United Kingdom Anti-money Laundering Combating Terrorism...

www.xpressmoney.com

Xpress Money Services Limited

Version 2.5

United KingdomAnti-money Laundering

&Combating Terrorism

Financing PolicyAnd Procedures

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www.xpressmoney.comXM_UK AML/CTF Policy & Procedure

ContentsINTRODUCTION 2SECTION I - GENERAL POLICY General Statements on “Money Laundering” 4 XM Anti-Money laundering policies 5 The XM AML&CTF Program 6 Risk Assessment & Mitigation 7SECTION II - AML/CTF POLICY/ PROCEDURES FOR UK OPERATIONS AppointmentofComplianceOfficer/s 13 Customer Due Diligence & on-going monitoring of transactions 14 - What is customer due diligence? 14 - Non Compliance with customer due diligence 14 -IdentifyingBeneficialOwner 15 - Enchanced Due Diligence 16 - Nature & Purpose of Business Relationship 16 -CustomerIdentification 17 - Documentary Evidence 18 - Electronic Evidence 19 - On-going Monitoring 19 - Other High Risk Situations 20 Anti-Money Laundering Training Program for Agents 22 Retention of Records 22 Identifying and Reporting of Suspicious Activity 23 - General Legal & Regulatory Obligations 23 - Internal Reporting Procedures 24 - Consent to a Transaction 24 - Tipping-off Offences 25 - Suspicion Indicators 25 Supervision & Penalty for non-compliance 26 Regular Review of Agents Anti-Money Laundering Program 27 Appendix I - Summary of XM Money Transfer Requirement 28 Appendix II - XM Acceptable Form of Identity 29 Appendix III - Suuspicios Transaction Report Form 30 Appendix IV - Source of Fund Declaration form 31 Appendix V - Documentation Checklist for Agents Application 32

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IntroductionTo: All our Esteemed Agents

We are glad to come out with a comprehensive “Xpress Money Anti-Money Laundering & Combating Terrorist Financing Policy & Procedure” (AML & CTF) (Version No. 2.5). This policy applies to all personnel and Agents & Sub-agents of Xpress Money.

Moneylaundering&terroristfinancinghavebeenidentifiedasmajorthreatstotheInternationalFinancialServices Community. Many governments have passed legislation designed to prevent these which imposecertainrequirementsuponinstitutionsregisteredintheirjurisdiction.Theselegislationsareastatementoftheminimumstandardstobeadoptedbyallregisteredfinancialinstitutionsoperatingintheirjurisdiction.XpressMoney&itsagents(includingsub-agents)maybesubjecttodifferentormorerigorous requirements of local regulation. In which case, the local requirements will be applicable, or in addition to, Xpress Money requirements. However XM has adopted best practices in the industry for AML & CTF Policy and Procedure. This Policy & Procedure will help you

•Detectandpreventmoneylaundering&terroristfinancing. •Identifysuspiciousactivity; •ComplywithyourlocallawsandotherAML&CTFregulations.

In addition to the above, you may assist law enforcement authorities in their effort to track down who illegallyusetheirmoneyforlaundering&terroristfinancing.XpressMoneyhasaresponsibilitytohelpfightmoneylaundering&terroristfinancing.Asacompanythatoperatesinawidevarietyofcultures,languages,andlegalsystems;presentinseveralcountriesandhasalargecustomerbase,XpressMoneymaybeatargetofwould-bemoneylaunderers&terroristfinanciers.Wehopethatyoutoowillsharethiscommitment to prevent our products and services, as well as your business, from being used for illegal purposes.Moneylaundering&terroristfinancingisacrimethatcanleadtoLosses,fines,seizureofaccounts, cancellation of license, individual imprisonment for you and Xpress Money, as well as damage the reputation of both of our businesses if we do not take care. Working together, we can help prevent this illegal activity from occurring.

Xpress Money Services Limited Anti Money Laundering & Combating Terrorist Financing Policy Framework set out in this document are divided into two sections: The 1st section sets out the Xpress Money Services Anti-Money Laundering & Combating Terrorist Financing Policy (AML&CTF Policy) and the second section outlines the Anti-Money Laundering Regulations for UK which, for the purposes of ensuring a uniform terminology within Xpress Money, is hereinafter also referred to as the “AML&CTF Policy”.

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Section One

1 General statements on “money laundering”

2 XM anti-money laundering principles

3 The XM AML&CTF Program

4 Risk Assessment & Mitigation

Section Two

The second section of this document contains the UK Money Laundering Regulations which will be the

standard of reference for all our agents operating in the UK. It consists of the following key elements:

1.AppointmentofComplianceOfficer/s

2. Customer Due Diligence & on-going monitoring of transactions

3. Anti-Money Laundering Training Program for Agents

4. Retention of records

5. Identifying and Reporting of Suspicious Activity

6. Penalty for non-compliance

7. Regular Review of Agents Anti-Money Laundering Program

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Section I - XM AML&CTF Policy

1. General statements on “money laundering”

Money Laundering:Money Laundering is the process whereby criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities thereby avoiding prosecution, conviction and confiscationofthecriminalfunds.Thesourceoftheproceedsmayincludedrugtrafficking,terrorism,organizedcrime,taxevasion,fraudandmanyothercrimes.This process involves 3 steps: 1) Placement - physically placing cash proceeds. 2)Layering-pilingoflayersthroughcomplexfinancialtransactionstoseparatetheproceeds fromillicitand/orcriminalactivity. 3) Integration - giving legitimate but false explanations as to the origin of the illicit monies.This definition covers awide range of activity.Money launderers use a variety ofmeans to laundermoney so that it cannot be easily detected. One of those means, may be is to convert currency into an Xpress money transaction. The purpose of this manual is to give you information that will help you identify money laundering and to help prevent it from occurring.

Terrorism & Terrorist Funding:Terrorismcanbedefinedastheunlawfuluseofforceagainstpersonsorpropertytointimidateorcoercea government, the civilian population or any segment thereof, in the furtherance of political or social objectives.Terroristactsarecriminalinnatureandconstituteaseriousthreattotheindividuals’livesand freedom. Terrorist funding relates to provision or collection of funds to carry out an act of killing or seriously injuring a civilianwith the objective of intimidating a section of people or compelling agovernment to do or to abstain from doing any act.

Combatingterrorist funding isoneof thehighestprioritiesforall thefinancial institutionsacrosstheworld.TheeventsofSeptember11thhaveplacedtheworldsfinancialinstitutionsonthefrontlineinthebattle against terrorist funding. The worldwide efforts to combat terrorist funding are gaining importance day by day. Terrorist funding is a global problem that not only threatens security but also compromises thestability,transparencyandefficiencyofthefinancialsystem.

Elements of Terrorist Funding: •Theprimaryobjectivebehindterroristfundingistointimidateorforceagovernmentor populationtodoorabstainfromdoinganyact.Inmoneylaunderingtheobjectiveismonetary gain. •Thevolumeofremittancesforterroristfundingneednothavetobelargeascomparedto money laundering. They will vary according to the strategies and methods adopted by the terrorists. •Terroristfundsneednotbefromillegalsourcesalways.Insomecases,fundsarealso sourced from legal income.

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What can we do to fight terrorist funding?

Prevention - We have to prevent our products and services from used by terrorists for transferring their money. This can be done by applying appropriate “Know Your Customer” Policies and Procedures.Pursuit - We have to track down the terrorist transactions by blocking their names. In case you come across any blacklisted names, it has to be immediately reported to the concerned authorities. Protection - Wehavetoprotectourinstitution,ourreputation,customers,ourjobsandourcommunitieswhere we operate. We have to protect by being responsible in our duties. If a counter agents does a money transfer transaction for a customer and has reasonable cause to suspect that it may be used, in whole or in part for thepurposeofterrorism,andthenitshouldbeimmediatelyreportedtheconcernedComplianceOfficerfornecessary action.Thefightagainstmoneylaundering&terroristfinancingisanevolvingandneverendingprocess.Moneylaunderingnotonlyharmsthepublicasawhole,butittaintsthefinancialservicesindustry.Itclearlyisinthebestinterestsofthefinancialindustrytotakeallfeasibleactiontopreventmoneylaundering.Thereforeweneedtoworktogetherandco-operatetofightagainstthechallengesposedbythissocialevil.

