- a. In this policy, “Severus”, “the Company”, “we”, “us” and “our” means “Severus Finance (Pty) Ltd”. The Company is committed to conducting its business with the highest ethical and legal standards and expects all employees and other individuals acting on its behalf to uphold this commitment. As such, the Company has adopted this Anti-Money Laundering Policy (“Policy”), which is applicable to all directors, officers, employees, agents, representatives, consultants, advisors, distributors, supplier contractors, or other third parties acting on behalf of the Company, even on a provisional and temporary basis (“Company Personnel”).
- b. Severus will not conduct business with individuals or corporations whose conduct may give risk to suspicions of involvement with illegal activities. Severus will report any suspicions of money laundering or terrorist financing activity to the relevant authorities.
- c. This Policy and the internal controls herein have been designed to avoid money laundering, including the laundering of illicit proceeds by the same person (self-laundering), and the use of money, goods, or gains of illicit provenance and, consequently, prevent potential criminal liability of the Company that could result from such violations/crimes.
- d. SEVERUS Personnel who violate this Policy may be subject to disciplinary action, including dismissal from the Company, termination of agreements, and or any other associated legal and out-of-court actions, in accordance with the applicable law. The consequences for violating anti-money laundering laws can be severe for the Company, including significant fines, loss of operating licences, limitations on engaging in certain business activities, imprisonment and reputational damage.
- e. SEVERUS Personnel must comply with the anti-money laundering laws of all countries where the Company carries out its activities.
If you have any questions about this Policy you should contact the Compliance Officer or the Head of Legal.
- 1.1. Policy Statement on AML
- 1.1.1. It is Severus’s policy to comply with all applicable AML Laws in our operations worldwide. To this end, Severus will only conduct business with customers who are involved in legitimate business activity and whose funds are derived from legitimate sources.
- 1.1.2. This Policy is intended to help employees, contractors, and other third parties acting on the company’s behalf to understand where breaches of AML Laws might arise and to support them in making the right decisions in line with our corporate position as stated in this Policy.
- 1.2. Board Endorsement
The Board of Severus will not criticise management for any loss of business resulting from adherence to this Policy. No employee or contractor will suffer as a consequence of bringing to the attention of the Board or senior management, in good faith, a known or suspected breach of this Policy nor will any employee or contractors suffer any adverse employment or contract decision for abiding by this Policy.
- 1.3. Who is subject to this Policy?
This Policy applies to SEVERUS’S operations globally, including all legal entities worldwide owned or controlled by SEVERUS (including all group companies), and to all directors, officers, employees, contractors, and other third parties acting on behalf of the foregoing.
- 1.4. What’s the risk?
- 1.4.1. Violations of AML Laws may lead to severe civil and/or criminal penalties against companies and individuals, including significant monetary fines, imprisonment, extradition, blacklisting, revocation of licences, and disqualification of directors.
- 1.4.2. In addition, violations of AML Laws can lead to damaging practical consequences, including harm to reputation and commercial relationships, restrictions in the way we can do business, and extensive time and cost in conducting internal investigations and/or defending against government investigations and enforcement actions.
2. IMPORTANT DEFINITIONS
Money laundering is defined as engaging in acts to conceal or disguise the origins of illegally or criminally derived proceeds and assets so that they appear to have legitimate origins and are introduced into the legal financial and business as if they were lawful. If any SEVERUS Employee or Personnel suspects that there has been money laundering, that person must immediately report the suspected violation to SEVERUS’s Compliance Team.
For the purposes of this policy, the following conducts shall be regarded as money laundering:
- – The conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an activity to evade the legal consequences of that person’s action.
- – The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is derived from criminal activity or from an act of participation in such activity.
- – The acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity.
- – Participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the above-mentioned actions.
Examples of illicit provenance are forgery of money, extortion, robbery, and drug crime, as well as fraud, corruption, organized crime, or terrorism, etc. The money laundering process consists of three “stages”:
- 1. Placement: This involves the introduction of illegally obtained monies or other valuables into financial or non-financial institutions.
- 2. Layering: Layering occurs by conducting multiple, complex financial transactions that make it difficult to link the money to an illegal activity. These layers are designed to hamper the audit trail, disguise the origin of funds and provide anonymity.
