The history of the AML/CFT system in Korea started with the establishment of the Korea Financial Intelligence Unit (KoFIU) and the enactment of the Financial Transaction Reports Act and the Proceeds of Crime Act in November 2001. The KoFIU was established pursuant to Article 3 Paragraph 1 of the Financial Transaction Reports Act (FTRA) and to Article 5 of the Enforcement Decree of the FTRA in order to effectively implement an AML/CFT system.
The AML/CFT POLICY is the basic principles which guide and must be followed by all employees, without exception of Prabhu Co. Ltd. The goal of this company is to achieve fair and appropriate management and fulfill our social responsibility given to this project. The policy is prepared and issued a compliance manual of the company, regardless of job description or title, all the staffs and executives, everyone are equal and with sincerity, proactively pledge to comply with this manual and laws and rules relevant with duty and also pledge to build better ethical organization culture.
The policy has been designed and approved by Management of Prabhu Co., Ltd. In lines with the Korea Financial Intelligence Unit (KoFIU) and as per Financial Services Commission (FSC) guidelines, Prabhu Co., Ltd reserves the right to add, change, revoke, suspend or terminate any or all of these policies either fully or in Part at any time, with or without Notice. If any such happens employees will be informed of all such actions.
This policy is called as “AML/CFT POLICY- PRABHU CO. LTD.’’
Under the subject or the context otherwise requires in this policy.a) Money Transfer Business:
The money transfer business means that things other than financial institutions handling deposits such as banks operate as exchange trading businesses. “Foreign exchange transaction” under the fund’s settlement law is synonymous with “exchange transaction” under the Banking Law and even a person other than a bank etc. can operate currency exchange transactions which banks etc. have dealt with so far. However, exchange transactions that can be handled by the money transfer agent are limited to those specified by cabinet order as small transactions (exchange transactions related to the movement of funds equal to or less than one million won)b) Money Laundering (ML)
Money Laundering is generally defined as the process of concealing the illicit origin of criminal proceeds, by which criminals try to avoid the detection or the arrest by the investigative authorities. In Korea, it is criminalized in the Act on Punishment of Organized Crimes and the Anti-Drug Special Provisions Law. It is a highly covert activity and therefore is extremely difficult to detect.c) Terrorism Financing (TF)
Terrorist financing involves the solicitation, collection, or provision of funds with the intention that they may be used to support terrorist acts or organizations. The primary goal is not necessarily to conceal the sources of the money but to conceal both the financing and the nature of the financed activity. List of restricted persons from financial transaction issued by the Financial Services Commission pursuant to the Prohibition of Financing for Offences of Public Intimidation Actd) Know Your Customer (KYC)
KYC is the process of identifying the customer and verifying the identity by using reliable and independent document and information.e) Customer
Customer is any person or entity engaged in a financial transaction or activity with the company or someone on whose behalf the financial transaction or activity is being performed.f) Korea Financial Information Unit (KoFIU)
The Korea Financial Intelligence Unit (“KoFIU”) has the power to supervise, investigate and take measures (e.g., imposing sanctions against officers, employees, and financial institutions) regarding financial institutions’ compliance with their AML obligations.
The history of the AML/CFT system in Korea started with the establishment of the Korea Financial Intelligence Unit (KoFIU) and the enactment of the Financial Transaction Reports Act and the Proceeds of Crime Act in November 2001.
The KoFIU was established pursuant to Article 3 Paragraph 1 of the Financial Transaction Reports Act (FTRA) and to Article 5 of the Enforcement Decree of the FTRA in order to effectively implement an AML/CFT system.
The KoFIU was originally within the Ministry of Finance and Economy (MOFE), but, as a result of a government reorganization in February 2008, it was transferred to the Financial Services
Commission (FSC). The KoFIU is staffed with AML/CFT experts from the FSC, the Ministry of Justice (MOJ), the National Police Agency (NPA), the National Tax Service (NTS), the Korea
Customs Service (KCS), the Financial Supervisory Service (FSS), and other relevant law enforcement agencies.