2. XM Anti-Money Laundering Policies

Our policy has always been to conduct our business in compliance with all applicable laws and regulations.

The fight againstmoney laundering& terrorist financing is a priority for XpressMoneyServices.Werecognizethatthisfightisateameffort.

Wesupportthemajorinternationalorganizations,whichcollectivelysetandenforcestandardsforanti-moneylaundering&CombatingterroristfinancingpoliciesandprogramssuchasFATF(FinancialActionTaskForce),UN,TheEU,TheOrganizationofAmericanStates - TheOfficeofForeignAssetsControl(OFAC) and the Local Regulatory Authorities in the UK (HMRC, FCA (formerly FSA), HMT & NCA). These organizationsareincreasinglyinsistentthatcompliancebeassessedintermsofimplementationandnot simply concurrence with the policy standards or guidelines established.

AhighstandardofDuediligenceandfit&properassessmentsarecarriedoutpriortoappointmentofXpress Money Agents.

XpressMoney prohibits remittances to Charitable and Religious Organizations. XpressMoney givesspecialattentiontotransactionswithororiginatingfromcountriesidentifiedbytheFATFasbeingnon–cooperativeincombatingmoneylaundering&terroristfinancing.

As part of our enhanced due diligence commitment, we currently outsource the Services of World Check tokeepinpacewiththeregularlyupdateddatabaseofsuspectednames(Watch/BlackList)issuedbyvarious enforcement authorities in the USA and Europe. Our internal operating system maintains a real-timeon-lineinterfacewiththeserviceprovidertoensurethatalltransactionsarerigorouslyfiltered,andtimely action taken on exceptions.

Xpress Money Transfer Transactions are limited to USD 5,000 or its equivalent in any foreign currency

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worldwide on our system platform as part of our enhanced risk-mitigation approach to combating money launderingandterroristfinancing.

Through our cooperation with regulators across Europe, we aim to maintain the highest operating standards to safeguard the interest of our customers, our shareholders, our agents and the communities where we operate. In conducting business with due skill, care and diligence, Xpress Money seeks always to comply with both the letter and spirit of relevant laws, rules, regulation, codes and standards of good practice. We are continuously updating our systems and technology and training our agents to assure thatwearewellequippedtocombatmoneylaundering,terroristfinancingandotherfinancialcrimes.We are fully committed to remaining constantly vigilant to prevent the use of our products and services by those who would abuse them.

3. The XM AML&CTF Program

Nearly all countries worldwide meanwhile have adopted regulations on combating money laundering. The Financial Action Task Force (FATF), a global task force, has developed 40 recommendations on combatingmoneylaunderingincluding9specificrecommendationsoncombatingterrorismfinancing(Now condensed into 40 New Recommendations in February 2012). These and other experiences from all countries in which XM is active are incorporated into the XM program which basically consists of seven measures. These at the same time are the global minimum standards applicable to all XM operations and their agents, and thus make sure that the principles set forth above are generally implemented. These instruments are: 1. Risk Assessment & Mitigation 2. Customer Due Diligence (otherwise known as KYC) 3. On-going monitoring of transactions 4. Anti-Money Laundering Training Program for Agents 5. Retention of records 6. Identifying and Reporting of Suspicious Activity 7. Independent review of the AML policies, principles and instruments.

Moneylaunderingandterrorismfinancingrisksmustbedealtwithusingrisk-basedapproach.The3rdEUAnti-MoneyLaunderingDirectiverequirethateachMSBmustadoptanew‘risk-basedapproach’toits customers, products and business practices.

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4. Risk Assessment & Mitigation

XMRiskprofilemaybeestablishedbothonthebasisofobjectivecriteriaandsubjectivecriteria.A‘riskrating’isgiventoeachcriterionbasedonthefollowingrankings:

Grading Risk Ranking1 Low Risk2 Low-Medium Risk3 Medium Risk4 Medium-High Risk5 High Risk

BelowaresummarizedsomeoftheoperationalrisksthathavebeenassessedandidentifiedwithinourCompany’sbusinessasonDecember2013.(subjecttoregularreviews):

Destination/Country Risks

Country Risk Factors Risk RankingUK This country is ranked 16 out of 180 with a risk factor CPI of

7.7from10includingtheconfidenceratingof7.2-8.1,whichvalidates our assessment of risk as low.

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India This Country is ranked 85 out of 180 with a risk factor CPI of 3.4from10includingtheconfidenceratingof3.2-3.6,whichvalidates our assessment of risk as medium.

3

Bangladesh This Country is ranked 147 out of 180 with a risk factor CPI of 2.1from10includingtheconfidenceratingof1.7-2.4,whichvalidates our assessment of risk as high.

5

Pakistan This Country is ranked 134 out of 180 with a risk factor CPI of 2.5from10includingtheconfidenceratingof2.0-2.8,whichvalidates our assessment of risk as high.

5

Sri Lanka This Country is ranked 92 out of 180 with a risk factor CPI of 3.2from10includingtheconfidenceratingof2.9-3.5,whichvalidates our assessment of risk as medium.

3

Indonesia This Country is ranked 126 out of 180 with a risk factor CPI of 2.6from10includingtheconfidenceratingof2.3-2.9,whichvalidates our assessment of risk as medium - high.

4

United Arab Emirates

This Country is ranked 35 out of 180 with a risk factor CPI of 5.9from10includingtheconfidenceratingof4.8-6.8,whichvalidates our assessment of risk as low -medium.

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USA This Country is ranked 18 out of 180 with a risk factor CPI of 7.3from10includingtheconfidenceratingof6.7-7.7,whichvalidates our assessment of risk as low.

1

Vietnam This Country is ranked 121 out of 180 with a risk factor CPI of 2.7from10includingtheconfidenceratingof2.4-3.1,whichvalidates our assessment of risk as medium - high.

4

Sudan This Country is ranked 173 out of 180 with a risk factor CPI of 1.6from10includingtheconfidenceratingof1.5-1.7,whichvalidates our assessment of risk as high.

5

Jamaica This Country is ranked 96 out of 180 with a risk factor CPI of 3.1from10includingtheconfidenceratingof2.8-3.3,whichvalidates our assessment of risk as medium.

3

Ghana This Country is ranked 67 out of 180 with a risk factor CPI of 3.9from10includingtheconfidenceratingof3.4-4.5,whichvalidates our assessment of risk as medium.

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Nigeria This Country is ranked 121 out of 180 with a risk factor CPI of 2.7from10includingtheconfidenceratingof2.3-3.0,whichvalidates our assessment of risk as medium - high.

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Nepal This Country is ranked 121 out of 180 with a risk factor CPI of 2.7from10includingtheconfidenceratingof2.4-3.0,whichvalidates our assessment of risk as medium - high.

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Philippines This Country is ranked 141 out of 180 with a risk factor CPI of 2.3from10includingtheconfidenceratingof2.1-2.5,whichvalidates our assessment of risk as high.

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Morocco This Country is ranked 80 out of 180 with a risk factor CPI of 3.5from10includingtheconfidenceratingof3.0-4.0,whichvalidates our assessment of risk as medium.

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Saudi Arabia This Country is ranked 80 out of 180 with a risk factor CPI of 3.5from10includingtheconfidenceratingof3.0-3.9,whichvalidates our assessment of risk as medium.

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Egypt This Country is ranked 115 out of 180 with a risk factor CPI of 2.8from10includingtheconfidenceratingof2.4-3.2,whichvalidates our assessment of risk as medium - high.

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Canada This Country is ranked 9 out of 180 with a risk factor CPI of 8.7from10includingtheconfidenceratingof8.4-9.1,whichvalidates our assessment of risk as low.

