AML Policy

Money Laundering – An Overview

Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their unlawful acts to avoid being prosecuted, convicted, and having their cash confiscated.

Money laundering is divided into three stages:

  • Placement refers to the process of introducing criminally obtained funds into the financial system.
  • Layering- Using layers of sophisticated financial transactions to separate the proceeds of illicit activities from their sources.
  • Integration: This is the ultimate stage, when the 'laundered' money is reintroduced into the normal economy.

Money laundering is a constantly developing and never-ending battle.
Money laundering not only has a negative impact on the public, but it also has a negative impact on the financial services business.
It is certainly in the banking industry's best interests

Terrorist Financing

The handling of funds to finance or aid terrorist activity is referred to as terrorism funding. It could include cash obtained from both legitimate and illicit sources, such as personal gifts, revenues from enterprises, and philanthropic organizations, as well as the drug trade, weapons smuggling, fraud, kidnapping, and extortion.

This is one of the most serious challenges that all financial institutions throughout the world are facing. HEE wants to avoid being used to fund terrorist activities; thus, it will always be on the lookout for suspicious transactions to report.

Know Your Customer and/or Know Your Customer Counter Party” (KYC/KYCC) Policy

KYC and KYCC are effective anti-money laundering and anti-terrorist financing defenses. Prior to performing a transaction, HEE Systems are designed to capture all essential information about the consumer and the recipient. The system's rules ensure that obtaining customer and beneficiary information is required for executing a transaction.

This is an important preventive strategy for effectively screening questionable activity in a proactive manner while remaining compliant with regulatory obligations.

HEE makes certain that the following critical information and documentation are available to assist effective KYC and KYCC:

HEE will not proceed with a transaction for a customer who fails to submit appropriate KYC information or who appears hesitant/unwilling to disclose information as required to establish adherence to KYC requirements and will flag the case as a High-Risk customer. These incidents are flagged for reporting to the regulator via the Suspicious Transaction Report (STR), as well as heightened surveillance.

Customer onboarding

The customer onboarding process at HEE is based on the legal basis of laws, regulations, System capabilities, and personal experience and understanding.

HEE has two types of customers in general:

  • Retail/individual customer
  • Corporate/SME customer

The branches oversee retail customer onboarding, which includes entering customer data into the system.

The data/name entered is automatically checked against the watch list in real time.

In the event of a name match, the System notifies the Branch User and prevents the transaction from being processed until the Compliance Department approves it.

Enhanced screening, such as "KYC screening" and a web search, is usually required before such clearance is granted.

Furthermore, both the remitter and recipient identities will be reviewed against the watch list at the transactional level.

If there is a match, the transaction will be put on hold for compliance clearance under the "suspect transaction" dashboard.

To proceed, a false positive case will be released, as well as an exact match instance.

All corporate customer onboarding is only permitted following compliance clearance, according to company policy. All mandatory documentation must be obtained by branch personnel and provided to the Compliance department (as specified below).

The customer onboarding policy is applicable to Wholesale currency buy/sell customers as mentioned below.

  • Retail/Individual – Similar to a Retail Customer onboarding, where KYC check and automated name screening is enabled through the System.
  • Corporate customer- Corporate onboarding policy applicable (as mentioned above)
  • Exchange houses- Copy of valid trade license, Passport copies of owner and/or partners and completed AML/CTF KYC questionnaire required.

The Compliance officer will review all compliance clearance requests received from the branches to ensure that they are comprehensive.

To find any unfavorable news/remarks, the compliance officer will do a screening -check" and a "web search."

The feedback with the notes will be given to the branch, which will either "accept or reject" the customer based on the conclusion.

False positive cases will be allowed to proceed, while exact match cases will be denied and reported to the Central Bank via STR.

Customer Identification (CID)

The CID procedure is the verification of the client's original identification documents (IDs)

as a natural person and the systematic entry of basic customer information in the Point-of-Sale system;

financial institutions must not accept any ID as recommended by the regulators

Customer Due Diligence (CDD)

HEE shall do due diligence before onboarding the customer or establishing business relationship with the correspondent banks, service providers and business partners.

Enhanced Due Diligence (EDD)

HEE shall perform Enhanced Due Diligence in the following scenarios:

1. Before onboarding the customers dealing with.

  • Jewelry and precious stones
  • Real Estate
  • Luxury items
  • Auction houses
  • Non-resident account holders/visitors

2. The customers of high-risk countries/products/services etc.

3. Politically Exposed Persons (PEPs)

4. If the customer/transaction found to be suspicious/unusual.

5. Any other suspicious cases alerted by the system based on the rule violation(s).

The above scenarios are reviewed periodically and updated as required through the quarterly Compliance Committee Meeting.

Transaction Monitoring

Compliance Officers oversee creating the internal Blacklist,

If there are notices/alerts from regulatory authorities, the lists are updated daily with the goal of screening the names to identify prohibited individuals, corporations, and organizations that may pose a high danger to the global community/financial systems.

Reporting of Suspicious Transaction Report (STR)

HEE shall file suspicious transaction report to Central Bank, if there are reasonable grounds to suspect that the proceeds are from the outcome of any of the illegal activities and/or the transaction is intended for terrorist financing/activities. If any such incidents are detected Compliance Department is responsible to file STR with Central Bank using the online portal. However, it is the responsibility of all HEE staff to identify and notify suspicious/unusual transactions to the Compliance Department.

Tipping off

According to HEE policy, HEE employees are not to notify or share information with the concerned individual and/or entity regarding information being submitted to/investigated by the competent authority. Any violation of these rules will result in disciplinary action. This obligation must be communicated to all employees.