The law guarantees the independence and autonomy of the KoFIU. The KoFIU works as an institutional link between financial institutions and law enforcement agencies by receiving suspicious transaction reports (STRs)from reporting entities, analyzing the STRs, and disseminating them to law enforcement agencies for further action. The KoFIU is also the primary organization responsible for AML/CFT policy formulation and implementation, AML/CFT supervision and the education of reporting entities.
The “Beneficial Owner” is the natural person who ultimately owns or controls firm and/or a person on whose behalf the transactions is being conducted and include person or persons who exercise ultimate effective control over a juridical person.h) Threshold Transaction Report (TTR)
One of the following includes “the amount paid for taxes, etc. prescribed by Commissioner of KoFIU” in Article 8-2.4.3.
On January 18, 2006, Korea implemented a new Currency Transaction Report (CTR) system, under which is required to report to the KoFIU all cash transactions above a designated threshold. Under Article 4-2 of the FTRA and Article 8-2 of the Enforcement Decree of the FTRA, reporting entities are required to report to the KoFIU when the amount of cash paid or received in all transactions conducted with in one trading day under the same name is above a threshold, which is currently set at KRW 20 million. While the Suspicious Transaction Report (STR) relies on the expertise and subjective judgment of employees at reporting entities, CTRs are only reported when transactions meet certain objective criteria without any subjective judgment.
The CTR data are used in strategic analysis and as supplementary data for the individual analysis of STRs. The effectiveness of information analysis is expected to be enhanced when STR data are analyzed in conjunction with CTR data. This comprehensive analysis assists analysts in getting a better understanding of the flow of suspicious funds.
A Suspicious Transaction Report (STR) is one of the core measures to fight money laundering and terrorist financing. Financial institutions and casinos are required to file STRs when they have reasonable grounds, based on their expertise and subjective judgment, to suspect that the funds that they have received are criminal proceeds or that the customer is engaged in money laundering or terrorist financing.
The KoFIU will conduct comprehensive analysis of all the STRs it receives based on the information contained in the STR, and on additional information that it obtains, such as foreign exchange transactions data, credit information, and information provided by foreign FIUs, etc. If it finds reasonable grounds to suspect that the reported transaction is related to money laundering or terrorist financing, it will pass on the STR to an appropriate law enforcement agency. The appropriate law enforcement agencies for STR dissemination include the Public Prosecutor's Office, the National Police Agency, the National Tax Service, the Korea Customs Service, the Financial Services Commission, and the National Intelligence Service. The law enforcement agencies will conduct further investigation into the case and take appropriate law enforcement actions, as needed.
Prabhu Co., Ltd is required to report to the KoFIU when they have "reasonable grounds" to suspect that the funds they received in relation to a financial transaction are illegal assets, or that the customer is engaged in money laundering or financing for offences of public intimidation. They are also required to report to the KoFIU when they have reported to a law enforcement agency
Legal person refers to customer or agents or domestic as well as international business partners of PRABHU CO., LTD. considered as having many of the right and responsibilities of a natural person and especially the capacity to sue and be sued.l) Currency
Currency for PRABHU CO. LTD. refers to both the convertible foreign currency and domestic currency.m) Money Laundering Preventive Officer (MLPO)
Head- Compliance of the Remittance shall be the MLPO who would have the necessary freedom to act on his own authority and shall report to General Manager. Name, Designation, Address, Qualification, contact number, e-mail address of the MLPO shall be informed to FSC for correspondence.n) Transactions
Transactions for PRABHU CO. LTD. are domestic and international money transfer or account deposit transactions.
This PRABHU CO. LTD. AML policy is based on the requirement of Anti- Money Laundering Rules and Regulations 2010. Also, this policy incorporates FSC directives, circular, agreed international rules and regulations and best practices, which directs PRABHU Remittance activities to proactively comply with AML prudent practices among its stakeholders.
This policy’s purpose is to establish governing standards to insulate the company from being used as a component of financial system to launder money.
In the light of above, the purposes of the policy are:
The following tenets of AML have been covered in this policy. They are:
This policy also intends to increase the awareness of ML activities amongst the staff, agents, customers and general public and its ill effects and also effectively counter/guard against ML at all times.
