ANTI-MONEY LAUNDERING / COMBATING THE FINANCING OF TERRORISM AND DUE-DILIGENCE POLICY

  1. INTRODUCTION

The combating of money laundering and the financing of terrorism has, in recent years, become a challenge of global proportions. Money launderers, terrorists and criminal groups have become more sophisticated in their methods and techniques. Trading in precious metals products is one of the techniques being used by the launderers, terrorists, and criminals.

For the policy (“the Policy”):

Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of criminal activities. If successful, the money can lose its criminal identity and appear legitimate. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.

The financing of terrorism and criminal activities is an offence within the meaning of the UN International Convention for the Suppression of the Financing of Terrorism (1999), where a person by any means, directly or indirectly, unlawfully, and willingly, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, to carry out:

  • An act which constitutes an offence within the scope of and as defined in one of the treaties listed on annex of the abovementioned treaty, or
  • Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking any active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population or to compel a government or an international organization to do or to abstain from doing an act.

The U.A.E., Cognizant of the need for regulatory legislation, has enacted numerous laws at federal level to prevent and criminalize money laundering and the financing of terrorism and criminal activities.

  1. COMMITMENT OF ULTRA GOLD AND DIAMOND JEWELLERY

Ultra Gold and Diamond Jewellery Co. L.L.C is a company registered in U.A.E and trading in precious metal products. Accordingly, we are covered under the United Arab Emirates Federal Decree Law No.20 on Anti-Money Laundering and Combating the Financing of Terrorism and illegal organizations (the “AML law”). Under this law, we are obligated to establish a set of policies and procedures to ensure that we do not facilitate money laundering and / or the financing of terrorist / criminal activities. It is mandatory on Ultra Gold and Diamond Jewellery to strictly adhere to the policies, rules, regulations, and guidance provided by the government of U.A.E. / Central Bank / DMCCA / OECD / other responsible regulators. Ultra Gold and Diamond Jewellery has appointed a compliance officer to take care of the company’s compliance with the directives / circular of the local regulators / DMCCA / other authorities. Ultra Gold and Diamond Jewellery continues to educate its staff on the rules and regulations of anti-money laundering and combating financing of terrorism and criminal activities with a specific emphasis on the KYC (Know Your Customer) principal. Staff is also encouraged to participate in the various seminars and lectures organized by the various authorities.

We do not tolerate profit, assist, facilitate, or contribute to:

  • Torture, degrading or cruel treatment in any form whatsoever.
  • Any forms of forced or compulsory labor, including the worst forms of child about (a defined by the International Labor Organization Convention No 1820) which Includes:
    • All forms slavery or practices similar to slavery, such as a sale and trafficking of children, debt bondage and serfdom and forced or compulsory labor, including forced and compulsory recruitment of children for use in armed conflict.
    • The use, procuring or offering of a child for prostitutions, for the production of pornography or for pornographic performances.
    • The Use, procuring or offering of a child for illicit activities, in particular for the production and trafficking of drugs as defined in the relevant international treaties.
    • Work which, by its nature or the circumstances in which it is carried out, is likely to harm the health, safety, or morals of children.
  • Any other forms of human rights violations.
  • War crimes, violations of international humanitarian law, crimes against humanity or genocide.
  • Any form of criminal activity, including but not limited to money laundering, extortion, corruption, or law-breaking activity.

We commit to rejecting or immediately suspending and discounting engagement with suppliers or customers where we identify a reasonable risk that they are sourcing, or are linked, to parties committing any of the abuses described above.

We will not tolerate any direct or indirect support to non-state armed groups or their affiliated who:

  • Illegally controlled mine sites, transportation routes or other points in the supply chains.
  • Illegal tax or extort money or minerals at any point in the supply chain, such as mining sites, or points where minerals are traded or exported.

We commit to reject or immediately suspend and discontinue engagement with suppliers or customers where we identify a reasonable risk that they are providing direct or indirect support to non-state armed groups as described above.