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Kuwait This Country is ranked 65 out of 180 with a risk factor CPI of 4.3from10includingtheconfidenceratingof3.3-5.2,whichvalidates our assessment of risk as medium.

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Malaysia This Country is ranked 47 out of 180 with a risk factor CPI of 5.1from10includingtheconfidenceratingof4.5-5.7,whichvalidates our assessment of risk as low -medium.

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It is company policy to consider and take note of any reports produced by the Financial Action Task Force (FATF)onML/TFrisksinparticularcountries.Thesearesubjecttoregularchangesandreviewsinlinewiththe source of this statistics at: www.fatf-gafi.org.

Transactions

How are they processed Risk Ranking

‘FacetoFace’ 1‘NonFacetoFace’ 4MSBRegistered‘FacetoFace’and‘NonFacetoFace’

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Size of Transaction Risk Ranking

Cash below GBP 600 1Cash GBP 600 to 3000 3Cash above GBP 3000 5

Customers

Retail Customers Risk Ranking

In a business relationship 1occasional customers 3one off customers 4

ID Provided (retail customers/directors/owners of MSB)

Type of ID Provided Risk Ranking

UK/EUPassports/drivinglicence(photocard)plusproofofaddress 1NonUK/EUPassportplusResidentVisaplusproofofaddress 3AnyotherformofotherID(‘unusualID’) 5

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Other Characteristics

Description Risk Ranking

Customer is a PEP 5Customerisnon-facetoface(firsttransaction 5Customer is sanctions list match 5Customerissendingmoremoneythanwouldbejustifiedbygiven employment status

5

Customer is sending money on behalf of a group of other people

5

Customer is otherwise behaving in an unusual way which may be suspicious(see below)

5

Unusual Activity which may be considered suspicious

•Splittransactions–thecustomerisattemptingtosplitalargetransactionsintoseveral smaller transactions to avoid obligations to provide ID or proof of source of funds •Newcustomerscarryingoutlargetransactions(asopposedtoregularcustomers) •Regularcustomerisprocessingtransactionswhichdonotmatchtheprofileofprevious transactions •Customersprocessingtransactionswhodonotappeartobelegitimateownersofthefunds (i.e. students processing large transactions) •Customersinvolvedintransactionswhichappeartobelinkedtotransactionsprocessedby other customers •CustomerswhocannotprovideIDwhenrequestedorwhoprovidefalseID •Customerswhocannotjustifysourceoffundswhenrequested •Customerisnotlocaltothebusiness,(butnotatourist) •Customerispayinginusednotesorinsmalldenominations •Transactionswherecustomerisaccompaniedbyanotherpersonwhotellshimwhattodo •TransactionswhichinvolvelargenumbersofGBP50notes •Thecustomeroperatesinahighriskareadealinginlotsofcash:restaurants,pubs,casinos, taxfirms,beautysalonsandamusementarcades •Customerswhoarenotnativetothecountrytheyaresendingmoney •Customerisprocessinglargevolumetransactionsincash,(ratherthansendingfundsfrom his personal bank account) •Thetransactionseemstobea“U-TurnTransaction”–Wherebythecustomertriessendback the money received to the same remitter or an attempt is seen to divert the funds to another country from where a further transfer is examined

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Risk Matrix - High, Medium and Low Risk CustomersItwillbetheresponsibilityoftheMoneyLaunderingReportingOfficer(MLRO)andtheAgent’sCompliancepersonnel to oversee all transactions which are processed. They will focus attention on high risk transactions (transactions with risk rating of 5).

Risk Ranking Summary of Red Flags Action by Compliance Officer

5 Sanctions List Match FreezetransactionandreporttoNational Crime Agency (NCA)

5 Customer previously reported to NCA and NCA withheld consent

FreezetransactionandreporttoNCA

5 Customer provides fake ID FreezetransactionandreporttoNCA

5 Customer previously reported to NCA and consent given

Freezetransactionpendingenhanceddue diligence check

5 Transaction being processed non face to face (and customer not previously identified)

Enhanced Due Diligence required

5 Cash transaction above GBP3000 (and no source of funds established)


5 Retail customer has sent cash transactions above GBP15000 within 12 month period (and no source of funds established)


5 Customer is PEP EDD required

5 Customer uses unusual ID to identfy himself

EDD required

5 Customer is processing level of transactions incompatible with work status

EDD required

5 Customer is demonstrating unusual behaviour (which may be suspicious)

EDD required

5 Customer is an MSB who is transacting outside anticipated parameters set at start of business relationship

EDD required

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5 Customer is an MSB and ownership isnotclear/MSBnotabletoverifyownership

EDD required

4 or less No action rquired

Therearenogloballyacceptedcriteriaorabindinglist,butthefollowingcustomerprofilesareespeciallyvulnerabletomoneylaunderingandthereforemustbealwayssubjectedtointensiveexamination: •Manufacturersofandtradersinarmsandammunition; •Businessmodelsinvolvinglargeamountsofcash; •Jewellers; •Tradersinluxurygoods; •Auctioneers; •Realestateagents; •Second-handcardealers; •Top-rankingpoliticiansandseniorgovernmentofficialsaswellastheirrelativePolitically ExposedPersons(PEPs); •Professionaltrusteessuchastaxconsultants,lawyers,trustees,notarieswhoactas aninterfacetotransactionprocessesandintegratetheirclients’moniesintothemoneyflow duringthe“Layer”phase; •Financialinstitutionssuchasoffshorebanks,letterboxcompanies,andsecretenterprises.

Products and services involving risks are those which: •Areidentifiedbytheregulatoryauthorities; •Enableparticipantstoremainanonymous;

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Section II Anti-Money Laundering Procedures (AML&CTF) for Agents operating in the UK

Applicable AML Regulations in the UK

All Money transmitters (whether Independent or Agents) providing XM regulated payment services and products in UK are bound by the following legal requirements and relevant provisions contained in:•MoneyLaunderingRegulations2007(asamended)•ProceedsofCrimeAct2002(PoCA2002)•Counter-TerrorismAct2008(CTA2000)•PaymentsServicesRegulation2009

TheUKMoneyLaunderingRegulation criminalizesmoney laundering related tonarcotics trafficking,fraud,forgery,embezzlement,andmembershipinaterroristorganization.Italsoincreasesduediligenceand reporting requirements for Payment Institutions like XM and its agents, and requires us to obtain customeridentificationfortransactionsconductedandverifythemaccordingly.XMortheirAgentsmustreport suspected money laundering to the National Crime Agency (NCA) XM Agents operating in UK must be aware of their regulatory obligations herewith highlighted for their guidance and compliance:

1.0 Appointment of Compliance OfficersEveryAgentmustappointacomplianceofficerwhowillactdirectlyascontactpersonfortheRegulatoryAuthorities(likeHMRC,FCAandHMT)andtheNationalCrimeAgency(NCA).Theofficermaybetheagenthimself(ifasoletrader)orastaffwithsufficientauthoritywhowillberesponsibleforthe following functions: •ImplementormonitortheimplementationandexecutionoftheprovisionsoftheAnti-Money Laundering Regulations, the directives issued by HMRC or FCA or other supervising entities and XM internal policies and procedures. •IdentifyandmakeSuspiciousTransactionReports(STR),investigateandreporttothe competent authorities, if required. •CoordinatewiththeRegulatoryAuthoritiesinmoneylaunderingandterroristfinancing issues and provide any information requested including relevant documentation and audits •MonitorAgentactivitiesandtakereasonablestepstoensurecompliancewiththeAML&CTF Policy & Procedures. •Monitoringday-to-daytransactionsoftheAgentforanyunusual/structured/suspicious/ blacklisted ones. •Performingmoreextensiveduediligenceforhighriskamounts/countries/customersand include proactive monitoring for suspicious activities. •EducatetheAgentandthefrontlinestaffregardingAnti-MoneyLaundering&Combating TerroristFinancingand‘KnowYourCustomer’procedures. •Ensureeffectivearrangementisinplacetocomplywithrecordkeepingrequirement. •LiaisewiththeXMappointedMLRObasedintheUKforsupportandguidanceregardingthe aforementioned functions