There is a specific law “Anti- Money Laundering Act 2013, 2nd amendment on 2017” prevailing in the country on this. Korea Financial Intelligence Center (KoFIU)/Financial Intelligence Unit (FIU) of Korea has also formulated guidelines on KYC. Considering the sensitiveness of the matter on global arena the Company has developed this Policy in order to be proactive in dealing with issues related with ML within the preview of the local law and guidelines of Korea Financial Intelligence Center (KoFIU)/Financial Intelligence Unit (FIU) of Korea. Compliance and willing adoption of this policy will be the primary goal while implementing it. All PRABHU Co. Ltd. employees and affiliates must comply with this policy.
Governance structure assigns responsibilities for the design of the companies AML/CFT implementation and monitoring structure and overall accountability for results. To align with over business requirements, it incorporates guidance from global standards, FSC Circulars and Directives and elements consistent with evolving best practices. A key element of our compliance governance structure is at below:
The section below details the various roles and responsibilities of governance structure of PRABHU CO. LTD. for AML/CFT compliance.2.1.1. Board of Directors
Ensuring that policies and procedures for AML/CFT Program are in line with changes and developments in products, services, and information technology of the Company as well as in line with development in modus for money laundering or terrorist financing.
Head- Compliance of the Remittance shall be the MLPO who would have the necessary freedom to act on his own authority and shall report to General Manager. Name, Designation, Address, Qualification, contact number, e-mail address of the MLPO shall be informed to FIU for correspondence.
The Roles and responsibilities of the MLPO shall be as follows:
Designated officer at Compliance Department and Operation in charge of the branches shall act as AML/CFT (Anti Money Laundering/ Counter Financing of Terrorism) Officer.
The major responsibilities of AML/CFT Officers will be as follows:
The agents should be responsible for all the activities as mentioned during the agreement.
Know Your Customer/Agent (KYC/KYA) is the process of a business verifying the identity of its agents and clients. The term is used to refer to the money transfer regulation which governs these activities. Money Transfer Regulation industry are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity. Know your customer policies are becoming much more important globally to prevent identity theft, financial fraud, money laundering and terrorist financing. PRABHU CO. LTD. shall not engage in business relationship for which customer identification and KYC is not performed.3.1.1 Types of Customer a) Domestic Politically Exposed Persons (PEP)
The President, Vice-President, Minister, parliamentarians, officials of the constitutional bodies, officials remained in the special class or equal to special class or their senior of the Government of Korea, judge of the Appellate Court and apex court and their senior, senior politician, central member of national political party or senior executives of any institution partially or fully owned by the Government. It shall also include other group of people as designated by the Government of Korea upon the recommendation of National Coordination Committee. Further, the family member or close associate of the PEP are also considered as PEP.b) Foreign Politically Exposed Persons (PEP)
Foreign PEPs mean the following person. Whether or not falls under foreign PEPs shall be confirmed by receiving a declaration from the applicant.
General customer is those who have not being involved in Head of government, politics, national political party, judicial or military official, state owned corporations of country. Further, they are the general citizens of the nation.
• Alien Registration Card front and back side (with selfie photo) Issued by Immigration of Koreab) For Korean Nationalities
• Driving License with registered residence address (with selfie photo).
This regulation concerns the handling of remittance service (hereinafter referred to as “the Service”) provided by the company.3.4.2 Contents of this service
In accordance with these regulations, PRABHU CO., LTD will remit the amount specified by the customer to the payee designated by the customer based on the customer’s remittance request.3.4.3 Member Registration
Users who wish to register for members shall apply for membership registration through procedures prescribed by the company, including notification of predetermined information required the by company (hereinafter referred to as “member information”).A) Non-Face to Face
Even if we accept the application for the service, we can cancel it if the confirmation at the time of transaction under the preceding paragraph is not completed or it is judged that it may not be completed.3.4.5 Membership Card & Password
1. When using this service, a member requests remittance in one of the following ways.
2.When making a remittance request, the member shall take the following procedures based on laws and regulations.