On-going KYC/Periodic review

On an ongoing basis, HEE will evaluate and update the KYC information of all its customers. High and medium risk customers, on the other hand, will be reviewed on a regular basis based on transaction trends, nature of business, and event-driven scenarios such as the expiration of trade licenses or identities, change in office location, trading name, management, correspondent bank query, notice from the Central Bank or Law Enforcement, and so on.

Record Retention

From the date of business closure/date of transaction, HEE will keep all customer/transaction-related data/supporting papers for a duration of 5 years

Prohibited Business/Relationships

HEE will not do business with any of the shell companies, banks, or service providers.

For existing customers, if there are reasonable grounds to believe that the client/service provider is involved in any illegal activities during the business relationship, the relationship with such clients/service providers will be suspended/terminated with immediate effect and reported to the regulatory authority.

Know your employee

HEE has process in place in co-ordination with Human Resource Department to ensure that only reliable staffs are employed to the organization.

Training program

HEE has a comprehensive AML/CTF training program to ensure that all staff, specifically staff involved in the customer onboarding, transaction processing and maintaining customer relationship undergoes AML/CTF training without fail. AML/CTF training is organized by the Quality and Business Excellence Department and handled by Compliance Department.

As part of this program, HEE conducts series of tests and exams covering AML/CFT areas. During training evaluation tests are conducted to ensure its effectiveness.

Business/ Product Risk Assessment

HEE shall introduce a new product/process only after ensuring that the new product/process has the capability to arrest possible AML/CTF risks. The current products are as follows.

1. Remittance

  • Direct Credit
  • Bank to bank

2. Buying and selling of currencies

3. Instant money

  • Send
  • Receive

4. Ancillary products.

  • Ezetop mobile top ups

Customer profiling or risk assessment

Customers are categorized or classified using a risk rating scale based on established characteristics and AML laws.

The customer profile or nature of business, geography, and nationality are used to determine KYC risk.

The transactional risk rating is based on the customer's transactional behavior/trend/pattern, the nature of the product/process/channel type used by the financial institution, and the number of AML rule violations (s).

Audit/Independent Testing

Internal and external audit functions independently verify the efficacy of the AML/CTF Compliance program.

Internal auditors at HEE test and check the effectiveness of AML/CTF across all branches and the head office on a regular basis.

The results of the tests or feedback from the audit will be shared with the operations team for possible improvement or remedial action.

In addition, HEE hires external audit firms to assess the efficacy of AML/CTF compliance on a regular basis.

KYC/AML/CTF Questionnaire

HEE has a self-attested KYC/AML/CTF questionnaire designed in accordance with the Wolfsberg KYC principle, as well as UAE and other international regulatory standards.

These surveys are reviewed and modified on a regular basis to keep up with regulatory and/or industry developments.

Procedure review and updation HEE reviews its AML/CTF policies/procedures on a regular basis to keep up with regulatory and industry changes.

The Compliance Department oversees this, and any changes must be approved by the Committee.

Risk Based Approach (RBA)

A risk-based approach is a method that allows a financial organization to detect potential hazards and take corrective action to avoid them.

One of the most serious risks to financial institutions is the channeling of illegal cash and terrorist financing.

Using the RBA method, financial institutions will be more proactive in preventing such dangerous behaviors.

Transaction Monitoring Pattern

analysis is an online technique for evaluating a customer's transaction behavior based on transaction history and the type of the business/job profile.

The nature of the business, the nature of the payment request/payment order, the number/frequency of transactions, the volume, the currencies, the remitter and beneficiary relationship, the manner of payment, and the availability of supporting documentation are all factors that go into this process.

Pattern analysis assists financial firms in determining the level of risk that their customers are exposed to.

Blacklist/Watch list screening to detect and prevent money laundering and/or terrorist financing, a scientifically well-defined watch list screening is an unavoidable component of an AML/CTF compliance program.

Financial institutions use a variety of internal screening lists, as well as lists issued by local and international regulatory authorities, such as notices/circulars from the Central Bank of the UAE, law enforcement, the Office of Foreign Assets Control (OFAC), the European Union (EU), the United Nations (UN), and Her Majesty's Treasury (HM).

Suspicious Transaction Reporting (STR)

All financial institutions are required by law to report suspicious transactions to the Financial Intelligence Unit (FIU) of that country, and this requirement extends to all the organization's personnel.

Because HEE's operations are situated in the United Arab Emirates, any suspicious or unusual transaction or customer must be reported to the UAE's Central Bank's Financial Intelligence Unit (FIU)

Customer profiling/ Risk Assessment A scientific method for identifying the possible risk or vulnerabilities posed by a company's customers.

Risk rating or customer profile is a continuous process that begins when a customer is onboarded and is referred to as KYC risk rating or profiling.

Throughout the relationship, the profile is reviewed and analyzed based on transactional behavior or pattern, resulting in a transactional risk rating.

Shell Company is a company that acts as a conduit for business transactions but does not have any substantial offices, assets, or operations of its own. Some shell firms may have operated, but owing to negative market conditions or poor management, they may have shrunk.

A shell corporation can also form after a company's operations have been shut down, such as after a takeover, but the original company's "shell" remains. Although some shell firms have valid business reasons, they are primarily utilized to avoid paying taxes.

Politically Exposed Customer (PEP)

Someone who has been entrusted with a prominent public function, or a relative or known associate of that person, is referred to as a politically exposed person (PEP). Because of their position and possible influence, PEPs are more likely to be involved in bribery and corruption

Money Laundering Reporting Officer (MLRO) A financial institution official who oversees monitoring and reporting suspicions of money laundering and/or terrorism financing. Such suspicions must be reported to the MLRO by the organization's employees.
Money Laundering Reporting Officer (MLRO) A financial institution official who oversees monitoring and reporting suspicions of money laundering and/or terrorism financing. Such suspicions must be reported to the MLRO by the organization's employees.