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1.1

XMMLROshallensurethatallnewlyappointedagentshavebeenpreviouslysubjectedto‘fitandpropertest’criteriabeforetheirappointment.Inapplyingthefitandpropertest,XMgenerallytakesintoaccountthefollowingfactors:theperson’sreputationandcharacter,theperson’sknowledgeandexperience,and past record, if any, of non-compliance or criminal activity. The XM MLRO contact details are given below for your information:

Adeleke AinaXM Money Laundering Reporting Officer (MLRO)E-mail: [email protected]: +44 207 478 0712

2.0 Customer Due Diligence and Monitoring of transactions

2.1 What is customer due diligence?

The UK Money Laundering Regulation requires all our Agents operating in the UK to perform the following Customer Due Diligence : •Toidentifyandverifytheidentityofcustomers; •Tokeepcopiesofidentityandverificationresults •Toobtaininformationonthetypeofbusinessrelationshiptheyhavewiththeircustomers, wherenotevident; •Toidentify,whereapplicable,the“beneficialowner”involvedinthebusinessortransaction andtakerisk-basedandadequatemeasurestoverifytheiridentity; •Tocontinuouslymonitorthebusinessrelationshipincludingtheupdateofthedocumentation in reasonable intervals.

The above instances MUST be done whenever any of the following occurs:

•Wheneverbusinessrelationshipistobeestablishedwithanycustomer •WhenevercashtransactioniscarriedoutthatwillbeinexcessofXMstipulatedlimitof £599.99ormultiple/splittransactionsaddingupto£600 •Wherethereisareasonforsuspicionofmoneylaunderingorterroristfinancingregardlessof the amount involved •Wheretherearedoubtsaboutpreviouslyobtainedcustomeridentificationinformation

2.2 Non-compliance with customer due diligence measures

Where an agent is unable to comply with the required CDD measures in relation to a customer as stated above, then the agent: •Mustnotcarryoutanytransactionforthecustomer •Mustnotestablishabusinessrelationship •Mustterminateanyexistingbusinessrelationshipwiththecustomer •MustconsidermakingareporttotheNationalCrimeAgency(NCA)eitherbyphoneorvia their on-line website

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If the problem is caused by the customer not having the “right” documents or information (perhaps because the person is financially excluded, i.e. not having any banking relationship), consideration should be given to whether there are any other ways of being reasonably satisfied as to the customer’s identity. If there are no grounds for making a report to NCA, the business should return any funds already received, ideally in a way that minimizes the risk of the returned funds being effectively laundered in the process. If the business decides that the circumstances give reasonable grounds for knowledge or suspicion of money laundering or terrorist financing, the agent must contact the XM MLRO for guidance.

2.3 Identifying the beneficial owner

2.3.1 General legal requirements:A“beneficialowner”istheindividualbehindthecustomerwhoultimatelyownsorcontrolsthecustomeror, as the case may be, the person who causes a transaction to be executed or on whose behalf a transaction or activity is ultimately being conducted or the business relationship is being established.

TheRegulationrequiresagentstoidentifythe“beneficialowner”ofthecustomerfundsandtakerisk-based and adequate measures to verify his identity. These due diligence obligations are slightly different from the obligation to verify the identity of customers in that there is no requirement, when identifying beneficialowners,forverificationtobedoneonthebasisofdocuments,dataorinformationobtainedfrom a reliable and independent source. We must only take risk-based and adequate measures with theobjectiveofsatisfyingitselfthatitknowswhothebeneficialowneris.

Where there are difficulties in independently verifying information provided on beneficial owners, the businesses should review the information provided by the customer and seek further evidence, where considered necessary. A decision should then be made, based on the information provided on the beneficial owner(s), the rationale for the transactions and the risks involved, as to whether the evidence of identity of the beneficial owner is satisfactory to enable the business relationship to be established or the occasional transaction to be carried out.

2.3.2 Beneficial owners of corporate bodies: Thebeneficialownersofcompanies(bodiescorporateaswellaspartnerships)aretheindividualswhoultimately own or control (whether direct or indirect) more than 25% of the shares or voting rights in the company.

2.3.3 Beneficial owners of incorporated foundations and of any construct managing assets on a trust basis as well as similar constructsThismeansanyconstructswhereassetsarecollectedormanagedjointlyorbyathirdparty(trustee)andwhereboththeassetsandtheincometherefromisintendedforthebenefitofthedepositorsthemselvesoranythirdparties.Inthesecasesthebeneficialowneris: •Anyindividualcontrollingatleast25%oftheassets;orwhois •Thebeneficiaryof25%ormoreoftheassetsundermanagement;or •Thegroupoffuturebeneficiaries,iftheultimatebeneficiaryhasnotyetbeendetermined;or •Anyindividualwhootherwisecontrolstheassetsundermanagement.

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2.4 Enhanced due diligence (EDD) General legal requirements: Agents are required to apply enhanced due diligence measures on a risk-sensitive basis: •Whenthecustomerhasnotbeenphysicallypresentforidentificationpurposes •Inrespectofabusinessrelationshiporoccasionaltransactionwitha“politicallyexposed person” (PEP) •Ifanyofregulatoryagencydirectsthatsuchmeasuresshouldbeapplied •Inanyothersituationwhichbyitsnaturecanpresentahigherriskofmoneylaunderingor wherethespecificcircumstancesofatransactionaredubiousorunusual.The measures to be taken will depend on the situation which triggers enhanced due diligence.

2.4.1 Non face-to-face customersWherethecustomerhasnotbeenphysicallypresentforidentificationpurposes,specificandadequatemeasures must be taken to compensate for the higher risk. The Regulations requires the following: •Avalidofficialidentificationdocument(Government-issuedidentitycardorpassport,UKorEU memberstateDriversLicence)musthavebeenpresentedinoriginalorcertifiedcopymusthave been provided. In such case the initial transaction must originate from an account opened in the name of the customer with a credit institution (Banks). •TheverificationofidentitybyadigitalproofofidentitypursuanttoJMLSGguidanceisalso possible. •PoliticallyExposedPersons.Enhancedduediligencemeasuresmustbetakenforthese persons, too. Such measures are discussed in more detail further below

2.5 Nature and purpose of the business relationship

The purpose of obtaining information on the customer is to build a base-line of knowledge of the customer and his business. Understanding the purpose of the transactions, the source and destination oftheremittedfunds,andthenatureofthecustomer’sbusiness,enablesustohavesomeexpectationregardingthesizeandfrequencyoftransactions.Wecanthenidentifyunusualtransactionsthatrequirescrutiny to decide whether further customer due diligence measures or suspicious activity reporting action is necessary. Useful information could include: •Thecustomer’slineofbusinessorwork •Thepurposeofthetransactions •Theexpectedfrequencyoftransactions •Thenatureofthepayer’srelationshipwiththepayee •Othergeneralcircumstancesofthecustomer.

For business customers, further information includes: •Turnoverofthebusiness,itssize,anditsnumberofagents •Lengthofestablishment.

As the nature of this information is likely to change over time, the law requires a process of review and updating of information about the nature and purpose of the relationship where this changes over time.