3. Members shall submit the remittance request within the payment deadline and the fee specified by company. The following items shall be paid by any method specified in the following and the expenses required for payment shall be borne by the member.
4. In this service, the payee is paid according to the currency specified by the member at the time of remittance. The currency shall be converted using the exchange rate at the time the remittance contract is established.
5. We will only accept member’s remittance request 24/7 i.e.24hours and 7days.
6. The maximum amount of remittance per service shall be one million won. On the same day or within a month if the same member transfers money to the same remittee or multiple remittee and should not exceeded 5 remittance requests within a month. We do not allow same remittee within a week from same member.3.4.7 Establishment and Termination of Remittance (Transaction) Request
1. If we determine that there is a problem with applying for this service, we will not accept the application for this service and we will assume that the application has been canceled.
2. If we cannot confirm payment of remittance funds etc. by the payment deadline, we will consider that the remittance request by this service has been canceled by the member.
3. Even after the remittance request has been established, if we acknowledge that is also falls under any of the following grounds before the remittance procedure of our company is completed, we can cancel the remittance request we shall assume. In this case, we are not responsible, except for cases where there is deliberate or gross negligence on our company regarding damages, losses or expenses caused by the cancellation.
The company shall use various mechanisms for Customer Due Diligence/ Agent Due Diligence Know Your Customer/Agent. These activities shall be carried out at the time of Sending Remittance for all the types of transaction send through PRABHU. PRABHU Co., Ltd. shall deploy all or the combination of any of the below mechanisms for KYC/CDD.
(A) If the transaction amount meets or exceeds 100 million Won in sender or receiver side in one day or within a month either in single or in series of transactions, following documents are required to present:
(B) If the nature of transaction is created as Individual to Company Account, following documents need to be presented:
(C) If the transaction is generated as Company to Company or Individual Transactions:
When using this service, the member can register information on the recipient (name of recipient, remittance method, remittance purpose, relationship etc.) by the method prescribed by the company.
(D) In case of sender founds to be in The Office of Foreign Assets Control (OFAC) listing or PEP, the Sender's valid Government issued ID needs to be presented.
In case of filing reports under Article 4.1, 4.2 and Article 4-2.2, a reporting entity shall file reports on financial transactions to the KoFIU Commissioner without delay when they consider the transactions should be reported (hereinafter referred to as “suspicious financial transactions) after comprehensive review on contents identified by designated persons responsible for the reporting(hereinafter referred to as “reporting officer”) in accordance with Article 5.1 of the Act and Article 9 of the Decree and on reports filed by executives and employees or on self-identified relevant information.
When a counterpart of financial transaction is suspected of making the said transactions divided into smaller amounts pursuant to Article 4.1.2 or 4-2.2 of the Act, the said transactions must be reported to the KoFIU Commissioner upon determination on reporting subject of suspicious transaction, taking consideration number of counterparts, number of transactions, number of a reporting entity, transaction period, etc.
After a reporting entity files a report on the suspicious financial transaction to the KoFIU Commissioner, they shall report it if a counterpart of financial transaction related to that suspicious financial transaction is suspected of being involved in the suspicious financial transaction. Also, confirmation and judgement shall be made appropriately according to transaction categories such as continuing transactions with existing customers and high-risk transactions.
a) Request a question to the customer etc. collect additional information by using the Internet etc. to check the truth or false of the profession etc. who received the declaration from the customer at the time of confirming the transaction, necessary investigation at the same time.
b) A method by which the supervisor or equivalent person confirms whether there is a suspicious point in the transaction after taking the above measures.
There are different indicators to detect suspicious transactions. Detection of suspicious transactions for the purpose of preventing money laundering and controlling terrorist financing, illegal activities, drugs, and weapons supplies, etc. this document has been made and issued exercising the power conferred by in accordance with Article 4-1 and Article 4-2 of the Act.
Based on this the company shall use the below information for detecting suspicious and large value transactions:
Terrorist financing provides funds for terrorist activity. The main objective of terrorist activity is to cause substantial property or human damage; or seriously interfering with or disrupting essential services, facilities, or systems.
