Travelex Group Anti-Money Laundering Policy The Americas - PDF by qdk21196

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									             Travelex Group
Anti-Money Laundering Policy
              The Americas
      A guide to the prevention of money laundering
                                     January 2003
                                                                                                                                                         Contents
Group Policy Statement........................................................................................................................ 1
What is Money Laundering?............................................................................................................... 2
The Money Laundering Process ........................................................................................................ 3
   Methods of Money Laundering ...................................................................................................................................................4
Worldwide Legislation ........................................................................................................................... 6
Travelex Americas – A Money Services Business (MSB)....................................................... 7
   North American Regulatory Authorities.................................................................................................................................7
 Anti-Money Laundering Regulations – ‘The MSB Standard’................................................ 8
   UNITED STATES Anti-Money Laundering Regulations......................................................................................................9
   CANADIAN Anti-Money Laundering Regulations .............................................................................................................10
Offences and Penalties ...................................................................................................................... 12
   UNITED STATES Money Laundering OFFENCES ..............................................................................................................12
   CANADIAN Money Laundering OFFENCES.........................................................................................................................13
Know Your Customer (KYC) Policy ............................................................................................... 14
   When to Identify Customers .....................................................................................................................................................14
‘Know your Customer’ – Retail....................................................................................................... 15
   Retail Identification and Recordkeeping...............................................................................................................................15
   Aggregation of transactions .....................................................................................................................................................16
   When to Accept or Decline a Transaction .........................................................................................................................16
‘Know your Customer’ – all Other Businesses......................................................................... 17
   Corporate Identification and Recordkeeping .....................................................................................................................17
   New Customer Due Diligence ..................................................................................................................................................18
   Monitoring Accounts....................................................................................................................................................................19
Money Laundering Reporting Officer (MLRO) .......................................................................... 20
Training and Education....................................................................................................................... 21
Controls – Prevention and Detection .......................................................................................... 22
Record Keeping and Retention ....................................................................................................... 23
‘Unusual’ or ‘Suspicious’ Activity Analysis ................................................................................. 24
   Suspicious Transaction Reporting .........................................................................................................................................25
   Suspicious Transaction Analysis .............................................................................................................................................25
   Suspicious Geographical ‘Red Flags’ .....................................................................................................................................26
   Suspicious Transaction Indicators – Travelex Products..............................................................................................27
   Suspicious Transaction Indicators – New Customers..................................................................................................29
   Suspicious Transaction Indicators – On-Going Customers.........................................................................................30
Summary.................................................................................................................................................. 31
                               Group Policy Statement
As a financial institution, Travelex is committed to preventing money
laundering. The Group policies and procedures comply with the laws of
the United Kingdom and those of the jurisdictions in which we operate.
We also monitor and adhere to all European Union and United Nations
sanctions and comply with the Office of Foreign Asset Control (OFAC)
requirements.

Travelex will support its staff to achieve the highest standards of
compliance integrity. Staff must be aware of both the Group’s
commitment to preventing money laundering and their own obligations
under the policies set down.

This policy document will provide all Travelex employees with an
understanding of money laundering and the extent to which the world
legislates against it. Internal disciplinary procedures will be strictly
enforced should any employee fail to implement or adhere to this Group
Policy.

Ignorance is no Defense.




                   -1-
                          What is Money Laundering?
Money Laundering is the process by which criminals attempt to conceal
the true origin and ownership of the proceeds of illegal activities. The
phrase ‘money laundering’ covers all methods used to change the
identity of illegally obtained money so that it can be used for legitimate
purposes.

Money laundering is not restricted to the proceeds of drug trafficking. It
includes proceeds from other criminal activities such as armed robbery,
tax evasion, smuggling, prostitution, terrorism, arms dealing, fraud,
forgery and counterfeiting, bribery and corruption.

Money laundering is a major threat to financial institutions and the
economic stability of entire countries. Governments worldwide have
introduced legislation to prevent it, including specific money laundering
offences and legally imposed requirements on institutions operating in
their jurisdictions.

Money laundering is the world’s third largest business




                    -2-
                                               The Money Laundering Process
                           The main objective of the money launderer is to transform ‘dirty’ money
                           into seemingly clean money or other assets in a way to leave as little
                           trace as possible of the transformation. There are essentially three
                           recognized forms of the money laundering process:

                           Placement
                           For criminals this is the most vulnerable step in the ‘washing’ cycle. This
                           is the physical immersion of the criminally derived funds into the financial
                           system.

                                                 Examples:
The physical disposal of cash, which starts
to break the link with the original crime by     Use cash to buy a bank draft to pay into a bank account.
placing money back into the economy.             Transfer cash to another country by wire transfer. Use the
                                                 cash to buy traveller’s cheques or foreign exchange. Buying a
                                                 house, car, antiques…

                           Layering
                           The purpose of layering is to disassociate the illegal monies from the
                           source and perpetrator of the crime by purposely creating a complex
                           web of financial transactions aimed at concealing any audit trail.

                                                 Examples:
The criminal tries to pass the money
through as many layers as possible.              Send the money by wire transfer to other countries, to
                                                 different people, to a variety of accounts in a variety of
                                                 currencies. Buy shares, which can be sold. Transfer money to
                                                 an offshore account.


                           Integration
                           The stage at which the money is integrated into the legitimate economic
                           and financial system and is assimilated with all the other assets in the
                           system. At this stage it becomes virtually impossible to distinguish
                           between ‘respectable’ and ‘dirty’ money.


Successful layering results in the money         Examples:
being returned to the economy in what
appears to be legitimate business funds.         Purchase of fast food outlets or other cash intensive
                                                 businesses/properties.



                           In basic terms, the money launderer wants to:
                           1. Place money in the financial system, without arousing suspicion
                           2. Move money around, often in a series of complex transactions
                               crossing multiple jurisdictions, so it becomes difficult to identify its
                               original source, and then
                           3. Move the money back into the financial and business system, so that
                               it appears as legitimate funds or assets.



                                               -3-
                                             The Money Laundering Process (cont’d)

Money Laundering   METHODS OF MONEY LAUNDERING
is the World’s     There are as many methods to launder money as the imagination allows,
Third Largest      and the schemes being used are becoming increasingly sophisticated
Business           and complicated as technology advances. The following are some
                   examples of common money laundering methods.

                   Nominees
                   This is one of the most common methods of laundering and hiding
                   assets. A launderer uses family members, friends or associates who are
                   trusted within the community, and who will not attract attention, to
                   conduct transactions on their behalf. The use of nominees facilitates the
                   concealment of the source and ownership of the funds involved.

                   Structuring or “smurfing”
                   Many inconspicuous individuals deposit cash or buy bank drafts at
                   various institutions, or one individual carries out transactions for
                   amounts less than the amount that must be reported to the
                   government, and the cash is subsequently transferred to a central
                   account. These individuals commonly referred to as “smurfs,” normally
                   do not attract attention as they deal in funds that are below reporting
                   thresholds and they appear to be conducting ordinary transactions.

                   Asset purchases with bulk cash
                   Individuals purchase big-ticket items such as cars, boats and real estate.
                   In many cases, launderers use the assets but distance themselves from
                   them by having them registered in a friend or relative’s name. The assets
                   may also be resold to further launder the proceeds.

