Anti-Money Laundering

1.0 Overview

It is a legal requirement to comply with the anti-money laundering laws in force in Mauritius and the various guidelines and regulations related thereto issued by the FSC, FIU and the Government of Mauritius such as the FIAMLA 2002 and FIAMLA regulations. This Manual for Compliance and Anti-Money Laundering is for the understanding, and it documents the procedures required to be adhered to by all staff and officers of the Company to combat laundering of criminal proceeds, the financing of terrorism and financing of proliferation of weapons of mass destruction.

Staff members and officers should understand the procedures set out herein and the Company’s policies with regards to sound Customer Due Diligence (‘CDD’) measures and checks. This Manual should be read together with the AML Handbook which is very detailed and helpful. Several texts of the AML Handbook have been repeated in this Manual. The AML Handbook is designed to help financial institutions like the Company to adopt a more effective, risk-based and outcome-focused approach. The AML Handbook does not cover an exhaustive list of ML & TF risks that a financial institution can face but there are examples of such risks. The FSC will consider the AML Handbook when assessing the level of compliance with the ML & TF laws and regulations.

The AML Handbook requires the board and senior management of a financial institution have a responsibility to ensure that a financial institution’s systems and controls are appropriately designed and implemented and are effectively operated to reduce risk of the business being used in connection with ML & TF.

The board and senior management of a financial institution must have documented systems and controls which:

1. undertake risk assessments of its business and its customers;
2. determine the true identity of customers and any beneficial owners and controllers;
3. determine the nature of the business that the customer expects to conduct and thecommercial rationale for the business relationship;
4. require identification information to be accurate and relevant;
5. require business relationships and transactions to be effectively monitored on anongoing basis with particular attention to transactions which are complex, both largeand unusual, or an unusual pattern of transactions which have no apparent economic orlawful purpose;
6. compare expected activity of a customer against actual activity;
7. apply increased vigilance to transactions and relationships posing higher risks of ML &TF;
8. ensure adequate resources are given to the Compliance Officer to enable the standardswithin this Handbook to be adequately implemented and periodically monitored andtested;
9. ensure procedures are established and maintained which allow the Money LaunderingReporting Officer (‘MLRO’) and the Deputy MLRO to have access to all relevantinformation, which may be of assistance to them in considering suspicious transactionreports (“STRs”)

The Company shall adopt a robust approach and shall not refrain from asking customers non-customary questions in circumstances of unusual activity. Any reluctance or failure by the Seamless Markets Limited

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customer to provide credible and verifiable answers should lead the Company to investigate the reason for this reluctance, establish any case for suspicion and follow up with appropriate action.

A hierarchical approach within a business may hinder an effective system of AML/CFT control, which the Company needs to recognise and address. The human element is particularly important since policies and procedures only work if they are understood, followed and enforced by those required to comply with them. The hierarchical relationships between employees within the Company and with its customers can face the following damaging barriers:

1. senior management being unwilling to lead on the concept of the need for soundcorporate ethics;
2. junior employees assuming that their concerns or suspicions are not significant;
3. employees being unwilling to subject high value (therefore important) customers toeffective CDD checks;
4. management or customer relationship managers outside Mauritius pressurisingemployees in Mauritius to transact without obtaining all relevant CDD and businessrelationship information;
5. employees being unable to understand the commercial rationale for customerrelationships and the use of certain products / services, so that potentially suspiciousactivity is not identified;
6. lack of time and/or resources to address concerns generating a tendency for linemanagers to discourage employees from raising concerns; and
7. conflict between the desire on the part of employees to provide a confidential andefficient customer service and the requirement for employee vigilance in respect ofprevention and detection of ML/TF.

The FATF Recommendations provide for AML/CFT requirements, allowing a business to adopt a risk-based approach towards the prevention and detection of ML and TF.

It is very important to note that FIAMLA, FIAML Regulations 2018 do not prohibit or prevent any type of business, customers or systems from operating, unless they are involved in ML/TF. The legislation only requires that the risks posed by customers, products and systems are identified, mitigated and the mitigating factors/controls documented and reviewed periodically.

The application of a risk-based approach provides a strategy for managing potential risks by enabling financial institutions to subject customers to proportionate controls and oversight. Financial institutions should avoid the “tick box” approach at all times, and always have to determine their risks themselves, based on their respective circumstances.

To demonstrate that a financial institution acted reasonably, an assessment of risk should always be documented, reasonably and objectively justifiable and sufficiently robust. Finally, while a risk-based approach grants a wide degree of discretion, parameters set by law or regulation may limit that discretion.

The purpose of this document is to:

• Outline the company’s framework and strategic position in respect of the prevention ofMoney Laundering and Counter Terrorist Financing within all of its remote operations.

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• Identify the measures and procedures, which have been implemented and embeddedwithin the Company’s operations.
• Detail and describe the Company’s procedures on a risk-based approach in order toensure compliance.
• Outline and set out the processes, measures and audit methods in use in order toensure that the Company’s AML policy is known and adhered to by all employees.
• Outline the duties of the Compliance Officer and the MLRO

1.1 What is risk

Risk can be seen as a function of three factors and ideally, a risk assessment involves making judgments about all three of these elements:

• THREAT – person or group of people, an object or an activity with the potential to causeharm. The threats may vary across customers, countries, geographic areas,products/services and delivery channels.
• VULNERABILITY – that which can be exploited by the threat or that may support orfacilitate its activities, such as size and volume of the business and client base profile.
• CONSEQUENCE – the impact or harm that ML or TF may cause, such as the impact onreputation and imposition of regulatory sanctions.