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2.6 Customer Identification

2.6.1 Individuals: For natural persons the following information should be obtained, where applicable: All relevant details of the ID should be taken on record such as •legalname(asappearinginprimaryID)andanyothernamesused(suchasmaidenname); •correctpermanentaddress(thefulladdresswithpost-codeshouldbeobtained;aPostOffice boxnumberisnotsufficient); •telephonenumber,faxnumber,ande-mailaddress; •dateandplaceofbirth; •nationality; •IDnumber,DateandPlaceofIssue/Country&DateofExpiry; •occupation(employedorself-employed),publicpositionheldand/ornameofemployer; •anofficialpersonalidentificationnumberorotheruniqueidentifiercontainedinanunexpired officialIDdocument(e.g.passport,identificationcard,residencepermit,socialsecurityrecords, drivinglicence)thatbearsaphotographofthecustomer;

The photocopy of the document is to be stamped “True copy of the Original” and signed by the attending agents. Examination of the documents should be carried out carefully and satisfied as to the following: •validityoftheID •hisphysicalappearanceshouldmatchwithphotoidentity •originalsignatureshouldmatchwiththatfoundontheID

Before conducting any transaction, the Agent shall identify the customers with any one or more of the original documents referred hereunder: •confirmingthedateofbirthfromanofficialdocument(e.g.birthcertificate,passport,identity card,socialsecurityrecords); •confirmingthepermanentaddress(e.g.utilitybill,taxassessment,bankstatement,aletter fromapublicauthority); •contactingthecustomerbytelephone,byletterorbye-mailtoconfirmtheinformationsupplied after an account has been opened (e.g. a disconnected phone, returned mail, or incorrect e-mail addressshouldwarrantfurtherinvestigation);

Please see Appendix I for summary of XM Money Transfer Requirements

2.6.2 Corporate Entities

For corporate entities (i.e. corporations and partnerships), the following information should be obtained: •Nameofthecompanyorotheridentifiers; •Legalformofthecompany; •Fullname(s)ofthemember(s)ofthecompany’srepresentativebodiesorofthelegal representative(s). If any of such members or representatives itself is a body corporate, the appropriate information must be obtained on them too •Principalplaceofcompany’sbusinessoperations; •Mailingaddressofcompany;

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•Someformofofficialidentificationnumber(e.g.companyregistrationnumber); •Extractfromarelevantregister(company,association,cooperative,partnershipregister,etc.); •TheoriginalorcertifiedcopyoftheCertificateofIncorporationandMemorandumandArticles ofAssociation; •Identificationofthosewhohaveauthoritytooperatetheaccount; •Natureandpurposeofbusinessanditslegitimacy.

You should verify this information by the following methods:

•Forestablishedcorporateentities-reviewingacopyofthelatestreportandaccounts(audited, ifavailable); •Undertakingacompanysearchand/orothercommercialenquiriestoseethattheinstitution hasnotbeen,orisnotintheprocessofbeingdissolved,struckoff,wounduporterminated; •Utilizinganindependentinformationverificationprocess; •Obtainingpriorbankreferences; •Visitingthecorporateentity; •Contactingthecorporateentitybytelephone,mailore-mail.

2.7 Documentary evidence

2.7.1 Natural Persons ThefollowingdocumentsareacceptableformofidentificationundertheUKregulations: •Documentsissuedbygovernmentdepartmentsandagencies,orbyacourt,then •Documentsissuedbyotherpublicsectorbodiesorlocalauthorities,then •Documentsissuedbyregulatedfirmsinthefinancialservicessector

We should recognise that some documents are more easily forged than others. If suspicions are raised in relation to any document offered, we should take whatever practical steps are available to establish whether the document offered has been reported lost or stolen.

The identity card or an official substitute document bearing a photograph.

Any other documents must only be accepted as proof of identity after a thorough investigation of the individualcaseandonlyifthereasonwhynoofficialdocumentsexistcanbeestablishedsatisfactorily.

Checks on photo ID may include: •Visuallikenessagainstthecustomer •Doesthedateofbirthontheevidencematchtheapparentageofthecustomer? •IstheIDvalid? •Isthespellingofnamesthesameasonotherdocumentsprovidedbythecustomer?

Checks on secondary evidence of ID may include: •DotheaddressesmatchtheaddressgivenonthephotoID? •DoesthenameofthecustomermatchwiththenameonthephotoID?

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Consideration should be given as to whether the documents relied upon may be forged. In addition, if a business chooses to accept documents that are in a foreign language, appropriate steps should be taken tobereasonablysatisfiedthatthedocumentsinfactprovideevidenceofthecustomer’sidentity.

2.7.2 Corporate customers

The following must be considered additionally with regard to corporate customers The structure, ownership, purpose and activities of many corporates will be clear and understandable. Some use complex ownership structures which can increase the steps to be taken to be reasonably satisfiedastotheiridentitiesbutthisdoesnotnecessarilyindicateariskofmoneylaunderingorterroristfinancing.Theuseofcomplexstructureswithoutanobviouscommercialpurposemay,however,giverisetoconcernandindicateanincreasedriskofmoneylaunderingorterroristfinancing.To the extent consistent with the risk assessment carried out a business should ensure that it understandsthecompany’slegalform,structureandownership,andshouldobtainsufficientadditionalinformationonthenatureofthecompany’sbusiness,andthereasonsforseekingtheproductorservice.In general the structure, ownership, purposes and activities of many private companies will be clear and understandable.

Thestandardevidenceinthesectionaboveoncorporatecustomersshouldbeobtainedandverified,plus, additionally and as far as not already done, the following information should be obtained and verified:Namesofalldirectors(orequivalent)Namesofbeneficialownersholdingover25%Names of all executives (or equivalent).

2.8 Electronic evidence

MostcustomerswholiveintheUKwillhavebuiltupanelectronic“footprint”,i.e.aprofileofchecksthathave been made, for example by utility providers, telephone companies, credit agencies, banks etc. Over time, individuals build up a score which is based on the number of checks made, the range of sources theinformationhasbeenverifiedfrometc.Itisthescorethatdeterminesthereliabilityoftheelectronicinformation held. We can access these records, either directly or through an independent third party organisation, and use themasawayofconfirmingcustomers’details.Thiscanprovideausefulbasisforhavingconfidenceinacustomer’sidentity.N.B.Checksmadeforthispurposedon’trequirethecustomer’spermissionbuttheymust be informed that the check is to take place.

Please see Appendix II for detail listing of XM Acceptable form of Identity

2.9 On-going monitoring

The regulations require XM and Agents to put a system in place that will facilitate the review and monitoringofthemoneylaunderingandterroristfinancingriskstothebusiness.Therisk-basedapproachby the business will be informed by the monitoring of patterns of business, for example: •Asuddenincreaseinbusinessfromanexistingcustomer •Uncharacteristictransactionswhicharenotinkeepingwiththecustomer’sknownactivities

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•Peaksofactivityatparticularlocationsoratparticulartimes •Unfamiliaroruntypicaltypesofcustomerortransaction.

Agents must ensure that appropriate controls are put in place to lessen these risks and prevent the businessfrombeingusedformoneylaunderingorterroristfinancing.Managing and mitigating the risks will involve: •Applyingcustomerduediligence(KnowYourCustomer)measurestoaskforandverifythe identityofcustomersandanybeneficialowners •Obtainingadditionalinformationonhigherriskcustomers •Conductingon-goingmonitoringofthetransactionsandactivityofcustomerswithwhomthere is a business relationship •Havingamethodtoidentifyandcheckunusualtransactionstodeterminewhetherthereare reasonablegroundsforknowingorsuspectingthatmoneylaunderingorterroristfinancingmay be taking place. •Agentsawarenessandtraining •Keepingrecordsofidentity,verificationandothersupportingrecordsforaminimumof5years beginning on the date from which a transaction is completed Examples of risk-based control procedures may include: •Introducingcustomeridentificationandverificationproceduresatalowermonetarylevel than the minimum set out for occasional transactions in the Money Laundering Regulations in circumstances where the customer or other characteristics of the transaction are in a higher risk category. This applies to all cases of cash transfer of £600 and above •RequiringIDevidence–whetheritbedocumentary,electronicorthirdpartyAssurance–tobe of a certain standard •Requiringadditionalevidenceofidentityinhigherrisksituations.E.g.sourceoffundsfor transactions above £2000 •Moreextensiveduediligencechecks,forexample,onsourceoffundsforhigherriskcustomers •Varyingthelevelofmonitoringofcustomertransactionsandactivitiesaccordingtoidentified risk to identify transactions or activities that may be unusual or suspicious.

