification Information:

Certified Documentation requested prior to entering into a legal relationship with Merchants/Third party processors/Beneficiaries etc.:
Certificate of Incorporation
Memorandum & Articles of Association
Proof of address of the company
Legal approval regarding the authorized signatories of the company
List of UBOs/Shareholders/Directors/Signatories
Declaration for disclosure of UBO
Passport copies and proof of addresses of UBOs/Shareholders/Directors/Signatories
Any applicable licenses if the business is regulated
AML/KYC policies & internal acceptance/ risk processes

What is verified?

Verification of the lawful existence of the company – carrying out an inspection in the trade register/ company house in order to establish whether the company was not or is not subject to bankruptcy proceedings, cancellation, termination or liquidation
Verification of the license if it is required in operating such business.
Is the legal entity regulated?
Is the legal entity required to observe AML/CFT controls?
Verification of the type of legal form and business purposes.
Location of the headquarter, branches, plants, warehouses, overseas offices
Verify that any person acting on behalf of the legal entity/arrangement is so authorized.
Directors: A director exercises control over the business and thus over funds passing through the account
Signatories: A signatory to an account is able to exercise control or authority over funds passing through the account

Identify the ultimate beneficial owners (UBOs) β€’ Shareholder/beneficial owners: Any person who owns a significant proportion of shares in the business (more than 25 percent) is able to exercise control in other way.

XI. RISK INDICATORS

Membership of FATF (high risk & non-cooperative jurisdictions)
Membership of regional FATF
FATF Strategic deficiencies
OFAC status
EU, UN Sanctions list
PEPs
Offshore/Shell bank account/relation

 

 

 

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