                   Exchange transactions
                   Individuals often use proceeds of crime to buy foreign currency that can
                   then be transferred to offshore bank accounts anywhere in the world or
                   converted in foreign currency drafts/travellers cheques.

                   Currency smuggling
                   Funds are moved across borders to disguise their source and ownership,
                   and to avoid being exposed to the law and systems that record money
                   entering into the financial system. Funds are smuggled in various ways
                   (such as by mail, courier and body-packing) often to countries with strict
                   bank secrecy laws.

                   Gambling in casinos
                   Individuals bring cash to a casino and buy gambling chips. After gaming
                   and placing just a few bets, the gambler redeems the remainder of the
                   chips and requests a casino cheque.



                                       -4-
                          The Money Laundering Process (cont’d)

Methods of Money Laundering (cont’d)

Black-market peso exchange
An underground network of currency brokers with offices in North
America, the Caribbean and South America allows drug traffickers to
exchange pesos for U.S. dollars. The dollars stay in the United States and
are bought by South American (mainly Colombian) companies, which use
them to buy American goods for sale back home.

Hawalas/Hundi/Chit (Informal money transfer businesses)
Informal networks that move money on a trust- based pact, with next to
no record keeping or formal paper trails. Usually family/clan based front
companies/businesses and is popular with cultures that don’t use or
trust formal banking. Pre-Dates any formal banking systems and moves
millions of dollars globally.




                    -5-
                                                              Worldwide Legislation
Members of the Financial   A major result of international concerns about the extent of money
Action Task Force on       laundering was the creation of the Financial Action Task Force (FATF).
Money Laundering (FATF)    The FATF is a body whose purpose is to examine worldwide compliance
1. Argentina               to existing money laundering legislation and to recommend additional
2. Australia               requirements where appropriate.
3. Austria
4. Belgium
5. Brazil                  The FATF has representatives from over 30 countries and two
6. Canada
7. Denmark                 international organizations. Its membership includes the major financial
8. European Commission     centres of Europe, North and South America, and Asia. It is a
9. Finland                 multidisciplinary body bringing together the policymaking power of legal,
10. France                 financial and law enforcement experts.
11. Germany
12. Greece
13. Gulf Co-operation      The FATF made recommendations to raise the international standards of
    Council                money laundering compliance to a uniform level. These
14. Hong Kong, China
15. Iceland
                           recommendations set out the basic framework for money laundering
16. Ireland                prevention efforts and are designed to be of universal application. It was
17. Italy                  recognized from the outset of FATF, that countries have diverse legal and
18. Japan                  financial systems. The recommendations are therefore the principles for
19. Luxembourg             action for countries to implement according to their particular
20. Mexico
21. Netherlands
                           circumstances, allowing countries a measure of flexibility rather than
22. New Zealand            prescribing every detail.
23. Norway
24. Portugal
25. Singapore              FATF continually inspect and assess the level of anti-money laundering
26. Spain                  compliance in countries around the globe. Those governments who fail to
27. Sweden                 provide an adequate anti-money laundering framework damage their
28. Switzerland            opportunities for international trade.
29. Turkey
30. United Kingdom
31. United States




                                               -6-
     Travelex Americas – A Money Services
                           Business (MSB)
In both the United States and Canada, certain non-bank financial
institutions for purposes of anti-money laundering regulations are
grouped into a separate category of financial institution called "money
services businesses" or "MSB’s." A business that offers one or more
products or services defined below is an MSB and must comply with local
government anti-money laundering requirements.
 Product or Service                 Capacity (Type of MSB)

Money Orders           Issuer of money orders
                       Seller of money orders
                       Redeemer of money orders

Travellers Cheques     Issuer of travellers cheques
                       Seller of travellers cheques
                       Redeemer of travellers cheques

Money Transmission Money transmitter

Cheque Cashing         Cheque casher

Currency Exchange      Currency exchanger

Currency Dealing       Currency dealer

Stored Value           Issuer of stored value
                       Seller of stored value
                       Redeemer of stored value
Travelex is a Money Services Business in both Canada and the United
States, providing many services defined under the MSB product list.

NORTH AMERICAN REGULATORY AUTHORITIES
In North America, the following regulatory authorities are responsible for
ensuring Travelex Americas are complying with all necessary Anti-Money
Laundering regulations:
    Individual State Banking Departments where Travelex is licensed
    (United States)
    Financial Crimes Enforcement Network - FINCEN (United States)
    Office of Foreign Assets and Control - OFAC (United States)
    Internal Revenue Service - IRS (United States)
    Financial Transactions and Reports Analysis Centre of Canada –
    FINTRAC (Canada)
    Customs (Canada & United States)

As regulators, representatives can enter any of our premises and inspect
our compliance procedures and penalize any irregularities.
                     -7-
                                              Anti-Money Laundering Regulations –
                                                              ‘The MSB Standard’
Failure to comply with the            Travelex Americas complies with established laws and regulations in order
regulations constitutes an            to protect our good name and reputation, decrease the likelihood of
offence and those not
complying with the law will find
                                      becoming a victim of fraud or illegal activity, and ensuring safe and sound
their reputation severely             business practices for our customers. In keeping with our Mission,
damaged and details of the            Values and Group policy, to ensure compliance with the law, and to
offence published in the general      prevent abuse of our facilities, we strictly observe the Federal and State
press.                                laws and refuse to aid those who attempt to evade them.

Each money services business,         US and Canadian AML regulations require that Travelex have an anti-
shall develop, implement, and         money laundering program (or Compliance Regime) in place to prevent
maintain an effective anti-           and detect money laundering. This program needs to ensure that
money laundering program. An
effective anti-money laundering       policies, procedures and controls are introduced and maintained and is
program is one that is                designed to achieve two purposes: firstly to enable suspicious
reasonably designed to prevent        transactions to be recognised and reported to the authorities and
the money services business           secondly to ensure that if a customer comes under investigation, the
from being used to facilitate         company can provide the audit trail.
money laundering and the
financing of terrorist activities.”
         Bank Secrecy Act 31
         CFR § 103.125                This Anti-Money Laundering Program consists of the following 4 key
                                      elements, encompassing all Bank Secrecy Act regulations:
For the purposes of the Act,
                                      1. Designate a Money Laundering Reporting Officer
and to assist the Centre in           2. Document anti-money laundering Procedures and Controls, including
carrying out its mandate, every           Know Your Customer policy, Transaction Analysis, Recordkeeping
Money Services Business shall             and Reporting
implement a compliance
regime for complying with the         3. Establish Anti-Money Laundering Staff Training Program
Act and any Regulations made          4. Independent review of Anti-Money Laundering Program
under the Act.”
         Proceeds of Crime (Anti-
         Money Laundering and
         Terrorist) Act, Section 71   “CATCH”
                                      To comply with such AML programs required in many countries, Travelex
                                      has implemented an AML Policy worldwide, known as ‘CATCH’:
                                         Confirm identity - set up procedures for verifying the identity of
                                         customers.
                                         Appoint a Money Laundering Reporting Officer (MLRO) for each area
                                         to ensure internal reporting procedures, controls and transaction
                                         (suspicious) analysis tools are in place.
                                         Train all staff in relevant areas about their legal obligations, how to
                                         recognise suspicious circumstances and what to do about them.
                                         Create awareness amongst all staff of the fact that money laundering
                                         is against the law and the wide scope of the offences.
                                         Controls   - implement procedures for internal controls that will
                                         enable the prevention and detection of money laundering, and ensure
                                         all necessary government reporting and recording.
                                         Hold  all records of transactions and evidence of identity for a
                                         minimum of five years. Set up record keeping procedures, including
                                         necessary customer information required by law.
                                                          -8-
    Travelex Americas Money Laundering Regulations – ‘The
                              Minimum Standard’ (cont’d)

