Anti-Money Laundering (AML)

Anti-Money Laundering (AML)

(Last update: August of 2020)

Anti-money laundering system
Anti-Money Laundering ("AML") is a procedure to prevent the money laundering process disguised as legitimate assets by concealing the source of funds for illegal profits obtained from criminal activities such as organized crime and drug crime. 

OMG WORLD USA CORP. USFCX AML Policy

OMG WORLD USA CORP.(hereinafter referred to as the "USFCX") adheres to the following policies to prevent money laundering.   

 

-We do not have a business relationship with criminal or terrorist financial crimes.   

-We do not conduct transactions that support criminal or terrorist financial crimes.   

-We do not support transactions related to criminal or terrorist financial crimes. 

 

AML Procedure

In order to comply with the anti-money laundering standards and the identity verification procedure (Know Your Customer, hereinafter referred to as "KYC"), the USFCX introduces the following procedures when using the USFCX cryptocurrency exchange. 

 

USFCX customers are required to verify and verify their identity by providing identification cards such as passports, resident registration cards and driver's licenses issued by countries that comply with KYC and AML. USFCX reserves the right to collect personal information of customers for the purposes of AML, and this information is processed through USFCX internal procedures. 

 

USFCX may request additional documentation from the customer if it detects a hazard.

In addition, we are collecting personal information documents related to KYC. This includes a copy of a bankbook, a copy of an identification card within 3 months with the customer's name and actual address specified. This document is not necessarily limited to this. In addition, you have the right to refuse documents related to KYC and AML if they violate the USFCX's above regulations. 

 

If the customer's personal information has changed, suspicious activity, or if a risk is detected based on internal procedures, USFCX reserves the right to request updated documentation from the customer even if no problem has been found in the past.

In addition, the determination of whether a transaction is suspicious is at the sole discretion of the USFCX. 

 

Money Laundering Prevention Officer

cs@omgworldusa.com

Mobile +1 248-491-8888

 

 

Anti-Money Laundering (AML) Source Tool for Broker-Dealers

 

Date: October 4, 2018 U.S. Securities and Exchange Commission

Several statutory and regulatory provisions, and related rules of the securities self-regulatory organizations (SROs), impose AML obligations on broker-dealers.

 

This compilation was prepared by staff in the Office of Compliance Inspections and Examinations (OCIE), Securities and Exchange Commission. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed in this document are those of the staff and do not necessarily represent the views of the Commission, or other Commission staff.

The Bank Secrecy Act

The Bank Secrecy Act (BSA), initially adopted in 1970, establishes the basic framework for AML obligations imposed on financial institutions. Among other things, it authorizes the Secretary of the Treasury (Treasury) to issue regulations requiring financial institutions (including broker-dealers) to keep records and file reports on financial transactions that may be useful in investigating and prosecuting money laundering and other financial crimes. The Financial Crimes Enforcement Network (FinCEN), a bureau within Treasury, has regulatory responsibilities for administering the BSA.

 

*Rule 17a-8 under the Securities Exchange Act of 1934 (Exchange Act) requires broker-dealers to comply with the reporting, recordkeeping, and record retention rules adopted under the BSA.

The USA PATRIOT Act

The USA PATRIOT Act was enacted by Congress in 2001 in response to the September 11, 2001 terrorist attacks. Among other things, the USA PATRIOT Act amended and strengthened the BSA. It imposed a number of AML obligations directly on broker-dealers, including:

 

AML compliance programs

customer identification programs; monitoring, detecting, and filing reports of suspicious activity;

due diligence on foreign correspondent accounts, including prohibitions on transactions with foreign shell banks; due diligence on private banking accounts; mandatory information-sharing (in response to requests by federal law enforcement); and compliance with “special measures” imposed by the Secretary of the Treasury to address particular AML concerns.

AML Programs

Section 352 of the USA PATRIOT ACT amended the BSA to require financial institutions, including broker-dealers, to establish AML programs. Broker-dealers can satisfy this requirement by implementing and maintaining an AML program that complies with SRO rule requirements.

 

An AML program must be in writing and include, at a minimum: policies, procedures, and internal controls reasonably designed to achieve compliance with the BSA and its implementing rules; policies and procedures that can be reasonably expected to detect and cause the reporting of transactions under 31 U.S.C. 5318(g) and the implementing regulations thereunder; the designation of an AML compliance officer (AML Officer), including notification to the SROs; ongoing AML employee training; and an independent test of the firm’s AML program, annually for most firms.

risk based procedures for conducting ongoing customer due diligence which should include, but not be limited to: 1) understanding the nature and purpose of customer relationships to be able to develop a risk profile and 2) conducting ongoing monitoring to identify and report suspicious transactions as well as maintaining and updating customer information, including beneficial ownership information for legal entity customers.