2.10 Other higher risk situations:

2.10.1 Politically exposed persons (PEPs) Underthedefinition,apoliticallyexposedpersonisapersonwho: •Isorhasinthepastbeenentrustedwithaprominentpublicfunctionby– (i) A state other than the UK (ii) A Community institution (e.g. the European Parliament) or (iii) An international body (e.g. the U.N.) or •Isanimmediatefamilymemberora“knowncloseassociate”ofsuchaperson.Prominent public functions include: •Headsofstateorgovernment,ministersanddeputyorassistantministers,statesecretaries, Members of parliaments, Members of supreme or constitutional courts, or other high level judicialbodiesthedecisionsofwhichcannotbeappealedagainstanymore;Membersof courts of auditors or the board of central banks •Ambassadors,chargesd’affairesandhigh-rankingofficersinthearmedforcesand •Membersoftheadministrative,managementorsupervisorybodiesofState-owned enterprises.

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An “immediate family member” includes: •Aspouse •Apartner •Childrenandtheirspousesorpartnersand •Parents.A “known close associate” includes: •Anyindividualwhoisknowntohavejointownershipofalegalentityorlegalarrangement,or any other close business relations, with a person referred to in the above bullet points and •Anyindividualwhohassolebeneficialownershipofalegalentityorlegalarrangementwhichis knowntohavebeensetupforthebenefitofapersonreferredtointheabovebulletpoints.

How can a PEP be identified? We must identify when a customer with whom we propose to have a business relationship or carry out an occasional transaction is a PEP. Where there is a risk that such a customer may be a PEP, we should make appropriate enquiries by, for example, asking the customer for background information, researching publicly available information via the internet, or, if the risk is substantial, consulting a commercial website listing PEPs. If there is doubt about whether the customer is a PEP, the customer should be treated as high-risk. In deciding whether a person is a known close associate of a PEP businesses need only have regard to information that they hold or is publicly known.

What customer due diligence measures must be applied to PEPs? When we propose to have a business relationship with, or conduct occasional transactions with a politically exposed person we must apply enhanced due diligence measures on a risk-sensitive basis. They must: •Haveseniormanagementapprovalforestablishingabusinessrelationshipwithsuchaperson •Takeadequatemeasurestoestablishthesourceofwealthandsourceofthefundsinvolved •Conductenhancedon-goingmonitoringofthebusinessrelationship.

2.10.2 Enhanced Due Diligence Enhanced due diligence measure are applied in situations which by their nature can present a higher riskofmoneylaunderingorterroristfinancing.Wemustbecapableofidentifyingsuchsituationsandappropriate enhanced due diligence measures must be applied to mitigate the risk involved. For example, enhance due diligence measures could include: •Obtainingdetailsofthesourceofthecustomer’sfundsandthepurposeofthetransactions •Obtainingadditionalevidenceofidentity •Applyingsupplementarymeasurestoverifyorcertifythedocumentssuppliedorrequiring certificationbyacreditorfinancialinstitution •Ensuringthatthefirstpaymentoftheoperationsiscarriedoutthroughanaccountopenedin thecustomer’snamewithacreditinstitution.

2.10.3 Blacklisted Entities and Individuals XM shall continually obtain information of Black Listed Entities and Individuals from the enforcement authorities and international Agencies and update the same in the system.All transactions irrespective of the amount shall be scanned against the Blacklist database. If there is any namematchofthecustomer/beneficiary,thetransactionshallbeimmediatelysuspendedforenhancedduediligencechecks.Thecustomer/beneficiarydetailsofthesuspendedtransactionshallbecheckedagainst the blacklist database and if different, shall be revoked. If there is an exact match, the

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transaction shall be blocked and reported to the NCA.

The FATF recommends that special attention should be given to business relations and transactions withpersonsincludingcompaniesandfinancialinstitutionsfromthe“Non-CooperativeCountriesandTerritories” (NCCT). Incasethereisanydoubtthatatransactionismeantforterrorismorterrorismorganizationorterroristpurposes,XMshallfreezethetransactionandinformtheNCAinwritingimmediately.

3.0 Anti-Money Laundering Training for Agents

3.1XMshallprovideperiodicanti-moneylaunderingandcounterterroristfinancingtrainingtotheirAgents.Agentsshouldalsobeawareoftheirownpersonallegalobligations/responsibilitiesundertheregulations and that they can be personally liable for failure to train their frontline staff.

The training shall include the following: •ResponsibilityoftheAgentsundertheMoneyLaunderingRegulationsforobtainingsufficient evidenceofidentity,recognizingandreportingknowledgeorsuspicionofmoneylaunderingand terroristfinancing. •DutiesandresponsibilitiesoftheAgents(asperXMGlobalAML/CTFpolicyandtheprocedures for UK.) •Procedureforreportingofsuspicioustransactions. •Potentialeffectonthecompany,onitsagentsandcustomersifthereisanybreachoflawor regulation. •Waystoidentifysuspicioustransactions. •RecordRetention.

3.2AML&CTF are also covered in the introductory training given to new agents. New agents, who will be dealing with customers or their transactions, irrespective of the level of seniority, shall have a general appreciation of the background about money laundering, the consequent need to be able to identify suspicious transactions and report such transactions to the appropriate designated XM MLRO, and the offence of “tipping off”. They shall be made familiar with the legal requirement and their personal statutoryobligationtoreportsuspicioustransactionsrelatingtodrugtraffickingorotherindictableoffences.

4.0 Retention of Records General legal requirements We will only be successful in demonstrating our compliance with the requirements of the regulations through keeping evidence and records of a. Due diligence checks made and b. Information held on customers and transactions.

These records may be crucial in any subsequent investigation by NCA, the police or HMRC. They will enable the business to produce a sound defence against any suspicion of involvement in money launderingorterroristfinancing,orchargesoffailuretocomplywiththeRegulations.

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The records that must be kept The records that must be kept are: •Acopyof,orthereferencesto,theevidenceofthecustomer’sidentityobtainedunderthe customer due diligence requirements in the Regulations. Clear copies of the forms ofidentificationpresentedbycustomers,orarecordofwheretheycanbeobtained,shouldbe retained. •Thesupportingevidenceandrecordsinrespectofthebusinessrelationshipsandoccasional transactionswhicharethesubjectofcustomerduediligencemeasuresoron-goingmonitoring. Records must be kept and should include the name and address of the customer.

Inrelationtotheevidenceofacustomer’sduediligencebusinessesmustkeepthefollowingrecords: •Allcopiesofdocumentsacceptedandverifiedasevidenceforconductofduediligenceand •AllotherReferencestotheevidenceofcustomer’sidentity •Transactionandbusinessrelationshiprecords(e.g.accountfiles,relevantbusiness correspondence, daily log books, receipts, cheques etc.) should be maintained in a form fromwhichasatisfactoryaudittrailmaybecompiled,andwhichmayestablishafinancialprofile of any suspect account or customer.

How long the customer due diligence records must be kept? Evidence of customer’s identity records must be kept for five years beginning from the end of the year during which the date of completion of the transaction or the termination of the business relationship occurred. The same retention period applies to records of transactions (whether undertaken as occasional transactions or part of a business relationship).

In what format must the records be kept? Records may therefore be kept: •Bywayoforiginaldocuments •Bywayofgoodphotocopiesoforiginaldocuments •Inscannedform •Incomputerisedorelectronicform.

It must be ensured, however, that the data stored electronically is consistent with the original document.

5.0 Identifying and Reporting of Suspicious Activity -

Suspicious Activity reporting to the National Crime Agency (NCA)

5.1 General legal and regulatory obligationsAll agents are required to disclose information to the XM MLRO when they Know or suspect or have reasonable grounds for knowing or suspecting that another person is engaged inmoneylaunderingorterroristfinancing

MLRO will determine whether the information received gives rise to knowledge or suspicion or reasonable groundsforknowledgeorsuspicionofmoneylaunderingorterroristfinancingbeforereportingtotheNational Crime Agency (NCA).