UNITED STATES ANTI-MONEY LAUNDERING REGULATIONS
Travelex offices located in the United States are required by law to
follow specific Federal anti-money laundering regulations:

Bank Secrecy Act was designed to:
•  Deter money laundering.
•  Implement Anti-Money Laundering (Compliance) programs
•  Create an investigative "paper trail" for large currency transactions
   by establishing regulatory reporting standards and requirements.
•  Impose civil and criminal penalties for non-compliance with the
   requirements.
•  Improve detection and investigation of criminal, tax, and regulatory
   violations.

Office of Foreign Assets Control (OFAC) of the U.S. Treasury
Department was designed to:
•   Administer and enforce economic and trade sanctions against
    targeted foreign countries, terrorism sponsoring organizations and
    international narcotics traffickers.
•   Provide a list of entities and individuals called the Specially Designated
    Nationals and Blocked Entities List (SDN List) and to prohibit
    transactions with any person/entity listed unless authorized by OFAC
    or expressly exempted by statute.

TRAVELEX Responsibilities – United States Anti-Money Laundering
Requirements
   Registration as an MSB with FinCEN
   Assigned Compliance Officer/Department for Travelex Americas
   Implementation of an Anti-Money Laundering Program
   Know Your Customer Policy and Documentation
   Recording customer information for transactions over $1000 USD
   Reporting of Cash transactions over $10,000 USD
   Reporting of Cross Border ‘shipments’ over $10,000 USD
   Reporting of Suspicious Activities
   Annual Anti-Money Laundering (AML) Staff Training
   Agent and Business Partners Support and Training Tools
   Audit of Internal Compliance Regime (completed by Travelex
   Americas Risk Management/Audit Department)
   Travelex offices located in the United States must not transact
   business and reject/block transactions within OFAC Sanctioned
   Countries or with Specially Designated Nationals (SDN List).
   Reporting of OFAC/Terrorist Attempts/Blocks
   Annual Reporting of Blocked Property (OFAC)

                     -9-
    Travelex Americas Money Laundering Regulations – ‘The
                              Minimum Standard’ (cont’d)

CANADIAN ANTI-MONEY LAUNDERING REGULATIONS
Travelex offices located in Canada are required by law to follow specific
Federal anti-money laundering regulations:

Proceeds of Crime (Money Laundering and Terrorist Financing) Act
was designed to:
•  Help detect and deter money laundering and the financing of terrorist
   activities.
•  Facilitate investigations and prosecutions of money laundering and
   terrorist activity financing offences.
•  Implementation of reporting and other requirements for financial
   service providers and those that engage in businesses, professions
   or activities susceptible to being used for money laundering or
   terrorist financing.
•  Establish the Financial Transactions and Reports Analysis Centre of
   Canada (FINTRAC) as the agency responsible for the collection,
   analysis and disclosure of information.

Anti-Terrorism Act (ATA) created measures to deter, disable, identify,
prosecute, convict and punish terrorist groups. It provides new
investigative tools for law enforcement and national security agencies
and includes significant additions to the Criminal Code and Proceeds of
Crime Act to include offences relating to terrorist activities and the
financing of terrorism. These changes make it a crime to do any of the
following:
•    Knowingly collect or provide funds, either directly or indirectly, to
     carry out terrorist activities;
•    Knowingly participate in, contribute to or facilitate the activities of a
     terrorist group;
•    Instruct anyone to carry out a terrorist activity on behalf of a terrorist
     group;

United Nations Suppression of Terrorism Regulations was designed to:
•  Provide a list of individuals or entities believed to be involved in or
   associated with terrorist activity.
•  Make it an offence for anyone in Canada, or any Canadian outside
   Canada:
   o To provide or collect funds if they know these would be for use by
       anyone on the list
   o To deal in any way with property if they know it is owned or
       controlled by anyone on the list. This includes any financial service
       or transaction relating to such property. It also includes making
       property available to anyone on the list.



                    - 10 -
         Anti-Money Laundering Regulations – ‘The Standard’
                                                    (cont’d)

CANADIAN Anti-Money Laundering Regulations (cont’d)
TRAVELEX Responsibilities – Canadian Anti-Money Laundering
Regulations
   Assigned Compliance Officer/Department for Travelex Americas
   Know Your Customer Policy and Documentation
   Implementation of a Compliance Regime
   Recording of customer information for specific transactions over
   $3000 CAD
   Reporting of Suspicious Activities
   Reporting of Wire transactions over $10,000 CAD, received or
   settled outside of Canada
   Reporting of Large Cash transactions over $10,000 CAD
   Reporting of Cross-Border ‘shipments’ over $10.000 CAD
   Annual Anti-Money Laundering Staff Training
   Agent and Business Partners Support, Training Tools and annual
   Audits
   External Audit of Compliance Regime (completed by Travelex
   Americas Risk Management/Audit Department)
   Travelex Offices Located in Canada must not transact business and
   seize funds with all individuals and companies defined in the UN
   Suppression of Terrorism Listing.
   Reporting of Terrorist Asset Activities




                    - 11 -
                                   Offences and Penalties
Please be aware that there are substantial civil and criminal penalties for
willful and negligent failure to comply with anti-money laundering laws and
regulations. Failure to comply may result in fines, criminal charges and
significant jail terms. These laws are in place for your protection; they
also aid in the fight against terrorism and criminal activity derived from
the proceeds of crime, and they are not to be taken lightly.

Every employee must be aware that criminal liability may be imposed on
themselves and the company if either is willfully blind to suspicious activity
or should have known that the activity was suspicious.

UNITED STATES MONEY LAUNDERING OFFENCES
Money Laundering is a federal crime. There are three principal criminal
offences relating to money laundering activities by, through, or to a
financial institution. These offences are:
•   Knowingly helping launder money from criminal activity.
•   Knowingly engaging (including by being willfully blind) in a transaction
    of more than $10,000 that involves property from criminal activity.
•   Structuring transactions to avoid reporting and record keeping
    requirements.

Penalties for United States Violations:
The Assistant Secretary or any agency to which compliance is required,
may examine any books, papers, records, or other data relevant to the
requirements. For any willful violation the Secretary may assess upon
any partner, director, officer, or employee hereof who willfully participates
in the violation:
•   Failure to comply with necessary recordkeeping and reporting
    requirements, fines up to $10,000
•   Failure to report cross border shipments, fines up to the amount of
    the currency/negotiable instruments being shipped
•   Any person who knowingly makes any false, fictitious or fraudulent
    statement or representation in any report may be fined up to
    $10,000 or be imprisoned up to 5 years, or both.
•   Loss of state licenses
•   Criminal offences include imprisonment for a maximum of 20 years,
    fines up to $500,000 or two times the amount laundered, and
    forfeiture of assets.
•   Fines for failing to report OFAC hits/violations can result in both civil
    and criminal penalties and is deemed to be in violation of the Trading
    with the Enemy Act and can result in the following:
        o A criminal penalty, which may include fines ranging from
            $50,000 to $10,000,000 and imprisonment ranging from
            10 to 30 years.
        o Civil Penalties include fines ranging from $11,000 to
            $1,000,000 for each violation.