- 3. Integration: Placing the laundered proceeds back into the economy in such a way that they re-enter the financial system as apparently legitimate funds.
3. FINANCING TERRORISM
Company Personnel must immediately report any suspected or known terrorist financing to SEVERUS’s Compliance Team. For the purposes of this Policy, “terrorist financing” means the provision or collection of funds, by any means, directly or indirectly, with the intention to be used or in the knowledge that they are to be used, in full or in part, in order to use indiscriminate violence as a means to create terror, fear, or to achieve a political, religious, or ideological aim.
4. POLITICALLY EXPOSED PERSON (PEP)
Transactions involving Politically Exposed Persons (“PEPs”) require enhanced due diligence. A PEP is an individual who is or has been entrusted with a prominent public function. Due to their position and influence, it is recognised 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 terrorist financing. The potential risks associated with PEPs justify the application of additional anti-money laundering/counter-terrorist financing preventive measures.
For the purposes of this Policy, Politically Exposed Persons (“PEP”) includes, but are not limited to:
- – Heads of State, heads of government, ministers and deputy or assistant ministers.
- – Members of parliament or of similar legislative bodies.
- – Members of the governing bodies of political parties.
- – Members of supreme courts, of courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances.
- – Members of courts of auditors or of the boards of central banks.
- – Mayors and members of local administration, city and district assemblies.
- – Ambassadors, charg d’affaires and high-ranking officers in the armed forces.
- – Members of the administrative, management or supervisory bodies of State-owned enterprises.
- – Directors, deputy directors and members of the board or equivalent function of an international organization.
Not only the person that officiates a public function must be considered as PEP, also close family members must be included in the assessment. For the purpose of this Policy, family members mean:
- – The spouse, or a person considered to be equivalent to a spouse, of a politically exposed person.
- – The children and their spouses, or persons considered to be equivalent to a spouse, of a politically exposed person.
- – The parents of a politically exposed person.
Also, persons known to be close associates to a PEP must be assessed with the same risk approach that includes:
- – Natural persons who are known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a Politically Exposed Person.
- – Natural persons who have sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the de facto benefit of a Politically Exposed Person.
- – President, State Governors, mayors, and any kind of ancillary such as ministers, counsellors and secretaries.
- – Officers or employees of national, federal, regional, local, or other, government bodies, departments, or agencies.
- – Officer or employees of state-owned or state-controlled entities, national or international.
- – Heads of state or anyone who exercises governmental authority.
- – Politicians, political party officials and candidates for political office.
- – Employees of regulatory agencies, public entities and mixed capital societies.
- – Officers and employees of public international organizations, as the United Nations, African Union, the World Bank and the International Monetary Fund.
5. REPORTING PROCESS: OPERATIONAL PRINCIPLES
The careful examination of those operations where risk factors exist is important. For example, this could mean those in which third parties propose the use of cash or bearers’ checks, international transactions (in particular those with persons or entities residents in tax havens or high-risk territories, or different locations from those where the company operates), operations with persons holding positions of public responsibility or PEPs or transactions conducted through or related to intermediary companies.
The Company Personnel should not initiate, maintain or accept a new business relationship (customer, supplier, financier, etc.), provide services or take action with anyone know or suspect to be involved in money laundering or terrorist financing, even if in different businesses from the relationship being established with SEVERUS.
Likewise, the Company Personnel should not deal with money, goods or valuables that know or suspect to be of illicit origin or that are unaware of.
Severus is committed to fight against money laundering and the finance of terrorism. Therefore, the following due diligence principles should be followed, not only in situations where particular risk factors exist, but as to all customers and third parties:
1) Identifying the Third Party
Company Personnel must conduct due diligence on customers and other third parties and document the findings. As part of the due diligence process, the following information (as applicable) should be collected:
- a. name,
- b. date of birth,
- c. address,
- d. Identity number,
- e. passport number,
- f. company name,
- g. registered office,
- h. corporate purpose,
- i. Tax Identity Number (TIN), and/or
- j. incorporation details.
As part of due diligence, SEVERUS must verify that the customer or third party does not appear on any of the international sanctions list. We should ask and search to confirm, whether the client or third party is or has been involved in an investigation of any kind involving corruption, money laundering or acts of terrorism. We will not enter into a business relationship with a person or an entity that appears on any sanctions lists.