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5.2 Internal reporting proceduresAllagentsmustreportsuspiciousactivitytotheXMMoneyLaunderingReportingOfficer.A report will be made as soon as a decision is made that there are reasonable grounds to suspect money laundering. Suspicion may arise before or after a transaction takes place. BeforedecidingtomakeareporttoNCA,theMLROwillneedaccesstoallthebusiness’srelevantrecords. The agents should inform •Thefinancialcircumstancesofthecustomerorapersononwhosebehalfthecustomeris acting and •Thedetailsofthetransaction.Inaddition,theMoneyLaunderingReportingOfficerwill: •Considerthelevelofidentityinformationheldonthecustomerandanyinformationheldonhis personal circumstances that might be available to the business and •Reviewothertransactionpatternsandvolumesthroughtheaccountandanyotheraccountsin the same name.

TheMoneyLaunderingReportingOfficershouldalsotakeintoconsiderationanyadditionalriskswherethecustomerislocatedoutsidetheUK,particularlyifthecustomerislocatedinahigh-riskjurisdiction.IftheMoneyLaunderingReportingOfficerdecidesnottomakeareporttoNCA,thereasonsfornotdoingso should be clearly documented or recorded electronically, and retained with the internal suspicion report.

Please see Appendix III for Suspicious Transaction Report (STR) form to be used by agents.

5.3 Consent to a transactionWhereacustomer’stransactionrequestraisesgroundsforsuspicionofpotentialmoneylaunderingorterroristfinancingactivity,consentmustbesoughtfromNCAbeforethetransactioniscompleted,unlessit is not practicable to do so (see below). We have to give a written report to NCA containing the suspicious transaction and the background which gives reason for the suspicion. A suspicious transaction can in cases of urgency be reported by phone (then a written report as to be followed up as soon as possible).

Beginning the day after NCA receives the report it has seven (7) working days to react (Monday-Friday deemed as working day). If there is no explicit response or consent from NCA to perform the reported transaction within seven working days, the transaction can proceed, although good practice should includefurthercontactwiththeNCAtoensureanoticeofrefusalhasn’tbeensent.

If it is not possible to suspend a transaction in order to obtain the reporting procedure, for reasons of urgencyorbecausethereportprocedurewouldhinderthetracking/prosecutionofthebeneficiariesofthe transaction, a suspicious activity report must be submitted as soon as possible after the transaction is completed. You will need to demonstrate that you have a good reason for not seeking prior consent to the transaction.

Ifyouareunabletoprovideadequatejustificationfornotperformingthereportingprocedureyoumaybeliable to prosecution under the Proceeds of Crime Act. In any case not to report a suspicious transaction makes you liable to prosecution under this Act.

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5.4 Tipping OffAgents or Staff must not tell a customer: •Thatatransactionwas/isbeingdelayedbecauseconsentfromNCAhasbeenrequested •Thatdetailsoftheirtransactionsoractivitieswillbe/havebeenreportedtoNCA •Thattheyarebeinginvestigatedbylawenforcement.

To act against this obligation may be liable to prosecution too. However, reasonable enquiries of a customer concerning the background to a business or transaction, as part of customer due diligence checks will not give rise to a tipping-off offence.

5.5 Suspicion indicators The following lists are not exhaustive but set out some of the main indications that a transaction is suspicious.

5.5.1 New customers and occasional or “one-off” transactions: •Checkingidentityisprovingdifficult •Thecustomerisreluctanttoprovidedetailsoftheiridentity •ThereisnogenuinereasonforthecustomerusingtheservicesofanMSB •Acashtransactionisunusuallylarge •Thecashisinusednotesand/orsmalldenominations •Thecustomerrequestscurrencyinlargedenominationnotes •Thecustomerwillnotdisclosethesourceofcash •Theexplanationforthebusinessand/ortheamountsinvolvedarenotcredible •Aseriesoftransactionsarestructuredjustbelowtheregulatorythresholdforduediligence identity checks •Thecustomerhasmadeanunusualrequestforcollectionordelivery •Transactionshavingnoapparentpurposeorwhichmakenoobviousfinancialsense,orwhich seem to involve unnecessary complexity •Unnecessaryroutingoffundsthroughthirdparties.

5.5.2 Regular and established customers •Thetransactionisdifferentfromthenormalbusinessofthecustomer •Thesizeorfrequencyofthetransactionisnotconsistentwiththenormalactivitiesofthe customer •Thepatternoftransactionshaschangedsincethebusinessrelationshipwasestablished •Moneytransferstohigh-riskjurisdictionswithoutreasonableexplanation,whicharenot consistentwiththecustomer’susualforeignbusinessdealings •Suddenincreasesinthefrequency/valueoftransactionsofaparticularcustomerwithout reasonable explanation.

5.5.3 Examples where customer identification issues have potential to indicate suspicious activity •Thecustomerrefusesorappearsreluctanttoprovideinformationrequested •Thereappearstobeinconsistenciesintheinformationprovidedbythecustomer •Thecustomer’sareaofresidenceisinconsistentwithotherprofiledetailssuchasemployment •Anaddressappearsvagueorunusual •Thesupportingdocumentationdoesnotaddvaliditytotheotherinformationprovidedbythe customer

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•Thecustomerisinahurrytorushatransactionthrough,withpromisestoprovidethe information later.

5.5.4 Examples of activity that might suggest to agents that there could be potential terrorist activity •Thecustomerisunabletosatisfactorilyexplainthesourceofincome •Frequentaddresschanges •Mediareportsonsuspectedorarrestedterroristsorgroups.

TheCompany’sdirectors,officersandagentsmustnotwarnorinformtheircustomerswheninformationrelatingtothemarebeingreportedto/investigatedbytherelevantauthorities.

By ignoring key indicators on money laundering/terrorist financing, an agent is considered to have directly partaken in such a scheme through “wilful blindness”. Wilful Blindness is a situation when an agent, or staff becomes suspicious about a customer / transaction but did not report his/her suspicions, even though he/she is aware that the transaction is of an illegal nature or that the purpose of the customer’s transaction is for money laundering/terrorist financing.

6.0 Supervision & Penalty for Non-Compliance

6.1 Administrative Supervision •ThecompetentregulatoryauthorityfortheenforcementoftheAMLregulationsforMoney Transmission Companies in UK will continue to be the HM Revenue & Customs •ThecompetentregulatoryauthorityfortheregulationofpaymentservicesprovidedbyMoney Transmission Companies in UK under the Payment Services Directive will continue to be the Financial Conduct Authority (FCA) •OurAgentsandStaffshall,uponrequestandfreeofcharge,provideHMRCorFCAaswell as persons and institutions working under them, with information on all business matters and shall produce any documents relevant to compliance with the requirements laid down in the UK Money Laundering Regulations. •HMRCorFCAmayalso,withoutspecificreason,conductexaminationsofcompliancewithAML requirementsattheofficesorpremisesoftheAgentatanytimeduringbusinesshours. •TheAgentsareadvisednottorefusetoprovideHMRCorFCAwithanyinformation in response to any questions the answering of which would place them as liable to criminal prosecution or proceedings under the Regulation •XMwillregularlyprovideAgentCompanywithup-to-dateinterpretationandpracticenotesto implement the due diligence requirements and internal controls and safeguards as set forth in the UK regulation. • XM should be notified in good time prior to changes regarding the Agent’s activities in UK as well as changes in the name, address and registered office details. The changes should be notified to XM well before the actual effective date the changes take effect.