                    - 12 -
                                    Offences and Penalties (cont’d)

CANADIAN MONEY LAUNDERING OFFENCES
Laundering Proceeds of Crime as part of the Canadian criminal code
finds a money laundering offence to involve:
•   Various acts committed with the intention to conceal or convert
    property or the proceeds of property (e.g. money) knowing or
    believing they were derived from an offence under the Criminal Code
•   Includes those relating to illegal drug trafficking, bribery, fraud,
    forgery, murder, robbery, counterfeit money, stock manipulation, etc.
•   A money laundering offence may also extend to property or proceeds
    derived from illegal activities that took place outside Canada.

Penalties for Canadian Violations:
The penalties for non-compliance include significant fines and jail terms.
Failure to comply can lead to criminal charges against the persons and
entities subject to the Act. Officers, directors, and employees of a
corporation who authorized or assented to the non-compliance is guilty of
the offense:
•   Failure to report a suspicious transaction or failure to make a
    terrorist property report — conviction of this could lead to up to five
    years imprisonment, to a fine of $2,000,000, or both.
•   Failure to report a large cash transaction or an electronic funds
    transfer — conviction of this could lead to a fine of $500,000 for a
    first offence and $1,000,000 for each subsequent offence.
•   Failure to retain records — conviction of this could lead to up to five
    years imprisonment, to a fine of $500,000, or both.
•   Failure to implement a compliance regime — conviction of this could
    lead to up to five years imprisonment, to a fine of $500,000, or both.
•   Laundering proceeds of crime include imprisonment for a maximum of
    10 years.




                   - 13 -
                                                 Know Your Customer (KYC) Policy
Travelex must establish            The integrity and professional reputation of Travelex revolves around
Travelex must                      ‘knowing your customer’ (KYC). In all businesses, Travelex must ‘know
establish of their
the identitythe identity
customer.                          our customer’ and ‘screen’ their activities to ensure:
of their customer.                     Any risks associated with fraud and money laundering become
SCREENING
                                       apparent well before major problems arise.
Taking reasonable steps to             Recordkeeping and Reporting requirements are met
ensure a Customers’ true           False identities and false information are used to enable the criminal to
identity and that the customer’s   launder their money through unwitting financial institutions.
request is consistent with their
actions/business.
                                   Government regulations require us to adhere to various anti-money
                                   laundering regulations, which require customer identification and
                                   recording of detailed customer information:
                                       Obtain and record customer information and identification for all on-
                                       going customer relationships, including signature cards/authorities.
                                       Obtain and record customer information and identification for cash to
                                       cash foreign exchange.
                                       Obtain and record customer information and identification for
                                       purchase and sales of foreign drafts, travellers cheques and other
                                       negotiable instruments.
                                       Obtain and record customer sender and receiver information and
                                       identification for funds transfers (wires)

‘Serving You Better – It’s The     WHEN TO IDENTIFY CUSTOMERS
Law’ counter stands and            All retail customers should be asked for evidence of identity based on
brochures are available to all
Travelex locations.
                                   identification and recordkeeping requirements of anti-money laundering
                                   regulations, and internal Travelex policy.
Counter Stands are displayed
for customers to review while
being served.                      All other businesses (non-retail) should establish the identity of all
                                   customers, irrespective of potential transaction size, before the business
Brochures are available when       relationship commences.
staff is queried about personal
information required as part of
Anti-Money Laundering              Handling Customer Queries
regulations or when a
customer wants to contact the
                                   If the customer asks why this information is required:
Compliance Department.                    “State that it is company policy in accordance with government
                                          anti-money laundering regulations.
Brochures should NOT be
displayed/available for all               OR
customers.                                Travelex is obliged to comply with foreign exchange or taxation
                                          legislation where applicable.
                                          OR
                                          It is standard banking practice to ask for proof of identification for
                                          all directors when commencing a business relationship.”




                                                      - 14 -
                                                         ‘Know your Customer’ – Retail
                                     Travelex Retail Staff must establish the identity of their
                                     customers.

In some cases, Travelex policy       RETAIL IDENTIFICATION AND RECORDKEEPING
may require identification and
customer information above           Government regulations require us to know our customer. To comply
the requirements of the law.         with the US and Canadian regulations, Travelex Policy states that for any
                                     dollar amount, we must ensure customer IDENTIFICATION and to
                                     RECORD this information for the following type of transactions:
                                     • Customers paying by cheque
                                     • Credit Card Payment
                                     • Draft Sales
                                     • Wire Sales
                                     • MoneyGram and Western Union
                                     • Travellers Cheques
                                     • Cash Passport/Gift Card Sales

REFER to Transaction                 Government regulations may require us to obtain and record some or
Recordkeeping Chart for              all of the following information, depending on the amount and type of the
Canadian and United States           financial activity:
regulation details, including the
following:                                Customer’s name and permanent address
     Details of customer                  Government approved identification, including place of issue and
     information to record based          number
     on amount and type of
     transaction
                                          Tax identification/Social Security Number
     Government approved                  Date of birth
     acceptable forms of                  Occupation
     Identification
                                          Purpose of Transaction
ALL Travelex Branches should
ensure up-to-date charts are         Government regulation requires we record defined customer information,
available in each office/location.   for all persons/ companies involved in the transaction:
                                         Person Present - The person initiating the transaction
FOR ALL FORMS GO TO
Travelex Americas Intranet Site          On Behalf Of - If the person present is completing the transaction for
@ http://tnetamericas or                 someone else, that person/entity must also be recorded
contact your local MLRO.
                                         Multiple Persons - Where the transaction is initiated by more than
                                         one person (person present) or completed for more than one
                                         person/company (on behalf of), this ‘multiple customer’ information
                                         must also be recorded.




                                                        - 15 -
                                                               ‘Know your Customer’ – Retail (cont’d)

                                   AGGREGATION OF TRANSACTIONS
If in doubt, err on the side of    All transactions by, or on behalf of, the same person(s) on a single day
over-inclusion. Remember,          must be aggregated for Reporting AND Recording purposes. This
failing to aggregate could         includes transactions at multiple branches, where there is knowledge.
help someone Structure – a
potentially serious violation of
the law.                           Same day transactions by two or more persons who may be acting
                                   together must also be aggregated for Reporting and Recording purposes.

                                   “Aggregation” = multiple transactions that may have been conducted by,
                                   or on behalf of, the same person(s) within one business day (24 Hours)
                                   are added together and considered ‘one transaction’. It is required by
                                   law to aggregate transactions, to prevent Structuring.

