ABDALI XCHANGE

WHY KYC?

The adoption of effective Know Your Customer (KYC) program is an essential part of financial institutions' risk management policies. Having sufficiently verified/corrected information about customers - “Knowing Your Customer” (KYC) - and making use of that information underpins all AML, CFT & CPF efforts, and is the most effective defense against being used to launder the proceeds of crime.
Financial institution with inadequate KYC program may be subject to significant risks, especially legal and reputational risk. Sound KYC Policies and Procedures not only contribute to the ABDALI XCHANGE Ltd overall safety and soundness, they also protect the integrity of its system by reducing money laundering, terrorist financing and other related offences.
ABDALI XCHANGE Ltd therefore, need to carry out customer due diligence for two broad reasons:

• to help the organization, at the time due diligence is carried out, to be reasonably satisfied tothose customers who they say about, to know whether they are acting on behalf of another, and that there is no legal barrier (e.g. government or international sanctions) to provide them with the product or service requested; and
• to enable the organisation in investigation, law enforcement by providing available information about customers in due process. It may be appropriate for the firm to know more about the customer by being aware of the nature of the customer’s business in order to assess the extent to which his transactions and activity undertaken with or through the firm is consistent with that business.

FATF recommendation 10 states that where the financial institution is unable to identify the customer and verify that customer‘s identity using reliable, independent source documents, data or information, and to identify the beneficial owner, and to take reasonable measures to verify the identity of the beneficial owner and unable to obtain information on the purpose and intended nature of the business relationship, it should not  commence business relations or perform the transaction; or should terminate the business relationship; and should consider making a suspicious transactions report in relation to the customer.

Nature of Customer’s Business

When a business relationship is being established, the nature of the business that the customer expects to conduct with the institution should be ascertained at the outset to establish what might be expected later as normal activity. This information should be updated as appropriate, and as opportunities arise. In order to judge whether a transaction is or is not suspicious, institutions need to have a clear understanding of the business carried out by their customers.

Identifying Real Person

An institution must establish to its satisfaction that it is dealing with a real person (natural, corporate or legal), and must verify the identity of persons who are authorised to operate any account or transact business for the customer. Whenever possible, the prospective/forthcoming customer should be interviewed personally. This will safeguard against opening of fictitious account.

Document is not enough

The best identification documents possible should be obtained from the prospective/forthcoming customer i.e. those that are the most difficult to obtain illicitly. No single piece of identification can be fully guaranteed as genuine, or as being sufficient to establish identity so verification will generally be a cumulative process. The overriding principle is that every Firm must know who their customers are, and have the necessary documentary evidence to verify this. Collection of document is not enough for KYC, identification is very important.

Financial institutions in the process of designing the KYC program should include certain key elements. Such essential elements should start from the financial institutions ‘risk management and control procedures and should include :-
(i) Customer acceptance policy,
(ii) Customer identification,
Abdali Xchange Ltd will not only establish the identity of it’s customers but will also monitor account activities to determine those transactions that do not conform with the normal or expected transactions for that customer or type of account. KYC will be a core feature of financial institutions’ risk management and control procedures and be complemented by regular compliance reviews and internal audit. The intensity of KYC programs beyond these essential elements will be tailored to the degree of risk.

I. Customer Acceptance Policy

ABDALI XCHANGE Ltd has been developing a clear customer acceptance policy and procedures, laying down explicit criteria for acceptance of customers including a description of the types of customer that are likely to pose a higher than average risk to a financial institution. In preparing such policies, factors such as customers’ background, country of origin, public or high profile position, linked accounts, business activities or other risk indicators have been considered.
It is important that the customer acceptance policy is not so restrictive that it results in a denial of access by the general public to financial services, especially for people who are financially or socially disadvantaged. On the other hand, quite extensive due diligence would be essential for an individual with a high net worth whose source of funds is unclear. Decisions to enter into business relationships with higher risk customers, such as public figures or politically exposed persons should be taken exclusively at senior management level.
The following Customer Acceptance Policy indicating the criteria for acceptance of customers shall be followed at ABDALI XCHANGE Ltd. We shall accept customer strictly in accordance with the said policy:

