AML/CTF Definitions

Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from criminal activities is considered dirty, and the process “launders” it to make it look clean.

Money laundering reduces the risk of detection and confiscation by authorities. It is just as serious as the criminal activity behind it – and preventing it can help reduce crime.

Terrorism financing differs from money laundering in 3 main ways:

· Its primary purpose is to disguise the ultimate use of the funds, as opposed to their origin.

· It can involve relatively small sums of money, which can have a huge impact in terms of death, destruction and disruption.

· Although terrorists may finance their activities through crime, legitimate funds can also be misappropriated to finance terrorism.

Customer identification Fincrypt provides a list of ‘designated services’ to their business customers, such as opening a business account or withdrawing funds from the sale of goods and services. Before receiving any of these designated services, customers will be required to provide proof of identity or similar documentation.

Fincrypt is required to collect and verify this information, depending on the type of customer:

· Sole proprietorship - a person who trades in their own legal right without the use of a company structure, incorporation or partners and who, alone, has full liability for the activities of the business

· Company - including proprietary, public and listed public companies

· Limited liability partnership – one or more general partners with unlimited liability, and one or more limited partners.

· Partnership - a relationship between persons (the partners) carrying on business in common, under a partnership agreement, with a view to profit.

· Trust - a relationship where the trustee holds property or assets for a beneficiary. The trustee can be an individual, a group of individuals or a company.

· Association - a group of persons who have agreed to join together in pursuit of one or more common objectives. An association can be incorporated or unincorporated.

· Registered co-operative - a legal entity owned and controlled by the people for whom it was established and who benefit from using its services

· Government body - can be domestic (e.g. Commonwealth, State, Territory) or foreign government body.

Suspicion

Money laundering and terrorism financing (ML/TF) are sometimes detected because a customer acts or behaves in a suspicious way.

For a ‘suspicion’ to be valid, we must have reasonable grounds to believe ML/TF activity may be occurring. To support this, employees receive training in identifying and reporting suspicious matters.