                                   WHEN TO ACCEPT OR DECLINE A TRANSACTION
                                   A transaction must only be declined if:
                                      The customer is unable to provide the identification documents or
                                      personal information required by law.
                                      The activity involves an individual, entity or country on the OFAC/UN
                                      Listings.

                                   If a customer is able to produce all the required information but you have
                                   reservations or are suspicious about the legality of the transaction, you
                                   may carry out the transaction, provided that you have obtained the
                                   correct level of authorization. You must also report it immediately to
                                   your branch manager and your local MLRO, along with a Suspicious
                                   Activity Report.

                                   The role of staff is to observe, record and report. Staff may question
                                   customers in order to clarify the nature of a transaction.




                                                      - 16 -
               ‘Know your Customer’ – all Other
                                   Businesses
In order to meet legal money laundering obligations, it is necessary for
companies providing financial services to ensure that they always
undertake basic ‘Know your Customer’ checks.

CORPORATE IDENTIFICATION AND RECORDKEEPING
Travelex must confirm the existence of any corporation or other entity
for which a client information record is kept; Travelex must have on file
for all established customers:
    Full Name
    Full Address
    SSN/TIN
    I.D. (type, issuer, and number – if an individual)
    Authorized Signatories
    Documented evidence that Travelex has completed “KYC” due
    diligence, (For example: completed customer application, visited the
    premises, recorded information regarding usual or expected activity
    for the customer)
Each “Established Customer” must be assigned an “account number”.
This means a unique number that Travelex could use to find the
customer’s file/recordkeeping information.

Corporations
To confirm the existence of a corporation, find out the corporation’s
name and address and the names of the corporation’s directors. To do
this, refer to the following documents:
•   The corporation’s certificate of corporate status;
•   A record that has to be filed annually under provincial securities
    legislation; or
•   Any other record that confirms the corporation’s existence.

Entities other than corporations
To confirm the existence of an entity other than a corporation, refer to a
partnership agreement, articles of association or any other similar
record that confirms the entity’s existence.

Where companies are sole traders, partnerships, and non-registered
companies, it is important to see proof of identity of the person who
owns the company.




                   - 17 -
       ‘Know your Customer ’ – all Other Businesses (cont’d)

NEW CUSTOMER DUE DILIGENCE
A due diligence process in all non-retail Travelex businesses must be
thoroughly established and completed for all new customers prior to
trading. Travelex should not only be able to say with certainty who their
customer is, but must also have a proper understanding of their
customer’s business. It is important to establish the nature of the
customer’s business prior to any agreement being formalized.

Understanding the customer’s business will allow Travelex to better
meet the customer’s legitimate business requirements and also to know
if the transactions they effect are consistent with that business or should
cause suspicion.

Visit the Premises. Is the location, appearance and Customer traffic
observed, what you’d expect for a legitimate business of this type? Is the
appearance and behaviour of your contact(s) what you would expect?

Anticipated Level and Type of Business With Us. Is it consistent with the
Customer’s known business? Is it a sensible way for the Customer to
meet its expressed needs?

Years in Business. How long has the company been in business? At
what address(es)? Be careful with new companies.

Owners, Directors and Officers. Who are they? Have there been recent
changes? Who actually runs the business? Who has authority to deal
with you?

Financial Reports. Do they have audited financials and are they willing to
share them with us? “No” answers already tell you a lot. Are net worth,
cash flow, profitability, etc., consistent with what you would expect?

Date and Place of Incorporation. Is the date consistent with years in
business? Is the company incorporated locally or elsewhere? If it is a
foreign corporation (e.g. Panama), why?

Suppliers, Customers and Beneficiaries. Who are the Customer’s major
suppliers, where are they located and what is the Customer’s target
market or primary trade area? Is the business with you consistent with
this information?

Bank and Trading References. What does the reference think your
Customer’s business is? Does the Customer deal in Cash with the
reference? If so, why? Also, who are these references? Would you do
business with them? How well do they really know the Customer? Should
the Customer have better references?
                   - 18 -
                                 ‘Know your Customer ’ – all Other Businesses (cont’d)

                          MONITORING ACCOUNTS
                          Corporate Dealers are responsible for reviewing and monitoring their
                          accounts on an ongoing basis. Management is responsible for ensuring
                          that the client and transaction file is maintained and updated as required.

REFER to list of          The following situations require further examination:
”Suspicious Transaction
Indicators – On-Going     • Significant increase in trading activity
Customer Relationships”   • Transactions that do not correspond with the nature of the business
for further examples.
                          • Cash transactions
                          • Third party payments
                          • Increased wire activity when previously there has been no regular
                             wire activity
                          • Wire transfers to foreign countries that are not the customer’s usual
                             countries or wire transfers to countries that are known for money
                             laundering
                          • Wire transfers to customer accounts with no history of such
                             transfers or where the stated business of the customer does not
                             warrant such activity

                          On-going customer relationships require constant vigilance and
                          monitoring. The ‘Know your Customer’ requirement is not a one-off
                          process that is carried out at the new customer and accreditation stage.
                          It is Group policy that every year clients are revisited to determine the
                          validity of our KYC records.




                                             - 19 -
                                             Money Laundering Reporting Officer
                                                                       (MLRO)
Contacting your Compliance         Each country of operation will appoint a local Money Laundering
Representatives for all North      Reporting Officer (MLRO), responsible for supervising money laundering
American Businesses can be         prevention. He/she will report directly to the local Head of Business and
done by mail, phone or e-mail:     in a dotted line to the Group Money Laundering Reporting Officer.
                                   Reporting lines between front line staff and the MLRO should be as short
    Travelex Canada Ltd.
 100 Yonge Street, 14th Floor      as possible to ensure speed, confidentiality and accessibility.
   Toronto, ON M5C 2W1
      416-359-3700
 compliance@travelexamericas.com   The MLRO is responsible for:
                                      Implementation of the Compliance Regime and Group policy at a local
                                      level
                                      Ensuring that local legislative and regulatory requirements are
                                      complied with, particularly making reports to local authorities
                                      Overseeing the employee training register
                                      Distributing AML information, manual updates and implementing new
                                      procedures where necessary.
                                      Submitting monthly status reports to the Group MLRO

                                   The level of person holding the position of MLRO will vary according to the
                                   size and nature of the business, however he/she will be sufficiently
                                   senior to command authority. He/she will have access to confidential
                                   and other internal records in order to enable him/her to fulfill the role
                                   effectively.

                                   The MLRO is responsible for ensuring that procedures meet local
                                   legislative and regulatory requirements and will advise on the correct
                                   procedures and parameters to be adopted.

                                   The MLRO will be responsible for maintaining records of all money
                                   laundering reports received and where appropriate, for passing these
                                   reports on to the Group Money Laundering Officer and to local
                                   authorities. The MLRO will follow directions given by the authorities in
                                   regard to any matters referred to them. The MLRO should record all
                                   steps taken in relation to a report, including internal inquiries and should
                                   keep Travelex management appraised.

                                   The MLRO must provide on-going information on new and developing
                                   trends in money laundering that may provide further assistance for staff
                                   when screening customers or analyzing customer transactions.