Customer Identification Programs

Section 326 of the USA PATRIOT Act amended the BSA to require financial institutions, including broker-dealers, to establish written customer identification programs (CIP). Treasury’s implementing rule requires a broker-dealer’s CIP to include, at a minimum, procedures for: obtaining customer identifying information from each customer prior to account opening; verifying the identity of each customer, to the extent reasonable and practicable, within a reasonable time before or after account opening; making and maintaining a record of information obtained relating to identity verification; determining within a reasonable time after account opening or earlier whether a customer appears on any list of known or suspected terrorist organizations designated by Treasury; 2 and providing each customer with adequate notice, prior to opening an account, that information is being requested to verify the customer’s identity.

 

The CIP rule provides that, under certain defined circumstances, broker-dealers may rely on the performance of another financial institution to fulfill some or all of the requirements of the broker-dealer's CIP. For example, in order for a broker-dealer to rely on the other financial institution the reliance must be reasonable. The other financial institution also must be subject to an AML compliance program rule and be regulated by a federal functional regulator. The broker-dealer and other financial institution must enter into a contract and the other financial institution must certify annually to the broker-dealer that it has implemented an AML program. The other financial institution must also certify to the broker-dealer that the financial institution will perform the specified requirements of the broker-dealer's CIP.

Beneficial Ownership and Customer Due Diligence (“CDD”)

Covered financial institutions are required to establish and maintain written procedures that are reasonably designed to identify and verify beneficial owners of legal entity customers and to include such procedures in their anti-money laundering compliance program required under 31 U.S.C. 5318(h) and its implementing regulations.

 

Legal entity customer means a corporation, limited liability USFCX, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.

Beneficial owner means each of the following:

(1) Each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer; and

 

(2) A single individual with significant responsibility to control, manage, or direct a legal entity customer, including:

     (i) An executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,

          Managing Member, General Partner, President, Vice President, or Treasurer); or

     (ii) Any other individual who regularly performs similar functions.

 

(3) If a trust owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, the beneficial owner for purposes of paragraph (d)(1) of this section shall mean the trustee. If an entity listed in paragraph (e)(2) of this section owns directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, 25 percent or more of the equity interests of a legal entity customer, no individual need be identified for purposes of paragraph (d)(1) of this section with respect to that entity's interests.

 

Due Diligence Programs for Private Banking Accounts

Section 312 of the USA PATRIOT Act amended the BSA to, among other things, impose special due diligence requirements on financial institutions, including broker-dealers, that establish, maintain, administer or manage a private banking account or a “correspondent account” in the United States for a “non-United States person.”

 

Treasury’s regulations provide that a “covered financial institution” is required to maintain a due diligence program that includes policies, procedures, and controls that are reasonably designed to detect and report any known or suspected money laundering or suspicious activity conducted through or involving a “private banking account” that is established, maintained, administered or managed in the U.S. by the financial institution. In addition, the regulations set forth certain minimum requirements for the required due diligence program with respect to private banking accounts and require enhanced scrutiny to any such accounts where the nominal or beneficial owner is a “senior foreign political figure.”

 

The regulations define a “private banking account” as an account that: (a) requires a minimum deposit of assets of at least $1,000,000; (b) is established or maintained on behalf of one or more non-U.S. persons who are direct or beneficial owners of the account; and (c) has an employee assigned to the account who is a liaison between the broker-dealer and the non-U.S. person.

 

The definition of “senior foreign political figure” extends to any member of the political figure’s immediate family, and any person widely and publicly known to be a close associate of the foreign political figure as well as any entities formed for the benefit of such persons (such persons are commonly referred to as PEPs, or Politically Exposed Persons).

 

Broker-dealers providing private banking accounts must take reasonable steps to:

determine the identity of all nominal and beneficial owners of the private banking accounts; determine whether any such owner is a “senior foreign political figure” and therefore subject to enhanced scrutiny that is reasonably designed to detect transactions that may involve the proceeds of foreign corruption; determine the source of funds deposited into the private banking account and the purpose and use of such account; review the activity of the account as needed to guard against money laundering; and report any suspicious activity, including transactions involving senior foreign political figures that may involve proceeds of foreign corruption.

Suspicious Activity Monitoring and Reporting

Section 356 of the USA PATRIOT Act amended the BSA to require broker-dealers to monitor for, and report, suspicious activity (so-called SAR reporting).

Under Treasury's SAR rule, a broker-dealer is required to file a suspicious activity report if: (i) a transaction is conducted or attempted to be conducted by, at, or through a broker-dealer; (ii) the transaction involves or aggregates funds or other assets of at least $5000; and (iii) the broker-dealer knows, suspects, or has reason to suspect that the transaction: (a) involves funds or is intended to disguise funds derived from illegal activity, (b) is designed to evade requirements of the BSA, (c) has no business or apparent lawful purpose, and the broker-dealer knows of no reasonable explanation for the transaction after examining the available facts, or (d) involves the use of the broker-dealer to facilitate criminal activity.

Broker-dealers must report the suspicious activity using a form Treasury has issued for the securities and futures industry, the SAR-SF (also referred to as FinCEN Form 101). The form, which is confidential, includes instructions.

Broker-dealers must maintain a copy of any SAR-SF filed and supporting documentation for a period of five years from the date of filing the SAR-SF.