1.2 What is mitigation

Once the risks have been identified, financial institutions must then take appropriate steps to mitigate any risks that have been identified. This will involve determining the necessary controls or procedures that need to be in place in relation to a particular part of the business in order to reduce the risk identified. The documented risk assessments that are required to be undertaken by Section 17 of the FIAMLA will assist the business to develop a risk-based approach.

Systems and controls may not always prevent and detect all ML/TF. A risk-based approach will, however, serve to balance the cost burden placed on financial institutions and their customers, with a realistic assessment of the threat of a business being used in connection with ML/TF. It focuses effort where it is needed and has most impact.

1.3 Assessing Compliance with a Risk Based Approach

Financial institutions should avoid internal systems of control that encourages the ‘tick box’ approach rather than involving a thorough thought process, which is counter-productive. Internal systems should require employees to think about the risks posed by individual customers and relationships and to mitigate appropriately and document their thought process. The FSC must be able to see clear, documented rationale of how risks have been assessed and then how these risks have been mitigated or controlled.

In accordance with Regulation 31 of the FIAML Regulations 2018, any risk assessment systems used by the financial institution should be reviewed regularly to ensure an effective system is in place and swift action should be taken to remedy any identified deficiencies.

The Company recognizes that failure to comply with anti-money laundering laws, on its part or any individual employed by them, may result in sanctions being leveled against them and that these sanctions include regulatory action, prosecution, loss of license or fines and could affect Seamless Markets Limited

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the ability of the Company to operate in the future. There are also actions under the Administrative Penalties Regulatory Framework which may also apply.

All the procedures below in this manual and those set out in the AML Handbook should be adhered to. Failure to do is a breach of your duty towards the Company and the regulatory authorities.

In order to ensure that the Company and its employees are not in breach of Anti Money Laundering legislations, the company will:

• Maintain the role of an appointed Money Laundering Reporting Officer (‘MLRO’).
• Deliver staff training at all levels that includes identification of suspicious transactions,activity or incidents and the correct reporting process.
• Include in staff training the fact that a customer should not in any way be informed thatthey are either suspected or the subject of a report.
• Operate an audit process that measures compliance with anti-money launderingprocedures and identifies points of difficulty or uncertainty.
• Risk assesses the business and ensures that an appropriate level of examination isprovided to higher risk business.
• Maintain reports, records of anti-money laundering activities for inspection by theregulators.
• Provide a source of communication for all enquiries or questions and a reportingprocess that directs information to the MLRO.
• Make Suspicious Transaction Reports in accordance with Anti Money Launderinglegislation applicable.
• Consider any action by an employee that is in breach of company instruction or policy inrelation to anti-money laundering as an action, which may lead to disciplinary actionand summary dismissal.
• Comply with such other ML & TF requirements

It is the responsibility of every member of staff to report any suspicions regarding potential money laundering by contacting the MLRO directly.

2.0 Corporate Governance in Financial Crime

2.1 Introduction

Good corporate governance should provide proper incentives for the board and senior management to pursue objectives that are in the interest of the firm and its shareholders and should facilitate effective monitoring of the firm for compliance with its AML and CFT obligations.

The presence of an effective corporate governance system, within an individual company and across an economy as a whole, is key to building an environment of trust, transparency and accountability. Seamless Markets Limited

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2.2 Board Responsibility for Compliance

The Board of the Company is responsible for managing the institution effectively and is in the best position to understand and evaluate all potential risks to the financial institution, including those of ML and TF. The Board must therefore take ownership of, and responsibility for, the business risk assessments and ensure that they remain up to date and relevant.

On the basis of its business risk assessment, the Board must establish a formal strategy to counter money laundering and financing of terrorism. Where a financial institution forms part of a group operating outside Mauritius, that strategy may protect both its global reputation and its Mauritius business. The Board must document its systems and controls (including policies and procedures) and clearly apportion responsibilities for countering money laundering and financing of terrorism, and, in particular, responsibilities of the Compliance Officer and MLRO.

The financial institution shall establish and maintain an effective policy, for which responsibility shall be taken by the Board, and such policy shall include provision as to the extent and frequency of compliance reviews. The Board should take a risk-based approach when defining its compliance review policy and ensure that those areas deemed to pose the greatest risk to the firm are reviewed more frequently.

The Board must consider the appropriateness and effectiveness of its compliance arrangements and its policy for the review of compliance at a minimum annually, or whenever material changes to the financial institution occur. Where, as a result of its review, changes to the compliance arrangements or review policy are required, the Board must ensure that the financial institution makes those changes in a timely manner.

As part of its compliance arrangements, the financial institution is responsible for appointing a Compliance Officer (‘CO’) who is responsible for the implementation and ongoing compliance of the financial institution with internal programmes, controls and procedures in accordance with the requirements of the FIAMLA and FIAML Regulations 2018.

In addition to appointing a CO, an independent audit function to test the ML and TF policies, procedures and controls of the financial institution shall be maintained, pursuant to Regulation 22(1)(d) of the FIAML Regulations 2018.

The Board must ensure that the compliance review policy takes into account the size, nature and complexity of the business of the financial institution, including the risks identified in the business risk assessments. The policy must include a requirement for sample testing of the effectiveness and adequacy of the financial institution’s policies, procedures and controls.

The Board must document its systems and controls (including policies and procedures) and clearly apportion responsibilities for ML and TF, and, in particular, responsibilities of the MLRO and Compliance Officer.