We recognize that the role of the public or private security forces is to maintain the rule of law, including safeguarding human rights providing security to mine workers and their equipment, and protecting the mine sites and transportation routes. We therefore commit to eliminate, however possible, (for instance through disengagement with the relevant suppliers) direct or indirect support to public or private security forces that illegally control mine sites. Transportation routes or actors in the supply chain, or who commit abuse, or the actions described in (a) and (b) of paragraph 2 above.

We commit to not offering, promising, giving, or demanding any bribes, and we will resist the solicitation of bribes to:

  1. Conceal or disguise the origin of minerals.
  2. Misrepresent taxes, fees and royalties paid to government for the purpose of mineral extraction, trade, handing, transport, and export.

In fact, we have a zero-tolerance policy toward any type of bribery or corruption. Under no circumstances shall any employee or anyone on behalf of an employee give, pay, offer, promise to pay, or authorize the giving or payment of the money or any other thing of value to any foreign government official or client, vendor, or other business partner for any improper purpose or in violation of applicable laws.

We will, however, ensure to the extent possible that all taxes, fees, and royalties related to mineral extraction, trade and export from conflict-affected and high-risk areas are paid to government as required.

We will support efforts and contribute to the elimination of money laundering and the financing of terrorism, and we commit to reject or disengage from counterparties where we identify a reasonable risk of such activity.

We will uphold high standards of environmental protection and sustainability. We commit to minimize the impact of our processes on the environment and to follow all emissions and other regulations, given our activity. We also commit to investigate the sustainability and environment impact of our suppliers.

  1. THE PROCEDURES AND CONTROLS

The procedures and controls to implement the policy are as follows:

  1. Identification, Verification, and Know Your Customer (‘KYC’) measures
  2. Opening of customers / suppliers’ account
  3. Updating of KYC information
  4. Screening of transitions
  5. Due diligence
  6. Reporting of suspicious activities
  7. Training and awareness
  8. Record keeping

Identification, Verification, and Know Your Customer (‘KYC’) measure:

  1. ID, VR, and KYC together form the first key step in the procedures and controls and are to be conducted prior to entering into any deal with the customers. It enables us to obtain background information about our customers, their business, source of funds, source of precious metals products and their expected level of activity.
  2. The carrying out of ID, VR and KYC procedure are mandatory.

Where customers / suppliers are individual person(s):

The ID, VR and KYC process must, in order to be valid, cover the following details regarding each individual customer / supplier:

  1. Customer’s full name (as per valid ID)
  2. Nationality
  3. Physical address (residential and business / home country and U.A.E.)
  4. Contact details
  5. Source of funds / precious metals products.
  6. Beneficial owner of funds / precious metal products

Where customers / suppliers are a corporate trader / refineries / mining co:

 The ID, VR and KYC process must, in order to be valid, cover the following details regarding the corporate customer / supplier:

  1. Company registration documents
  2. List of shareholder / director / manager / authorized person(s) / beneficial owners (as may be applicable)
  3. Physical address and contact details
  4. Source of funds used to buy the precious metal products from us and related declaration
  5. Source of gold sold to us and related declaration
  1. KYC PROCESS

The KYC process is to be carried out after obtaining the abovementioned information about customers / suppliers.

The existing law in the U.A.E. forbids us to deal with the shell companies. A ‘shell company’ shall mean an institution that has no physical presence in any country, and which merely exists on paper.

An integral part of the KYC process is the carrying out of customers / suppliers screening and relative risk assessment. Screening ensures that the customer is not listed on those official sanctions lists issued by UN, Government, and other law enforcement agencies.

When conducting the KYC process, no reliance must be placed on third party information or ‘hearsay’-ID, VR and KYC must all be carried out by us.