• No customer under the age of 18 (eighteen) shall be registered as a sender.
• No customer shall be registered in anonymous or fictitious names.
• Not to register any customer where ABDALI XCHANGE Ltd is unable to apply appropriate due diligence.
• Customer is not allowed to do registration on behalf of other customer.
• Necessary checks should be carried out before registering a new customer to ensure that the identity of the customer does not match any person with a known criminal background or an association with banned entities such as individual terrorist or terrorist organisations etc. This is by way of sanctions and PEPS screening which is carried out prior to any transaction.
• The status of the customer may change as the relationship progresses. To address this, employees should update information regarding the customer’s activities.
• This is done daily through the daily updated sanctions list which is integrated into the system (the “System”). We presently use the OFAC, HMT, UN, EU, lists and also use CreditSafe for sanction and PEPs check
• ABDALI XCHANGE Ltd is currently dealing with individual customers and company will not be dealing with any NGO, Trust or corporate company. If the company decide to onboard the corporate customer, firm will update its risk assessment and policy and procedures accordingly.

II. Customer Identification

Customer identification is an essential element of KYC standards. The customer identification process applies naturally at the outset of the relationship. To ensure that records remain up-to-date and relevant, we will undertake regular reviews of existing records. An appropriate time to do so is when a transaction of significance takes place, when customer documentation standards change substantially, or when there is a material change in the way that the account is operated. However, if we become aware at any time that our records lack sufficient information about an existing customer, we take steps to ensure that all relevant information is obtained as quickly as possible.
Once verification of identity has been satisfactorily completed, no further evidence is needed to undertake subsequent transactions. However, information should be updated or reviewed as appropriate and records must be maintained.

For all new customers, the following information will be collected:

• Full name and if they use more than one, all their names
• Residential address
• Date of Birth
• Place of Birth
• Gender
• Their Occupation
• Passport
• A copy of a government-issued identification (ID Card/Passport)
• As per Threshold A valid utility bill issued on the client’s name and current address – not older than 3 months. Utility bill can be water, electricity bill or adequate bank statements including clients account number, bank name, name of client and current place of living
• Their purpose and intended nature of the business relationship with ABDALI XCHANGES LTD.
• E-mail
• Contact number

The following current government-issued documents, which include the customer's full name, photo, date of birth, and residence address, are used to verify these:

• A valid passport
• A valid photo card driving licence (full or provisional)
• A national identity cards
• Firearms certificate
• An identity card issued by the Electoral Office for Northern Ireland

We shall make a copy and save it in the customer's file if we use the aforementioned list of official papers to confirm a customer's identity.
If the client does not have one of the aforementioned documents, we will require the following:
A government issued document (without a photo) which includes the customer’s full name and secondary evidence of the customer’s address, for example an old-style driving licence or recent evidence of entitlement to state or local authority funded benefit such as housing benefit, council tax benefit, pension, tax credit.
Secondary evidence of the customer’s address, not downloaded from the internet, for example a utility bill, bank, building society or credit union statement or a most recent mortgage statement. The documents must be from a reliable source not connected to the customer.
If a member of our staff has visited an individual at their home address. A record of their visit may corroborate the individual’s residential address (instead of the need for a second document). This should be covered in the risk assessment. Normally we will not visit client’s premises

All documents collected or gathered for establishing relationship must be filed in with supporting evidence. Where this is not possible, the relevant details should be recorded on the applicant's file. Since ABDALI XCHANGE Ltd will regularly conduct one-off transactions, we will record the details in a manner which allows cross reference to transaction records.

All consumers should be made aware that information is held for 5 years, that it may be checked at random, and that if any information is wrong, customers will be notified. Any submitted client address information should be checked again at least once every 12 months.