I. Introduction
Celo Community Fund, Inc. (“CCF”) has issued these guidelines on “Know Your Customer” (KYC) and Anti-Money Laundering (AML) standards to ensure that a proper policy framework on KYC and AML measures be formulated and put in place with the approval of the Board of Directors. Accordingly, the following KYC & AML policy is approved by the Board of Directors of Celo Community Fund, Inc. This Policy is applicable to all categories of services offered by Celo Community Fund, Inc., principally, the award of Celo Community Fund grant funds.
The objective of these KYC/AML Policy guidelines is to prevent Celo Community Fund, Inc. grant funds from being used, intentionally or unintentionally, by criminal elements for money laundering activities.
CCF will implement and enforce internal policies as well as Anti-Money Laundering (AML), Bank Secrecy Act (BSA), and Office of Foreign Assets Control (OFAC) compliance.
II. Acceptance Policy
CCF shall follow the following norms while accepting and dealing with individuals and business entities:
- Individual must be 18 years of age or older
- Individual must not be incapacitated from entering into a contract.
- Name of the customer should not appear in the list of banned entities.
- CCF officials must be satisfied as regards KYC due diligence of the customer.
III. Anti-Money Laundering (AML)
Cryptocurrency-related institutions and closely related entities often experience attempts of money laundering and terrorist financing. Money laundering is defined as the process where the identity of the proceeds of the crime are so disguised that it gives the appearance of legitimate income. Terrorist financing is defined as the process of providing support to individual or group terrorists.
CCF pays thorough attention to any activities that may be considered as money laundering or terrorist financing. CCF’s AML policy is designed to prevent money laundering by complying with AML regulatory obligations including the need to have adequate systems and controls in place to mitigate the risk of being used to facilitate the financial crime. To minimize and mitigate the risk of money laundering and/or terrorist financing, CCF has implemented effective internal measures and procedures:
- Establishment of the identity of CCF grantee;
- Assessment of risk;
- Monitoring of the customer’s activities; and
- Reporting of suspicious activities to respective authorities.
A. Establishment of Identity
Before any individual can access and benefit CCF grants, the identity of such individual or organization has to be established. For CCF to be able to establish the identity of an individual or organization, CCF must obtain sufficient data/documents/information from a prospective grantee and verify such data/documents/information against independent sources.
Individuals or organizations that, in the opinion of CCF, pose higher risk may be investigated more thoroughly, which may result in the request of additional information for verification of the identity of such individual or organization. CCF retains a right to re-establish the identity of the individual or organization in cases where CCF sees fit and request additional data/documents/information or renew previously submitted requests.
Individual’s and organization’s identification information will be collected, stored, shared, and protected strictly in accordance with the CCF Privacy Policy and related regulations.
B. Assessment of Risk
To mitigate and minimize the risks, CCF has adopted a risk-based approach, which enables CCF to identify, assess, and understand the money laundering and terrorist financing risk to which CCF may be exposed, and take the appropriate mitigation measures in accordance with the level of risk. This risk-based approach also allows CCF to pay the most attention to the higher risk individuals or organizations, and allocate most of the resources for mitigation of such risks.
C. Monitoring
To get to know individuals and organizations, CCF performs ongoing and retrospective monitoring. Monitoring performed by CCF intends not only to get to know the individual or organization, but also to notice non-conformities, taking into account comparison information submitted to CCF by the individual or organization or obtained by CCF during establishment of the identity and such individual’s or organization’s actual activities.
CCF may use both manual and automated solutions to track its grantees’ activity. CCF may use other measures on case-by-case basis.
Each instance of suspicious activity will be thoroughly investigated and, if necessary, reported to the respective authorities, or other restrictive measures may be taken to ensure no money laundering or terrorist financing activity is performed. CCF is entitled to request additional information/data/documents in relation to the grant award, and the grantee must abide by such request.
D. Reporting to the Authorities
Following its AML Policy, CCF, when necessary, will report to the respective authorities activities that may be suspected to be money laundering and terrorist financing. CCF will not disclose any information about such report to have been made and will not address any questions in relation to that.
E. Compliance Officer
CCF has assigned a compliance officer and retained legal counsel to assist with AML compliance, who is responsible for implementation of CCF AML policy, including but not limited to, the above listed activities.
IV. Know Your Customer (KYC)
KYC is the means of identifying and verifying the identity of individuals or business entities through independent and reliant source of documents, data, or information. This mandates making reasonable efforts to determine the true identity of individuals, business entities, and organizations who may be subject to the receipt of CCF grant funding.
This helps CCF manage its risks prudently. Accordingly, the main objective of this policy is to enable the Company to have positive identification of individuals, business entities, and organizations.
A. KYC Protocol
- i. Individual, Business Entity, and Organization Identification Procedures
Identification means identifying the individual, business entity, or organization, and verifying their identity by using reliable and independent source of documents, data, or information to ensure that the individual, business entity, or organization is not a fictitious person, business entity, or organization. CCF shall obtain sufficient information necessary to establish, to its satisfaction, the identity of each individual, business entity, or organization.
