KYC

Fina Innovate s.r.o. “Know Your Customer (“KYC”)” Manual 6.1 Customer’s Identity

The first requirement of knowing your Customer for money laundering purposes is to be satisfied that a prospective Customer is who they claim to be.

As much information as possible should be obtained from new and regular Customers, such as the nature of business, nature of transactions, source of funds and proofs of identity.

Fina Innovate s.r.o.’s MLRO will conduct a review of all new Customers, and no transactions may be carried out on behalf of any new Customer without MLRO and/or CAO approval.

Each employee is responsible for obtaining the necessary information and proofs of identity for their relevant Customers and must submit completed applications to the MLRO. The MLRO will conduct an application review and any incomplete applications will be sent back to the relevant employee to be finalised.

If necessary, submit a report of your suspicions to the MLRO and refrain from conducting any more transactions for the Customer. In these circumstances you should make contemporaneous notes of any conversations with Customers and if the Customer in question is a regular Customer, place these notes on their file.

6.2 Beneficial Owner

Beneficial owners are the individual(s) behind the Customer who ultimately own or control the Customer or on whose behalf a transaction or activity is being conducted. In deciding who the beneficial owner is in relation to a Customer who is not a private individual (e.g., a company or trust) employees should aim to find out who has ownership of or control over the funds and / or forms the controlling management of the entity involved in the transaction or relationship. This should take account of the number of individuals, the nature and distribution of their interests in the entity, and the nature and extent of any business, contractual or family relationship between them.

As part of the standard KYC procedure, Fina Innovate s.r.o. must know the names of all individual beneficial owners who own or control more than twenty-five (25) % of the assets or voting rights, or who otherwise exert control, even where these interests are held indirectly.

Following the assessment of the money laundering and terrorist financing risks presented by the Customer, the employee must also decide what information should be obtained and verified for some of the individuals behind or connected to the Customer, for being satisfied that it knows who the ‘beneficial owners’ of the entity are. If an employee is unsure of the information required, they should contact the MLRO for assistance.

Fina Innovate s.r.o. uses a risk-based approach to decide when it is appropriate to rely on information provided by their Customers and when they need to obtain or verify information from another source. Accounts determined to represent a higher level of risk require written verification of the identity of parties with greater than twenty-five 25 % beneficial ownership. 

Where there are difficulties in verifying information provided on beneficial owners,e.g., where the Customer is from a jurisdiction where there is no requirement to file information about the persons who own or control a company, employees should review the information provided by the Customer and seek further evidence, where considered necessary. A decision should then be made, based on the information provided on the beneficial owner(s), the rationale for the transactions and the risks involved, as to whether the evidence of identity of the beneficial owner is satisfactory to enable the business relationship to be established or the occasional transaction to be carried out. Fina Innovate s.r.o. retains all information used to make such a determination in all cases.

6.2.1 Partnerships

The beneficial owners of partnerships are the individuals who are entitled to or control more than a twenty-five 25 % share of the capital or profits of the partnership or more than twenty-five 25 % of the voting rights.

6.2.2 Limited Companies and Limited Liability Partnerships

The beneficial owners of companies are the individuals who:

Ultimately own or control (whether through direct or indirect ownership or control, including through bearer shareholdings (being shares that are the property of whoever is in possession of the share certificate and no formal record of ownership is kept by the issuing company)) more than twenty-five 25 % of the shares or voting rights in the company.

For the avoidance of doubt this test is not used for companies whose shares are listed on a regulated market.

Otherwise exercise control over the management of the company. 

6.2.3 Trusts

In the case of trusts, beneficial owners are;

The Settlor;
The Trustee(s);
The Protector, if any;

The Benefactors, or where the individuals benefiting from the legal arrangements or entity have yet to be determined, the class of persons in whose main interest the legal arrangement; entity is setup; and

Any other natural person exercising ultimate control over the trust by means of direct or indirect ownership, or by other means.

6.3 Politically Exposed Persons (“PEPs”)

Politically exposed persons (“PEPs”) mean natural persons who are or have been entrusted with prominent public functions and immediate family members or persons known to be close associates, of such persons. Since Fina Innovate s.r.o. business is international by nature and taking into consideration that PEP individuals tend to be internationally mobile, Fina Innovate s.r.o. will not differentiate between domestic, foreign or international PEPs and will apply enhanced due diligence measures to all identified PEPs irrespective of their country of residence and regardless which country has granted a politically prominent position to a PEP.

Family members of PEPs are individuals who are related to a PEP either directly, by marriage or via other civil forms of partnership, such as:

(a) spouse
(b) a partner, equivalent to a spouse
(c) parents
(d) brothers, sisters
(e) children and their spouses/partners (f) siblings

(g) in some cases, step-children, step-parents, grand-children and grand-parents could be considered, especially if there are reasons to believe that their identity is used to disguise the nature of the economic activity or its true owners.

Close associates of a PEP are individuals closely linked to a PEP, either socially or professionally, for example, lawyers, bankers, agents, trusts and foundations, other professionals able to act on behalf of others (trustees, lawyers); natural persons known to have joint beneficial ownership of legal entities or legal arrangements or other forms of common economic interests with a PEP; and any natural persons who have sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit de facto of the PEP person in question.