                                                       - 20 -
                                                              Training and Education
                            Travelex trains its staff in:
                               Policies and procedures put in place to prevent money laundering
                               Identifying and handling of suspicious transactions.
                               Identifying and handling OFAC and Terrorist Property transactions
                               Penalties and Offences

Any staff member that       Government Regulations require all Travelex Americas staff complete
has not completed annual    annual anti-money laundering training and may consist of the following
AML Training must           activities:
contact their local MLRO.       Person to Person training sessions/conferences
                                Compliance Skill Rallies, including specific AML topics and exercises
                                to complete
                                Review of AML Manuals, Policy documents and News Bulletins

                            New joiners need to be thoroughly trained and provided with this money
                            laundering policy document and must sign-off, ensuring full and complete
                            understanding of his/her requirements.

                            In order to ensure that the training is given sufficient prominence a
                            register must be kept of all training received by an employee. This is to be
                            regularly updated and will be overseen by the local and Group MLRO's. All
                            country heads are ultimately responsible for ensuring compliance in this
                            area.




                                                - 21 -
          Controls – Prevention and Detection
It is a legal obligation and therefore Group Policy to prevent money
laundering. This is achieved by:
     Being fully compliant with the Money Laundering Regulations
     Implementing a Compliance Regime.
     The introduction of additional transaction restrictions i.e. requesting
     proof of identity at a lower transaction limit than the law demands
     Adherence to the Group Policy document.
     Documenting anti-money laundering procedures and controls for
     both staff and the MLRO.
     On-going training of staff
     Periodic Audit of Compliance procedures and controls

All ‘large trades’ from the retail business are recorded and reported in
accordance with local procedures. Each branch has the additional
responsibility of examining these records to identify unusual repeat
trades or other anomalies.

Travelex records all transactions and monitors and reviews these for all
business areas to help identify irregularities. These records are kept for
the Group’s minimum requirement time period of five years.

It is a legal and Group requirement that this continuous monitoring and
analysis takes place to identify unusual and suspicious transactions.
These processes can be done manually or electronically and must be
available for scrutiny by the MLRO and local law enforcement bodies as
required.      In all instances, the MLRO will advise on the correct
procedures and parameters to be adopted and provide updated
information on new and developing trends in money laundering that may
necessitate additional controls.

Travelex Risk Management/Audit Teams are responsible for completing
periodic audits of both business streams and the Compliance
Department, to ensure that all procedures are up-to-date and being
completed, according to law and policy.

The combination of personal vigilance, data analysis and the Group’s
policies provide a powerful aid to the prevention and detection of money
laundering.




                    - 22 -
                     Record Keeping and Retention
Travelex will retain all customer transaction records, including all details
required as part of government recordkeeping regulations. This is both
for internal audit purposes and in order to enable the authorities to
investigate and trace criminal money.

Travelex will maintain records of all Suspicious and OFAC activities
identified, and will include all back-up documentation and history of items
completed.

Travelex will maintain records of all reports completed for the
government, including copies of any logs and back-up documentation.

Records can be kept in a machine-readable or electronic form, as long as
a paper copy can be readily produced. Also, for records that are kept
electronically, an electronic signature of the individual who must sign the
record has to be retained.

Timeframe for keeping records
In the case of client information and records to confirm the existence of
an entity (including a corporation), these documents have to be kept for
five years from the day the last business transaction was conducted.

In the case of all other records, they must be kept for a period of at least
five years following the date they were created.




                    - 23 -
                                    ‘Unusual’ or ‘Suspicious’ Activity Analysis
                                  An important part of the anti-money laundering procedure is determining
Common sense is a great           whether a transaction is merely ‘unusual’ or whether it is in fact
virtue – often an intuition       ‘suspicious’. ‘Unusual’ or ‘suspicious’ transactions can be identified:
that “all is not well” has some
basis in fact.                    o At the ‘placement’ stage when the ‘face to face’ deal is negotiated.
                                  o During meetings or telephone dealings with customers.
Employees should feel they        o During transaction analysis after activities have been completed to
can report their ‘suspicions’         determine trends and possible structuring.
in confidence and without
fear of reprisal.                 o During the ‘settlement’ stage when drafts & travellers cheques are
                                      cleared by our operations department.

                                  Suspicion is a personal, subjective thing and falls far short of proof based
                                  on firm evidence. A person who considers a transaction to be suspicious
                                  would not be expected to know the exact nature of the criminal offence
                                  or that the particular funds were definitely those arising from a crime.

                                  It is recognized in business that employees at all levels may discover
                                  irregularities of practice in the work area. These may be connected with
                                  procedures or persons and could leave the company vulnerable to
                                  financial attack. Management should encourage all such instances to be
                                  reported to the MLRO.

                                  The decision to report suspicious activities to the authorities rests with
                                  the MLRO, all decisions are to be recorded and secured.

Travelex is primarily             The 5W’s will assist staff to reach a decision.
concerned with the safety         What – what happened, all the details of the transaction
of our staff. Although we
will do anything possible to      When – the dates associated with the transaction
assist the authorities, this      Waiver – any uncertainties or doubts that you notice
does not include
jeopardising the safety of        Write – make sure you make notes of your doubts
our staff in any way.             Weigh up – reach a decision on what you ought to do

                                  Pay special attention to ‘Conflicts of Interest’ by a Travelex employee
                                  such as deals done for friends, family or on the goodwill recommendation
                                  of existing customers. Prior approval must be sought in all instances.




                                                      - 24 -
                                                  ‘Unusual’ or ‘Suspicious’ Activity Analysis (cont’d)

                                    SUSPICIOUS TRANSACTION REPORTING
Internal Reporting Forms are        Travelex must file a Suspicious Activity Report (SAR) with the country’s
available to staff, and should be   regulating body for all known or suspected violations of law committed or
completed when reporting to         attempted (such as money laundering, Travellers cheque refund and
the local MLRO:                     credit card frauds, terrorist activities) where Travelex is the actual or
√ Suspicious Activity               potential victim. Any suspicious transaction, or attempt, related to
     Reporting (SAR) Form
√ OFAC/UN Reporting Form
                                    criminal activity, the Bank Secrecy Act, the Proceeds of Crime Act or
                                    money laundering must be reported on an SAR where Travelex staff has
All Departments should              knowledge of, suspects or has reason to suspect that:
ensure up-to-date copies are            The funds come from illegal activities
available to staff at all times.
                                        The transaction is intended to disguise the nature of the funds, their
FOR ALL FORMS GO TO                     ownership or any other key fact
Travelex Americas Intranet
Site @ http://tnetamericas or           The transaction is intended to evade any Federal law or reporting
contact your local MLRO.                requirement
                                        The transaction has no apparent legitimate business purpose or
                                        other lawful purpose
                                        The transaction is not the type that the customer would be normally
                                        expected to conduct and we do not have a reasonable explanation for
                                        the transaction, even after examining all the facts known to us
                                        The transaction is related to terrorist activities or OFAC sanctions
                                    Knowledge includes the concept of ‘willful blindness’. This concept
                                    applies to a person who deliberately avoided positive knowledge; that is ‘if
                                    a person has his suspicion aroused but then deliberately omits to make
                                    further inquiries, because he wishes to remain in ignorance, he is
                                    deemed to have knowledge’.