An effective Individual or Organizational Identification Program (IOIP) is an important part of the effort by CCF to know its grantees, which contains provisions requiring the business processes to:
- Verify the identity of any individual, business entity, or organization transacting with CCF to the extent reasonable and practicable;
- Maintain records of the information used to verify an individual, business entity, or organization’s identity, including name, address, and other identifying information; and
- Consult lists of known or suspected terrorists or terrorist organizations provided to the CCF by any applicable government agency to determine whether an individual, business entity, or organization appears on any such list.
CCF will perform appropriate, specific, and where necessary, Enhanced Due Diligence on individuals, business entities, or organizations that is reasonably designed to know and verify the true identity of individuals, business entities, or organizations and to detect and report instances of criminal activity, including money laundering or terrorist financing. The procedures, documentation, types of information obtained, and levels of KYC due diligence to be performed will be based on the level of risk associated with the relationship between CCF and the individual, business entity, or organization and the risk profile of the individual, business entity, or organization.
- ii. Required “KYC” Due Diligence
CCF shall take reasonable measures to ascertain and verify the true identity of all individuals, business entities, or organizations who transact with CCF. Each business process shall design and implement specific due diligence standards and procedures that are appropriate given the nature of the respective individuals, business entities, or organizations, and the associated risks. Such standards and procedures shall include, at a minimum, the following elements.
For the purpose of identifying and verifying the identity of individuals, business entities, or organizations at the time of commencement of the relationship, CCF may rely on a third party, subject to the conditions that:
- CCF immediately obtains necessary information of such due diligence carried out by the third party;
- CCF takes adequate steps to satisfy itself that copies of identification data and other relevant documentation relating to the due diligence requirements will be made available from the third party upon request without delay;
- CCF is satisfied that such third party is regulated, supervised, or monitored for, and has measures in place for compliance with due diligence and record-keeping requirements in line with the requirements and obligations under applicable regulations;
- The third party is not based in a country or jurisdiction assessed as high risk; and
- CCF is ultimately responsible for client due diligence and undertaking enhanced due diligence measures, as applicable.
- a. Personal Verification
For an individual to pass verification, the individual must provide:
- First Name;
- Last Name;
- Photo ID from Issuing Country;
- Photo ID Serial Number;
- Photo ID Issue Date;
- Photo ID Expiry Date (if available);
- Residential Address;
- An image of a proof of residence (bank statement, utility bill, tax return, or another document issued by a government or a reliable licensed entity); and
- A photo of the individual, which can be in the form of a self photograph (“selfie”).
Information is checked for accuracy and consistency manually. CCF may also enlist a third-party vendor to assist with the verification process.
Identity verification is approved when all of the provided information is complete, and CCF has sufficient reason to believe that the actual owner of the identity documents is providing them.
- b. Business Entity or Organization Verification
For a business entity or organization to pass verification, the entity or organization must provide the Personal Verification information of a director, manager, officer, or official designee of the entity in addition to the following:
- Incorporation documents of the entity.
CCF, if deemed necessary, will also request and undertake review of the following:
- Analysis of application form;
- Search for information about the entity or organization in open source;
- Identify the business model;
- Identification of the entity’s or organization’s source of funds (if applicable);
- Review of the executive management of the entity (directors, managers, officers); and
- Any additional documents and information that may be required.
CCF may request further confirmation of the entity or organization’s source of funds, which may include, but is not limited to:
- Entity annual financial report;
- Entity tax return;
- Confirmation of business activity (contracts, invoices, bank statements, shipping documents);
- Corporate account bank statements;
- Loan agreement; and
- Bank statements confirming the transfer of funds.
A business entity or organization application will be rejected if:
- The legal entity is inactive;
- It is not possible to identify and verify the business entity or organization; and
- The suspected source of business entity or organization funds is illegal.
- iii. Suspicious Activity
CCF will engage legal counsel to review, detect, investigate, and resolve cases where there is a belief of suspicious individual, business entity, or organization activity.
While performing identity verification, CCF will note and report cases of suspicious activity, such as:
- An individual, business entity, or organization provides unusual, unfamiliar, or suspicious identity documents;
- An individual, business entity, or organization provides data that matches the data previously provided by another individual, business entity, or organization;
- An individual, business entity, or organization is found in a Politically Exposed Persons (PEP) list; and
- An individual, business entity, or organization is found on the Office of Foreign Assets Control (OFAC) list.
- iv. Blocked Countries
Individuals and entities from the following countries will be rejected:
- Afghanistan
- Barbados
- Bosnia and Herzegovina
- Burundi
- Cuba
- Ethiopia
- Iran
- Iraq
- Laos
- Lebanon
- Libya
- Myanmar
- Nauru
- North Korea
- Pakistan
- Palestine
- Somalia
- South Sudan
- Sudan
- Syria
- The Central African Republic
- The Democratic Republic of the Congo
- Uganda
- Vanuatu
- Yemen
- Zimbabwe
- v. Training CCF in KYC/AML Compliance Procedures
CCF’s compliance training aims to provide training on the subjects of regulatory requirements, compliance policies, and procedures.
The training program makes sure that:
- All consultants or employees who deal with KYC or AML procedures receive appropriate training.
- All consultants or employees who deal with KYC or AML procedures go through evaluation.
Training will be continuous and provides information on new developments and relevant changes in respective regulations.