It should be kept in mind that KYC is more than a procedure and is actually a discipline that is to be encouraged and developed. For example, KYC should become second nature so that, in addition to the foregoing, any significant information related to the customers obtained during meetings, telephone discussions, visits, etc. and which is deemed to be relevant for the purposes of the policy should be recorded. Fresh CDD should be undertaken, especially if it appears that the veracity or accuracy of previous information is doubted.

KYC information updating:

In the case of a regular customer, reasonable steps must be taken to ensure that ID, VR and KYC information is updated as and when required. As a minimum standard, KYC information must be updated every year.

Procedure guidance:

Ultra Gold and Diamond Jewellery has framed the following procedural guidance for KYC, and it should be strictly followed by the staff when entering any transaction with the customers / suppliers:

  1. Customers / suppliers account opening:
    1. After the KYC Process is complete, and if found satisfactory, the customers / suppliers account is opened for transactional purposes. A copy of all KYC documents must be obtained and be verified with the original before opening any new account. Due attention must be given validity of the documents, review of these documents must be made every year.
  1. Transactions with customers / suppliers:
    1. After an account is opened, the customers / suppliers can transact with the company. All transactions must follow the following procedures:
      1. Copy of identity document (Trade license, Passport, residence ID, driving license etc.) must be obtained. The ID copy must be verified with original.
      2. Where the customer is represented by his representative then proper authority letter authorizing the representative to sign and act on his behalf should be obtained.
      3. Prescribed declaration form to be filled by customers / suppliers for source of precious metal products / funds. The source of precious metal products should not be of criminal origin or sanctioned countries.
      4. The dealers must be able to ensure that the account of the customers / suppliers related to a transaction is in an active status and all KYC is updated.
  1. Transaction of politically exposed person(s) and senior political figure(s):
    1. We do not entertain any transactions with a politically exposed person(s) and senior political figure(s).
  1. Due diligence:
    1. We commit to implement, centralize, communicate, monitor, adapt and improve a robust due-diligence system, which will include:
      1. Clear responsibilities and escalation channels for all relevant employees or external stakeholders.
      2. A framework that assesses risk in the supply chain and identifies conflict affected and high-risk areas.
      3. A robust Know Your Customer (‘KYC’) framework for all our customers / suppliers.
      4. Monitoring of transactions and risk mitigation steps based on the risk assessment of suppliers.
      5. Maintaining records.
      6. Mandatory training for all relevant employees.
  1. Reporting of suspicious activities:
    1. It is obligatory for all staff members to report any suspicious activities or information related to transactions with customers / suppliers to the compliance officers, who will assess the case and if he is convinced of money laundering / financing terrorism / criminal activities then he in turn shall report to the central bank’s anti money laundering & Suspicious cases unit (AMLSCU) in prescribed form. All such reporting should be kept secret of the customers / suppliers. Normally AMLSCU provides their immediate guidance on such reporting and further action like freezing of funds, reporting to local police authority etc. to be taken accordingly. In doing so, it is important that:
      1. The reason for the suspicion is fully explained; and
      2. No mention of the suspicious activity is to be made to the customers / suppliers involved in the transaction (failure to observe this requirement may result in the divulging party being prosecuted for the offence of ‘tipping off’); and
      3. Any additional information as may be requested by the regulating authority.
  1. Responsibility of compliance officer:
    1. To ensure that the KYC of all customers / suppliers is done and is updated from time to time.
    2. Conformity with the directives / circulars issued by the authorities from time to time.
    3. To report to the Central Bank about the suspicious transaction.
    4. To ensure that all staff members follow the guidelines issued by the Central Bank / DMCCA / OECD / any other competent authority time to time. Staff also must be provided suitable training (from time to time) by the Compliance officer for implementation of this policy and any issues related thereto.
  1. Record keeping:
    1. All transaction records, books of accounts and documents required under this policy should be retained for a period of at least 5 (five) years from the date of transaction.
  1. Administrative matters:
    1. The legal status of the company should be kept in order at all times and necessary copies of the documents shall be provided to the concerned authorities, banks, suppliers, customers etc.

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