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6.2 Fines & Penalties An administrative offence shall be deemed to be committed by any Staff or Agent who wilfully or gross negligently: •failstoidentifythecontractingpartyorcustomercorrectly,completely,intheprescribed manner, in due time or at all times or fails to identify the customer when accepting cash transaction in the prescribed manner consistent with the regulations describedinthisdocumentandinaccordancewiththeUKAMLregulation; •failstoestablishclarityregardingtheexistenceofabeneficialowner,orfailstodosocorrectly, completelyorinduetime; •failstoestablishthenameofthebeneficialowner; •failstoverifytheidentityofthecustomercorrectly,completelyoratall,orfailstoensurethat thefirsttransactioniscarriedoutfromanaccountopenedinthenameofthecustomer; •failstorecordanydataorinformationcorrectly,completelyoratall; •failstokeeprecordsandotherevidenceforatleastfiveyearsoratall; •failstofileareportcorrectly,completely,induetimeoratall; •disclosesinformationtothecustomerorinstructingpartyoranythirdparty; •failstoprovideanyinformationcorrectly,completelyoratallorfailstoproduceanydocuments correctly,completely,induetimeoratall;orfailstotolerateanymeasurespecifiedthereunder.

The administrative offence may incur up to between 2 – 5 years imprisonment and/or an unlimited fine.

7.0 Independent review of Anti-Money Laundering ProgramThe MLRO will conduct independent review of the AML Procedures on a regular basis His review will cover the following areas: •CustomerRegistration •Outward&inwardTransfers •On-goingmonitoringreviews •Qualityofrecordkeeping •SuspiciousTransactionReporting •AgentStaffTraining •CustomerSatisfaction

Apart from this the XM internal auditors shall conduct their periodical AML audit separately.

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APPENDICES

Appendix I - Summary of XM Money Transfer Requirements

Agents are to ensure that the following requirements are correctly recorded in the system (and copies retained where applicable) at the time of processing the transfer:

SEND TRANSACTIONS (BELOW £600) (a)Sender’sfullnameandaddress (b)Sender’stelephonenumber (c)Receiver’sfullname,addressandtelephonenumber (d) Details of valid photo ID of the Sender to be incorporated in each transfer instruction. (e) Purpose of transfer and Source of fund details (f) Signature of the Sender and Agent

SEND TRANSACTIONS (£600 TO £1999.99) (a)Sender’sfullnameandaddress (b)Sender’stelephonenumber (c)Sender’svalidphotoidentificationnumber,type,issuingstate/country(copy of ID to be retained by agent) (d)Receiver’sfullname,addressandtelephonenumber. (e) Purpose of transfer and Source of fund details (f) Signature of the Sender and Agent

SEND TRANSACTIONS (£2000 and above) (a)Sender’sfullnameandaddress (b)Sender’stelephonenumber (c)Sender’sphotoidentificationnumber,type,issuingstate/country(copy of ID to be retained by agent) (d)Sender’sDateofbirth&occupation (e) Purpose of Remittance to be recorded (supporting documents to be provided in case of “business”) (f) Source of Remittance to be recorded (proof to be provided and copy retained by agent) (g)Receiver’sfullname,addressandtelephonenumber (h) Signature of the sender and Agent

RECEIVE TRANSACTIONS (ALL AMOUNTS) (a) XPIN number (b)Receiver’sfullname,addressandtelephonenumber (c)Receiver’sphotoidentificationnumber,type,issuingstate/country(copy to be retained with the application) (d)Sender’snameandtheamounttobetakenfromthereceiverforcrosscheckingthedetails. (e) Signature of the receiver (f)Apartfromtheabove,anyotherrequirementofthelocallawstobefulfilled.

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Appendix II - XM Acceptable Form of Identity

Primary ID Secondary ID

a. EU/UK Government-Issued documents with a photograph:

- Valid Passport(Ifthepassportisnon–EU,validresidentpermitissuedbyHomeOfficetoberequestedinaddition.)

None

Valid photocard driving licence (full or provisional)

None

IDcardissuedbytheelectoralofficeofN.Ireland

None

b. UK Government-Issued documents without a photograph:

ValidoldstylefullUKDriver’sLicence+secondary ID

Any National passport or any form of ID with photograph

Recent evidence of entitlement to state or localauthorityfundedbenefit,taxcredit,pensionorothergrant+secondary ID


CourtOrder+secondary ID Any National passport or any form of ID with photograph

Currentcounciltaxdemandletter+secondary ID


Currentbankorcredit/debitcardstatement+secondary ID


OriginalUtilitybills(notprintedoffinternet)+secondary ID


c. ID requirement for financially-excluded customers

EconomicMigrants-Nationalpassports+secondary requirement

Any other utility documents to show proof of address in the UK

Refugees-Immigrationstatusdocument+secondary requirement

Any other utility documents to show proof of address in the UK

Asylum seekers - IND Application Registration Card+secondary ID


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Appendix III – Suspicious Transaction Reports (STR) Form to be used by Agents

PrivateandConfidential

SUSPICIOUS ACTIVITY REPORT (SAR)

To:XMMoneyLaunderingReportingOfficer

From:........................................................................ (name of Agent)

Phone # of Agent:

Date:

This SAR (underline which applies) is:

1. A request for consent for a transaction which is not yet completed Yes / No

2. A report on a transaction which has taken place which I consider suspicious Yes / No

3. Report on other person or business related activity which I consider suspicious Yes / No

I consider the following transaction suspicious and report to you under the XM internal reporting procedure.

1) Date of transaction :

2) Amount involved (if any):

3) Name of suspected person or business*:

4) Address of suspected person or business*:

5) Date of Birth (if known):

6) Transaction number (if any):

7) Please state your reason for suspicion*:

__________________________

Signature of Agent

Signature not necessary if you are sending this report as email attachment

*It is compulsory you provide this information

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Appedix IV - Xpress Money Source Of Fund Declaration ForM

Agent Name Agent Code

Agent Address

Sender’s Name

Sender’s Address

Transfer Amount in GBP

Transfer Destination

Sender’s Signature Agent’s Signature

Proof providedSource of the money (please tick where applicable)

i.Salary/wagesfromEmployment

ii. Income from Self Employment

iii.Gift/Donation

iv. Other sources (please state)

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Appendix V – Documentation Checklist for Agents Application

1) Sole Proprietorship Firm a)Govt-IssuedPhotoidentificationdocumentoftheProprietorandtheWitness(Whosignsthe contract).EvidenceofAuthorizationtoworkintheEUcountrymustbeincluded. b) Proof of business and personal Addresses (Utility Bill such as BT, Gas, Electricity or Council Tax or Bank Statement) c) Duly Completed information sheet d)DulyCompletedAMLQuestionnaire e) Duly completed Agent KYC Check list f)DulycompletedCertificationofCompliance g)Agent’sInternalAML/CTFPolicies&ProceduresandcontrolsinplaceforthepreventionofMoney Laundering and Terrorist Financing. h) Business Licence required for EU Agents

2) Partnership Firm a)Govt-IssuedPhotoidentificationdocumentoftheProprietorandtheWitness(Whosignsthe contract).EvidenceofAuthorizationtoworkintheEUmustbeincluded b) Proof of business and personal Addresses (Utility Bill such as BT, Gas, Electricity or Council Tax or Bank Statement) c) Duly Completed information sheet d) Partnership Deed e) Authority letter to sign agreement (if it is not cleared by partnership deed) f)DulyCompletedAMLQuestionnaire g) Duly completed Agent KYC Check list h)DulycompletedCertificationofCompliance. i)Agent’sInternalAML/CTFPolicies&ProceduresandcontrolsinplaceforthepreventionofMoney Laundering and Terrorist Financing. j)BusinessLicencerequiredforEUAgents

3) Private Limited Company a)CertificateofIncorporation b) Memorandum & Article of Association c) Board Resolution (only if there are 2 or more directors) d)Govt-IssuedPhotoidentificationdocumentofDirector(s)andtheWitness.Evidenceof AuthorizationtoworkintheEUmustbeincluded. e) Proof of business and personal Addresses (Utility Bill such as BT, Gas, Electricity or Council Tax or Bank Statement) f) Duly Completed information sheet g)DulyCompletedAMLQuestionnaire h) Duly completed Agent KYC Check list i)DulycompletedCertificationofCompliance j)Agent’sInternalAML/CTFPolicies&ProceduresandcontrolsinplaceforthepreventionofMoney Laundering and Terrorist Financing. k) Business Licence required for EU Agents

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