The following positions in Czech, European Union, international or foreign institutions will trigger PEP risk assessment:

• Head of State, Head of Government, Minister, Deputy Minister or Deputy Minister, State Secretary, Chancellor of Parliament, Government or Ministry;
  
• Member of Parliament;
  
• Member of supreme courts, constitutional courts or other supreme judicial institutions whose decisions cannot be appealed;
  
• Mayor of the municipality, director of the municipal administration;
  
• Member of the governing body of the supreme audit and control institution or the chairman of the board of the central bank, his deputy or a member of the board;
  
• Ambassador, interim trustee, Commander of the Armed Forces, Commanders of the Armed Forces and Combinations, Chief of the Defense Staff or a high-ranking officer of the Armed Forces of Foreign States;
  
• Member of the management or supervisory body of a state-owned enterprise, public limited company, private limited company whose shares or part of the shares giving more than ½ of all votes at the general meeting of shareholders of these companies is owned by the state;
  
• Member of the body of municipal companies, joint-stock companies, private limited companies, the shares or part of shares of which giving more than 1/2 of all votes at the general meeting of these companies are owned by the municipality and are considered large companies;
  
• Head of an international intergovernmental organization, his deputy, a member of the management or supervisory body;
  
• Leader of a political party, his deputy, member of the governing body;
  
• Presidents, Directors, Deputy Directors, Board members of international organizations and institutions (for example, European Union and its institutions, NATO, OPEC, UN and its affiliated agencies, International Monetary Fund, regional international organizations such as the Asian Development Bank, OECD, economic organizations such as the World Trade Organization or the Asia-Pacific Economic Cooperation Secretariat, Golf Countries Cooperation Counsel, international sport organizations, such as Olympic Committee, FIFA, UEFA, etc.).

In accordance with FATF Recommendations and regulatory provisions, Fina Innovate s.r.o. is required to:

• Make adequate efforts to identify PEPs among its new and existing customers;
  
• Perform risk assessment of the business relationship associated with a PEP;
  
• Take adequate measures to establish the source of wealth and source of funds that are involved in the business relationship or transactions;
  
• Ensure senior management approval for establishing or continuing business relationship with a PEP;
  
• Where a customer has been accepted and is subsequently found to be or subsequently becomes a politically exposed person (including the customer or its beneficial owner or one of the proxy-holders), Fina Innovate s.r.o. must obtain approval to continue the business relationship from the senior management; and
  
• Conduct enhanced on-going monitoring of PEP business relationships.

As per FATF Recommendations, “due to their position and influence, it is recognized that many PEPs are in positions that potentially can be abused for the purpose of committing money laundering offences and related predicate offences, including corruption and bribery, as well as conducting activity related to terrorism financing.” The focus of the PEP relationship risk assessment should be on the level of AML/CTF, reputational and possible other risks they may pose for Fina Innovate s.r.o., and whether the company has adequate controls in place to mitigate such risks. In particular, risk assessment should analyze information collected as a part of due diligence in conjunction with analysis of the public functions of a PEP, possible conflicts of interests and impact on the Fina Innovate s.r.o. activity. The specific level and type of risks associated with a PEP customer must be determined based on pertinent risk factors, including those outlined below.

Red flags indicating elevated risk level associated with a PEP relationship:

• Possible conflict of interest between PEP’s public functions and his/her role at the company, which is a Fina Innovate s.r.o.’s customer.
  
• PEP is associated with a country that is a high-risk country, with known AML/CFT regime deficiencies or high level of corruption;
  
• PEP’s economic interests are within industries associated high corruption levels (natural resources exploitation, construction or infrastructure projects for the government needs, defense, sports, gambling, sales of luxury goods or real estate development projects);
  
• PEP client displays unusually complex corporate structure, involving trusts and foundations established without evident business reasons, potentially in jurisdictions known as tax havens, and/or represented by nominal directors, legals, notaries or other professionals; owners of the legal entity are family members of a PEP, but not a PEP him-self/herself;
  
• Negative media information about PEP, indicative of possible bribery, tax evasion, bankruptcy or important legal disputes, criminal investigations by competent authorities; and
  
• PEP is from a country that prohibits or restricts certain public officials to own property (including holding accounts and conducting commercial activity) in a foreign country without appropriate disclosures in the home country.

Mitigating factors potentially indicating decreased risks associated with a PEP relationship:

• PEP is from a low risk country, and his/her activity with Fina Innovate s.r.o. has no evident connection to his PEPs status or his/her area of influence (e.g. PEP is spending small amounts using a personal account or wallet that belongs to him/her for casual purchases);
  
• PEP association with a Fina Innovate s.r.o. customer appears to be purely honorary, PEP is unlikely to make financial decisions on behalf of the company, which is our client, or initiate transactions (e.g. PEP is a Board Member of a professional association or an NGO (e.g. museum, university), and PEP individual does not appear to be involved into daily activities pertinent, and the underlying commercial activity is not a high risk activity); and
  
• Activity of PEP is low volume and infrequent.

PEP customer will always be categorized by us as a high-risk customer, and aforementioned mitigating factors can never result in PEP relationship being categorized as a standard risk, nor can PEP customers can be exempt from enhanced due diligence requirements. Red flags and mitigating factors analysis can contribute to determination of the exact scope of necessary due diligence steps required for PEP account.

Former and deceased PEPs

While some countries and regions allow to exclude former PEPs from mandatory due diligence requirements one year after their PEP status has expired, FATF Recommendations and many other jurisdictions expect obliged parties to apply a risk-based approach and take into account the following:

• Informal influence PEP could exercise after retirement;
  
• Links between PEP former functions and current commercial activity;
  
• Possibility that family members of a deceased PEP are accessing funds or wealth that may have been illegitimately obtained or was not properly declared previously.

We will follow a more stringent, FATF-aligned approach, and will assess the risk associated with former PEPs based on their individual circumstances and the underlying activity with Fina Innovate s.r.o..

Any employee dealing with a PEP must inform the MLRO immediately on becoming aware of the Customer’s PEP status. Employees must obtain the approval of the CAO before opening an account for any Customer who is a PEP.

If a Customer is a PEP, Fina Innovate s.r.o. employees will put in place the enhanced due diligence measures as indicated above.