                                    SUSPICIOUS TRANSACTION ANALYSIS
                                    On-going analysis of customer transactions must be completed to
                                    determine any suspicious trends or activities. It is the responsibility of
                                    the MLRO to ensure procedures are in place to complete transaction
                                    analysis where data / transaction information (‘knowledge’) is available:
                                       Multiple Large Cash transactions by same customer
                                       Single and multiple transactions completed just below reporting and
                                       recording thresholds (ie; $999.00 or $9999.00)
                                       Multiple transactions completed by same customer over period of a
                                       day/week/month
                                       Multiple transactions completed by same customer at different
                                       locations
                                       Multiple products purchased by same customer
                                       Same address/different customer transactions
                                       Same customer last name transactions
                                       Transactions where payments are sent/received from ‘high-risk’
                                       countries/locations
                                       Multiple transactions on the same day to the same beneficiary
                                       Increase in cash activities at specific branch/location
                                                        - 25 -
                                              ‘Unusual’ or ‘Suspicious’ Activity Analysis (cont’d)

                                SUSPICIOUS GEOGRAPHICAL ‘RED FLAGS’
                                With the global services Travelex provides, including transmission of
REFER to Anti-Money
Laundering Country Chart        money around the world, suspicious transaction analysis should consider
providing a list of high-risk   geographical risks:
countries.                      •  Sanctioned Countries
                                •  Secrecy Jurisdictions & Tax Havens
ALL Travelex Departments
should ensure up-to-date        •  Non Cooperative Countries
charts are available to         •  Drug Trans-shipment Countries
staff.
                                •  Drug Producing Nations
FOR ALL FORMS GO TO             •  Countries/Jurisdictions of Primary Concerns*
Travelex Americas Intranet         * Major money laundering countries of primary concern are identified based on
Site @ http://tnetamericas         whether the country or jurisdiction’s financial institutions engage in transactions
or contact your local MLRO.        involving significant amounts of proceeds from serious crime. It is not based on an
                                   assessment of the country or jurisdiction’s legal framework to combat money
                                   laundering or the degree of its cooperation in the international fight against money
                                   laundering.


                                Non-Cooperative Countries
                                As part of the FATF mandate, a list of non-cooperative countries is
                                provided. These country’s AML policies and regulations have been
                                reviewed in detail by the FATF and are deemed to have unacceptable or
                                no AML requirements in place as outlined in the FATF 40
                                Recommendations.

                                Major characteristics of an Ideal Financial Haven
                                Many countries have less stringent AML regulations or are in a location
                                that is amiable to money launderers. The characteristics to these types
                                of financial havens/countries are:
                                •    No deals for sharing tax information with other countries.
                                •    Availability of instant corporations.
                                •    Corporate secrecy laws.
                                •    Excellent electronic communications.
                                •    Tight bank secrecy/privacy laws (sharing of financial information).
                                •    A large tourist trade that can help explain major inflows of cash.
                                •    Use of major world currency, preferably the United States dollar, as
                                     the local money.
                                •    A Government that is relatively invulnerable to outside pressure.
                                •    A high degree of economic dependence on the financial services
                                     sector.
                                •    A geographic location that facilitates business travel to and from rich
                                     neighbours.
                                •    A free-trade zone.




                                                     - 26 -
                                      ‘Unusual’ or ‘Suspicious’ Activity Analysis (cont’d)

                        SUSPICIOUS TRANSACTION INDICATORS – TRAVELEX PRODUCTS
                        Indicators of what might constitute a suspicious transaction are listed
                        below. This list is by no means exhaustive but does suggest some
                        potential situations that could be indicative of money laundering taking
                        place particularly where large sums of money are involved.

                        If a transaction is deemed suspicious it must be recorded on a
                        Suspicious Transaction Form and forwarded to the MLRO. The customer
                        must not be made aware that this form is being completed.


SUSPICIOUS FOREIGN      The age, appearance and dress of the customer conflict with a
EXCHANGE TRENDS,        transaction of that type or value.
including F/X cash to   The size of the transaction itself.
cash, Negotiable
Instrument and          The customer is reluctant to provide ID or the address details or has
Travellers Cheque       various forms of ID in different names.
activities.             The customer is in a hurry, aggressive or demanding.
                        The customer changes money that is not consistent with their
                        destination or the Terminal or Port that they are traveling from.
                        The customer conducts regular transactions that do not appear to be
                        travel or business related.
                        The customer conducts large transactions that do not appear to be
                        travel or business related.
                        The customer asks to split a transaction or conducts multiple
                        transactions in the same currency to just under the large transaction
                        level. This is known as ‘Smurfing’.
                        The customer downsizes the transaction to just under the large
                        transaction level.
                        The customer does not know how much money they have and asks the
                        Travelex staff member to count their cash.
                        Frequent exchange of small denomination notes for large notes or vice
                        versa.
                        The transaction includes some counterfeit notes.
                        Customers who appear to know each other and each do a transaction
                        close to compulsory identification requirement of that jurisdiction.
                        The customer was seen at another Travelex counter or even at a
                        competitor’s counter earlier in the day or a few days ago.
                        The customer asks about our internal procedures and doesn’t start the
                        transaction until he/she knows what they are.
                        The customer conducts a large encashment of Travellers Cheques that
                        were purchased very recently.


                                            - 27 -
Identifying ‘Unusual’ or   Customer requests a transaction at a foreign exchange rate that
‘Suspicious’               exceeds the posted rate.
Transactions (cont’d)      Customer wants to pay transaction fees that exceed the posted fees.
                           Customer instructs that funds are to be picked up by a third party on
                           behalf of the payee.
                           Customer knows little about address and contact details for payee, is
                           reluctant to disclose this information, or requests a bearer instrument.
                           Customer wants a cheque issued in the same currency to replace the
                           one being cashed.
                           Customer requests numerous cheques in small amounts and various
                           names, which total the amount of the exchange.
                           Customer performs activities for multiple nominees (or on behalf of),
                           such as friends and family.
 SUSPICIOUS FUNDS          Client wants to transfer/receive large sums of money to overseas
 TRANSFER (WIRE)           locations with instructions to the foreign entity for payment in cash.
 TRENDS
                           Client receives electronic funds transfers and immediately purchases
                           monetary instruments prepared for payment to a third party which is
                           inconsistent with or outside the normal course of business for the client.
                           Client requests payment in cash immediately upon receipt of a large
                           electronic funds transfer.
                           Client instructs you to transfer funds abroad and to expect an equal
                           incoming transfer.
                           Client transfers funds to another country without changing the form of
                           currency.
                           Client sends frequent wire transfers to foreign countries, but business
                           does not seem to have connection to destination country.
                           Wire transfers are received from entities having no apparent business
                           connection with client.
                           Size of electronic transfers is out-of-keeping with normal business
                           transactions for that client.
                           Wire transfers do not have information about the beneficial owner or
                           originator when the inclusion of this information would be expected.
                           Beneficiaries of wire transfers involve a large group of nationals of
                           countries associated with terrorist activity.
                           Client conducts transactions involving countries known as narcotic
                           source countries or as trans-shipment points for narcotics, or that are
                           known for highly secretive banking and corporate law practices.
                           Client makes electronic funds transfers to free trade zones that are not
                           in line with the client’s business.
                           Client shows unusual interest in electronic funds systems and questions
                           limit of what amount can be transferred.



