RADR is committed to Anti-Money Laundering (AML) compliance and Anti-Terrorist Financing and has built policy, procedures and reporting to prohibit use of RADR system for such activities.
Gateways are responsible for complying with local regulations and reporting to the appropriate agencies.
Reporting requirements vary depending on country and state. In support of our AML and Anti-TF policy and procedures RADR must:
Know Your Customer (KYC) refers to due diligence activities by financial institutions to determine whether customers may be at risk of using the institution’s to conduct criminal activity. Criminal activity in financial terms may include money laundering, terrorist financing, financial fraud, etc. Customers may be individuals, intermediaries, or businesses.
KYC requirements generally address the customer’s identity, affiliations, and transaction behavior.
KYC is critical for financial institutions. Having an inadequate or nonexistent KYC program may result in criminal penalties for the gateway or individual employees.
Example: The USA Patriot Act requires strict KYC programs of all financial institutions to avoid terrorist financing. Several of the following topics refer to specific components of KYC due diligence practices.
Customer information is collected during registration and during transactions. Based on the risk, RADR will ensure that it has a reasonable belief of the true identity of our customers. In verifying customer RADR will perform enhanced due diligence for those customers presenting higher risk and may require additional information such as photo identification.
RADR has a risk based system and procedures to monitor on-going customer activity to detect fraud as well as money laundering activities including but not limited to placement, layering and integration of funds. Reporting: Procedures for reporting suspicious activity internally and to the relevant law enforcement authorities as appropriate.
Money laundering is the process making income generated by illegal activity appear to be from a legitimate source.
Anti Money Laundering (AML) refers to the laws and procedures designed to stop money laundering from occurring.
Example: The US Bank Secrecy Act requires financial institutions to comply with a minimum set of due diligence requirements outlined here: http://www.fdic.gov/regulations/examinations/bsa/bsa_13.html.
For more information on AML, visit http://www.finra.org/Industry/Issues/AML/.
To support AML, financial institutions must be able to determine within reason whether the source of a customer’s deposits are linked to criminal activity.
Determining the exact source of funds may not be administratively feasible for every customer. As a result, some regulatory authorities may not provide specific regulation or guidance for all accounts. In specific cases, however, authorities may require financial institutions to identify and report the source of funds.
Example: The US Bank Secrecy Act requires financial institutions to identify and report the source and expected use of funds totalling more than $1,000,000 USD in private bank accounts belonging to non-U.S. persons (deposited either directly, or indirectly via a liason).
If a financial institution suspects that funds may be related to criminal activity, the institution must file a report (Suspicious Activity Report (SAR) / Currency Transaction Report (CTR)) with the appropriate regulatory authority. Failure to report suspicious activity may result in in penalties for the institution.
Financial institutions may automatically generate and submit an electronic report
Example: The US Bank Secrecy Act requires any cash transactions over $10,000 USD to be reported to the government identifying the individual and the source of the cash. An example of the form required by the US Internal Revenue Service: http://www.irs.gov/pub/irs-pdf/f8300.pdf.
The Travel Rule is enforced by the US Financial Crimes Enforcement Network (FinCEN; an agency of the US Department of Treasury) refers to the requirement for financial institutions sending a large amount (as of writing, value equalling or exceeding $3,000 USD) to provide the receiving institution with identifiable information about both the sender and receiver of the transfer. FinCEN may require each institution to provide this information about transactions when asked.
FinCEN outlines the required information: http://www.fincen.gov/news_room/rp/advisory/html/advissu7.html.
Workers Remittance refers to the act of workers in a foreign country sending money to their home country. Transfers are generally in cash, relatively low value (e.g. $500 USD), and channeled through remittance service providers (e.g. Western Union).
Since the systems are informal, originate in cash form, and represent significant aggregate volume ($500B USD/year) local regulatory authorities are concerned about the risk for money laundering and terrorist financing.
The Office of Foreign Assets Control (OFAC; an agency of the US Department of Treasury) that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. OFAC helps financial institutions avoid directly or indirectly supporting activity by or with foreign states, organizations, and individuals.
Example: OFAC provides a list of specific individuals and companies that financial institutions are not allowed to support: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx.
A list of OFAC resources: http://www.treasury.gov/resource-center/sanctions/Pages/default.aspx.