Funds raised to finance terrorism usually have to be laundered and thus anti-money laundering processes in companies & Remittance and other reporting industries are important in the identification and tracking of terrorist financing activities.
The Act on Prohibition Against the Financing of Terrorism and Proliferation of Weapons of Mass Destruction (PFOPIA) is Korea's anti-terrorist financing legislation. It was enacted in December 2007 and came into force in December 2008 after a one-year transition period.
The PFOPIA uses the term "financing for offences of public intimidation" instead of "terrorist financing" since there is no legal definition of "terrorism" in Korea. The main purpose of PFOPIA is to implement the UN Convention for the Suppression of Financing of Terrorism (1999).
Company shall build measures to monitor, identify and report such funds received or sent using the Remittance system. PRABHU Co., Ltd. shall take caution while doing transaction or carrying Remittance activities if in any circumstances the name of any banned organization or individual (involved in terrorist activities) appears as payee/endorsee/applicant and report of such transaction as and when detected.
The Company shall endeavor to get the list of such organization/individuals to the best possible means or mechanisms.
In order to realize this Code, we declare “Basic Policy on Response to Antisocial Forces” as follows.
The process (automated or manual) of monitoring transactions after the execution to identify unusual transactions, including monitoring single transactions as well as transaction flows, for subsequent review and, where appropriate, report to the authorities. The purpose of transaction monitoring is to provide ongoing identification of suspicious activity from customer transaction data.
Company shall review the customer Transaction on the basis of
Money Laundering risk does not end after an agent has opened an account. To satisfy regulatory requirements and expectations as well as to protect the Company, the respective Unit must perform on-going monitoring of our Agent transaction. Compliance must ensure that the documents, data, or information are retained are kept up-to-date and that the assessment of AML risk for the agent is appropriate. Company shall deploy the below mechanisms for ongoing transaction monitoring.
Company shall do the ongoing monitoring of Transaction based on Threshold Agent for both personal and non-personal Transaction.
Ongoing review of Remittance is the process where PRABHU Co. Ltd. shall review all its Agents based on risk grading. For the purpose of agent review is to check the risk level assigned. For this PRABHU shall review the risk level of Level 2 Agent (Medium Risk Agents) Accounts in every 3 year and review of Level 3 Agent (High Risk Agent) Accounts in every 1 year. After carrying out review of L2/L3 Accounts, the risk level shall be reduced to lower risk on the following conditions:
Joint approval of respective Segment Business Heads and Head Compliance shall be obtained for lowering of risk in all accounts.
When detecting suspicious transaction or having the reasonable grounds to suspect the account transaction has derived from the illegal activity or in relation with money laundering, Compliance Department must report to FSC under the confidential mode.
PRABHU shall also generate STR (Suspicious Transaction Report), and other reports related to AML/CFT.
This Compliance manual is a basic principle that must be observed without exception by all directors, regular employees, contract employees, temporary employees of the company as well as all persons engaged in the business under the supervision of the company. We fairly and appropriately manage according to this manual, fulfill our social responsibilities given to our company, position compliance (compliance with ethics laws and regulations) as the most important issue of management, and establish a solid ethical perspective and integrity. We will declare to establish a corporate culture that enhances compliance.Purpose
This compliance manual is a summary of items that require attention on issues that are considered to be particularly important in carrying out our business. Therefore, this is not comprehended. It shows the basic way of thinking. For problems not mentioned here, or for complicated matters that are difficult to find answers only by please talk to the direct supervisor, the legal department, the audit department, the supervisor of each workplace, etc.
The important thing is that if we feel doubts about business practices and procedures, we have to say it aloud. For Example, do not pretend to look at it when you encounter any problem. Through the busy daily tasks, we tend to forget to ask questions, what we are doing, what we have done, what we are about to do, and it’s always important to review these points from the perspective of compliance. Leaving everything up to someone else or an irresponsible attitude that business is just a lip service, just do as everyone is doing it, this only make our company worse. Let’s strive to practice compliance with laws and ethics with courage to create a workplace with work and a workplace where you can work with pride.A) Basic Principle
Training shall be provided to business units that offer products and services that are subject to the legislative requirements in accordance with Article 5(3) of the Act. Employee involved in customer facing areas, remittances of PRABHU Co., Ltd. shall receive periodic training and reminders on the detection and reporting process for suspicious activities. Communication of changes to AML/CTF legislation or any emerging risks are communicated to the relevant staff. Training workshops conducted by Regulator should be attended by compliance department.