                                               - 28 -
                                               ‘Unusual’ or ‘Suspicious’ Activity Analysis (cont’d)

                                 SUSPICIOUS TRANSACTION INDICATORS – NEW CUSTOMERS
Beware of a new customer         Staff dealing with non-retail operations, are equally important to the
prospect that provides           company’s strategy in the fight against money laundering.
insufficient or suspicious
information.
                                 As money laundering is a necessary consequence of almost all profit
Immediately report any           generating crime, it can occur practically anywhere in the world.
suspicious NEW customer          Generally, money launderers tend to seek out areas in which there is a
activities to your local MLRO,   low risk of detection due to weak or ineffective anti-money laundering
including completion of a
Suspicious Activity Report.      programs.

                                 Methods popular to money launderers are the establishment of
                                 anonymous companies in countries where the right to secrecy is
                                 guaranteed. They are then able to grant themselves loans out of the
                                 laundered money in the course of a future legal transaction.

                                 Laundering may also take the form of sending false export/import
                                 invoices that overvalue goods allowing the launderer to move money
                                 from one company and country to another with the invoices serving to
                                 verify the origin of the monies placed with financial institutions.

                                 Indicators of what might constitute suspicious transactions are listed
                                 below. These are not intended to be exhaustive and only provide
                                 examples of the most basic way that money can be laundered.
SUSPICIOUS NEW                   A business that is reluctant to provide complete information regarding
CUSTOMER TRENDS                  the purpose of the business, banking relationships, officers or directors,
                                 or its location.
                                 A customer wants to enter into transactions/beneficiaries with counter
                                 parties in locations that are unusual to the business or are considered
                                 ‘high risk’ countries.
                                 A customer who is unwilling to provide background information when
                                 pursuing a dealing relationship.
                                 A customer who pursues a dealing relationship without references, a
                                 local address, or identification (passport, drivers license or any
                                 recognized document of identification), or refuses to provide any other
                                 information that a bank would.
                                 A customer who presents unusual or suspicious identification
                                 documents that cannot be readily verified.
                                 A customer who provides only a mobile phone number as a contact
                                 number, does not have a permanent address or cannot meet at their
                                 office.
                                 A business that is reluctant to reveal details about its activities or to
                                 provide financial statements.
                                 A business that presents financial statements noticeably different from
                                 those of similar businesses.

                                                     - 29 -
                                    ‘Unusual’ or ‘Suspicious’ Activity Analysis (cont’d)

                       SUSPICIOUS TRANSACTION INDICATORS – ON-GOING CUSTOMERS
                       Beware of changes in transactions:
SUSPICIOUS ON-GOING
                       Significant changes in currency shipment patterns between
CUSTOMER TRENDS,
                       correspondent banks.
including TGP,
Wholesale and Retail   Significant turnover in large denomination notes.
customers
                       A large increase in small denomination notes and a corresponding
                       decrease in large denominations but no increase in turnover.
                       A corporate account where transactions are requested in cash.
                       A customer who operates a retail business and provides a cheque
                       cashing service and does not make large draws of cash against cheques
                       deposited. This may indicate that the customer has another source of
                       cash.
                       An unusual purchase of bank drafts or cheques.
                       Transfers of money to or from a country, company or individual that
                       appears on the Office of Foreign Assets Control List (OFAC), the FATF list
                       of Non Cooperative Countries or those in ‘Off shore jurisdictions.
                       Sudden inconsistent change in transactions or patterns.
                       An account that sends and receives wire transfers to or from a
                       suspected drugs ‘source’ or ‘transit’ country without apparent reasons
                       or when inconsistent with the customers business or history.
                       An account that receives many small incoming wire transfers or makes
                       deposits using cheques and immediately transfers all but a residue
                       amount to another account, when this activity is not consistent with the
                       customers business or history.
                       Depositing funds into several accounts, usually in amounts below a
                       reportable threshold, and then consolidating into a master account and
                       transferring them outside the country.
                       Customers requesting to transfer funds abroad and to expect an equal
                       incoming wire transfer from other sources.
                       Wiring proceeds of a deposit to another country without changing the
                       form of currency or converting to local currency.
                       Receiving wire transfers and immediately purchasing monetary
                       instruments prepared for a payment to a third party.
                       Personal transactions requested by corporate customers
                       Increase in beneficiaries or settlement countries without any business
                       reasons
                       Personal beneficiaries or numbered companies
                       Request to pay beneficiary in multiple/split payments
                       Constant change in staff/contacts or poor administration and
                       communication with customer/company.

                                          - 30 -
                                                        Summary
With increasing integration of the world’s financial systems, constant
improvements in technology and freer movement of capital, money
launderers have more and different opportunities to hide the proceeds of
their crime. They are able to quickly move their criminally derived cash
between national jurisdictions complicating the task of tracing and
confiscating these assets.

As a result, it was recognized by many governments that close
international co-operation is needed to counter money laundering, and a
number of agreements have been reached internationally in order to
counter this global threat.

This close co-operation must also exist between Travelex staff and their
local MLRO. This Handbook promotes such co-operation and on-going
communication is encouraged.

Let’s play CATCH!
An easy way to remember Travelex Anti-Money Laundering procedures is
the acronym CATCH.
 Confirm       Identify the customers (‘KYC’)
 Appoint       Appoint a Money Laundering Reporting Officer who is
               responsible for ensuring an on-going AML Compliance
               Regime.
 Train         Train staff in key areas to identify suspect transactions
               and give all staff an awareness of the Money Laundering
               phenomena.
 Controls      Maintain such other procedures of internal control and
               communications, as may be necessary to prevent and
               detect money laundering and ensuring compliance with
               local government AML regulations and reporting.
 Hold          All records including transaction history, suspicious
               transaction reports and associated documentation must
               be held for a minimum of 5 years.


Travelex prides itself on our vigilance and integrity and the
effectiveness of our controls. Fighting money laundering
demands a major team effort and everyone has a
responsibility to play his or her part.




                  - 31 -
Travelex Offices Worldwide

Group Head Office        Asia                    USA
65 Kingsway              Unit 2210-2218          1000 Franklin Avenue
London, England          Level 22 Tower 1        Suite 100
WC2B 6TD                 Millennium City         Garden City, New York
T: +44 (0)20 7400 4000   388 Kwun Tong Road      11530
F: +44 (0)20 7400 4001   Kwun Tong               T: +1 516 663 5200
                         Kowloon, Hong Kong      F: +1 516 663 5291
                         T: +852 2853 9888
European HO/Admin        F: +852 2581 1707       2121 North 117th Avenue
Worldwide House                                  Suite 300
Thorpe Wood                                      Omaha, Nebraska
Peterborough, England
                         Australasia
                         1 Margaret Street       68164
PE3 6SB                                          T: +1 402 491 3200
T: +44 (0)1733 563200    Level 13
                         Sydney, Australia       F: +1 402 491 0016
F: +44 (0)1733 502033
                         NSW 2000
                         T: +61 (0)2 8585 7000
Canada                   F: +61 (0)2 8585 7575
100 Yonge Street
14th Floor
Toronto, Ontario
M5C 2W1
T: +1 416 359 3700
F: +1 416 359 3673


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