In situations that require immediate attention, such as terrorist financing or ongoing money laundering schemes, broker-dealers should immediately notify law enforcement in addition to filing a SAR-SF. In addition, if a firm wishes to report suspicious transactions that may relate to terrorist activity, in addition to filing a SAR-SF, the firm may call FinCEN's Hotline at 1-866-556-3974

 

Records of Funds Transfers

Under the “joint rule” and “travel rule,” broker-dealers must keep records of funds transfers of $3,000 or more (such as wire transfers), including certain related information (such as name, address, account number of client, date and amount of wire, payment instructions, name of recipient institution, and name and account information of wire payment recipient). The “travel rule” also requires that certain information obtained or retained by the transmittor's financial institution “travel” with the transmittal order through the payment chain.

Information Sharing with Law Enforcement and Financial Institutions
Two provisions relating to information sharing were added to the BSA by the USA PATRIOT Act. One provision requires broker-dealers to respond to mandatory requests for information made by FinCEN on behalf of federal law enforcement agencies. The other provides a safe harbor to permit and facilitate voluntary information sharing among financial institutions.

Mandatory Information Sharing: Section 314(a) Requests: FinCEN’s BSA information sharing rules, under Section 314(a), authorize law enforcement agencies with criminal investigative authority to request that FinCEN solicit, on the agency’s behalf, certain information from a financial institution, including a broker-dealer. These requests are often referred to as “Section 314(a) information requests.”

 

Upon receiving a Section 314(a) request, a broker-dealer is required to search its records to determine whether it has accounts for, or has engaged in transactions with, any specified individual, entity, or organization. If the broker-dealer identifies an account or transaction identified with any individual, entity or organization named in the request, it must report certain relevant information to FinCEN. Broker-dealers also must designate a contact person (typically the firm’s AML compliance officer) to receive the requests and must maintain the confidentiality of any request and any responsive reports to FinCEN.

Special Measures Imposed by the Secretary of the Treasury

Section 311 of the USA PATRIOT Act amended the BSA to authorize the Secretary of the Treasury to require broker-dealers to take “special measures” to address particular money laundering concerns. 

The Secretary of the Treasury may impose special measures on foreign jurisdictions, financial institutions, or transactions or types of accounts found to be of “primary money laundering concern.” 

There are five “special measures,” including prohibiting U.S. financial institutions from opening or maintaining certain correspondent accounts. In addition, FinCEN issued a rule proposal on November 28, 2011, which, if adopted, will impose special measures against the Islamic Republic of Iran.

OFAC Sanctions Programs and Other Lists

OFAC is an office within Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, terrorism sponsoring organizations, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under U.S. jurisdiction.

OFAC’s sanctions programs are separate and distinct from, and in addition to, the AML requirements imposed on broker-dealers under the BSA.

As a tool in administering sanctions, OFAC publishes lists of sanctioned countries and persons that are continually being updated. Its list of Specially Designated Nationals and Blocked Persons (SDNs) lists individuals and entities from all over the world whose property is subject to blocking and with whom U.S. persons cannot conduct business. OFAC also administers country-based sanctions that are broader in scope than the “list-based” programs.

In general, OFAC regulations require broker-dealers to:
block accounts and other property or property interests of entities and individuals that appear on the SDN list;

block accounts and other property or property interests of entities and individuals subject to blocking under OFAC country-based programs; and

block or reject unlicensed trade and financial transactions with OFAC-specified countries, entities, and individuals.

Broker-dealers must report all blockings and rejections of prohibited transactions to OFAC within 10 days of being identified and annually. 

OFAC has the authority to impose substantial civil penalties administratively. To guard against engaging in OFAC prohibited transactions, one best practice that has emerged entails “screening against the OFAC list.” 

OFAC has stated that it will take into account the adequacy of a firm’s OFAC compliance program when it evaluates whether to impose a penalty if an OFAC violation has occurred. 

Firms should be aware of other lists, such as the Financial Action Task Force (“FATF”) list of non-compliant countries (the “NCCT list”). If transactions originate from or are routed to any FATF-identified countries, it might be an indication of suspicious activity.

Useful Contact Information

 

FinCEN

Financial Institutions Hotline: 1-866-556-3974

Regulatory Helpline: 1-800-949-2732

Office of Public Affairs: 703-905-3770

General Information: 703-905-3591

FinCEN website: www.fincen.gov

Securities and Futures: http://www.fincen.gov/financial_institutions/secs_futures

 

OFAC

Hotline: 1-800-540-6322

OFAC website: www.treas.gov/ofac

FINRA
Please contact your local FINRA Coordinator directly with any questions relating to AML requirements. If you have not received notification of your assigned Coordinator, contact your FINRA District Office for more details. Contact information is available at the following link: www.finra.org/contactus/districts

FINRA website: http://www.finra.org

SEC Staff

Division of Trading and Markets Office of Interpretation and Guidance: 202-551-5777

Office of Compliance Inspections &Examinations, Office of Chief Counsel: 202-551-6460

SEC SAR Alert Message Line: 202-551-SARS (7277)

SEC website: www.sec.gov