(1) Prabhu Co., Ltd shall provide employees with adequate and different education and training in accordance with their differing positions and responsibilities.
(2) Prabhu Co., Ltd. shall make sure education and training under Article 8(1) cover each of the following:
In addition to the above, the reporting officer shall provide employees with education and training pursuant to Article 7(1) more than once a year, using internal or external resources and as and when there are changes in AML Policy/procedures or there are developments in the AML trends worldwide.5.5.2 Amendment to the policy
Financial Service Commission (FSC) may issue the AML related circular/directives from time to time and the KYC/AML/CFT acts, and laws of the country shall form integral parts of this policy. If any section/sub-section/clause of this policy contradicts with the country’s laws, FSC/KoFIU’s directives, circulars; the latter shall be valid to the extent of contradiction. This policy is subject to review at least annually or as required for updates in the terms or any clause of the policy. There shall be a separate AML/KYC procedure formulated by PRABHU Co. Ltd.5.5.3 Compliance Measurement
MLPO or the designated officer will verify compliance to this policy through various methods, using various tools, reports, internal and external audits, and feedbacks to the policy owner. PRABHU auditors and internal compliance departments shall conduct programs of audit and compliance testing of this policy and operational procedures applicable to AML. The frequency and scope of the audits and compliance tests are determined through a risk-based approach, where higher risks to PRABHU are audited and tested more frequently. The audit and compliance programs shall be approved by senior management.5.5.4 Exceptions
Any exception to the policy must be acknowledged by MLPO and approved by the PRABHU Co., Ltd. management.5.5.5 Non-Compliance
An employee found to have violated this procedure may be subject to disciplinary action, as per the provisions in the prevailing PRABHU Employee Policy.5.5.6 Repeal and Saving
In terms of the operating procedures of the Remittance, records such as Agent Opening Forms, vouchers, ledgers, registers, etc., pertaining to Remittance Transactions for specified periods are required to be maintained.
To assist the authorities on investigation of cases of suspicious money laundering, it is essential that evidence of customer identification, address, transactions details are retained by the PRABHU Co., Ltd as mandated by the regulators. Such records must be archived in a secure area under the custody of a dedicated custodian. Access to such records must be made available only with due approval from Head Compliance.
Items to be checked at the time of transaction.
A) Identification document (original) present
i) Identification document (original) receive presentation (Name, Address, Date of Birth) confirm.
ii) Depending on the identity confirmation document, there may be issuers of the identity confirmation documents, symbols, numbers etc. that must be recorded in the transaction confirmation record field, and copies must be obtained.
a) Identity Confirmation Documents of Individuals
Documents issued by government agencies or other similar items with the description of the name, address, date of birth of customers etc. and affixed with the photograph of the customer.
b) Personal Identification Document of the Corporation
A) Transaction Purpose
Confirm the purpose of transaction by customer’s self-declaration.
C) Relationship to the Beneficiary
Create a transaction record according to a separately prescribed form or in our system (retention period: seven years from the date of transaction). Such as
There are certain criteria for the restriction of the transaction process. The restrictions for transactions are mentioned as:
PRABHU CO., LTD shall implement risk based due diligence procedures that include, but are not limited to, the following – understanding the nature of the correspondent’s business, its license to operate, the quality of its management, ownership and effective control, its AML Policies, external oversight, and prudential supervision including its AML/CFT regime.
Additionally, ongoing due diligence of correspondent Principal Remittance Company shall be performed on a regular basis or when circumstances change. Remittance policies also ensure that we do not offer ‘payable through Remittance’. All correspondent Remittance relationships are approved by senior management of the Company.
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