You must also take steps to understand the nature and purpose of the customer or third party relationship and develop an appropriate risk profile based on the information learned. Based on the risk profile, the Company may actively maintain and update the customer or third party information. SEVERUS will also conduct ongoing monitoring to identify suspicious transactions and report those transactions where legally required.
2) Identifying the Ultimate Beneficial Owner (UBO)
Before the commencement of a commercial relationship, whether of a habitual nature, and prior to its execution, the Ultimate Beneficial Owner of any Third Parties who are formally involved must be identified. Company Personnel must document this analysis. Ultimate Beneficial Owner (UBO) means the person who directly or indirectly controls 25% or more of the equity or voting rights in the corresponding company or owns the company. In the event of the existence of a beneficial owner in the third party, that person must be identified through their name, nationality, identity number, or passport number. Listed companies are excluded from the obligation to identify the UBO.
If the UBO is a PEP, then the Company must conduct enhanced due diligence before entering into any contractual or commercial relationship with the entity.
3) Obligation to formally record commercial relationships in writing
Before the commencement of commercial relationships and prior to carrying out transactions with third parties (attention being paid to those of an international nature) the relationship must be formally recorded in a written agreement in accordance with Severus’s standards.
The provisions in a written agreement should include a commitment to comply with the Anti-Money Laundering laws, and Severus’s right to immediately terminate the contract in case of violation, subject to applicable law.
6. RED FLAGS
- 6.1. Where any suspicions arise that criminal conduct may have taken place involving a customer, colleague or third party, you should consider whether there is a risk that money laundering or terrorist financing has occurred or may occur.
- 6.2. Some examples of red flags to be reported as per the procedure herein include:
- – A customer provides insufficient, false or suspicious information or is reluctant to provide complete information
- – Methods or volumes of payment that are not consistent with the payment policy or that are not customarily used in the course of business, e.g., payments with money orders, traveller’s checks, and/or multiple instruments, and payments from unrelated third parties
- – Receipts of multiple negotiable instruments to pay a single invoice
- – Requests by a customer or partner to pay in cash
- – Early repayments of a loan, especially if payment is from an unrelated third party or involves another unacceptable form of payment
- – Orders or purchases that are inconsistent with the customer’s trade or business
- – Payments to or from third parties that have no apparent or logical connection with the customer or transaction
- – Payment to or from countries considered high risk for money laundering or terrorist financing
- – Payments to or from countries considered to be tax havens or offshore jurisdictions
- – Payments from countries unrelated to the transaction or not logical for the customer
- – A customer’s business formation documents are from a tax haven, or a country that poses a high risk for money laundering, terrorism or terrorist financing, or a country that is not logical for the customer
- – Overpayments followed by directions to refund a payment, especially if requested to send the payment to a third party
- – Any customer for whom you cannot determine the true beneficial owner
- – Structuring transactions to avoid government reporting or record keeping requirements
- – Unusually complex business structures, payment patterns that reflect no real business purpose
- – Wire transfer activity that is not consistent with the business activities of the customer, or which originates or terminates with parties unrelated to the transaction
- – Unexpected spikes in a customer’s activities
The above is not intended to be an exhaustive list. Deviation from customer and accepted business practice should alert you to further investigate the activity in accordance with this Policy.
7. ENHANCED DUE DILIGENCE
If you identify a red flag or the transaction directly or indirectly involves a PEP, then enhanced due diligence must be conducted prior to entering into a business relationship with the customer or third party.
Enhanced due diligence involves the gathering of additional information to ensure that the person or entity is not participating in any improper or illicit conduct. This information should include, but is not limited to, the source of the funds, the source of the individual or company’s wealth, and the individual’s occupation or the type of business. The findings of enhanced due diligence should be documented.
If you are unsure whether enhanced due diligence is required in a particular situation or have any other questions regarding enhanced due diligence, they should contact Severus’s Compliance Team.
8. COMPLIANCE CONTROLS
Senior management in each Severus business are responsible for ensuring that their business has a culture of compliance and effective controls to comply with AML laws and regulations to prevent, detect and respond to money laundering and counter-terrorism financing and to communicate the serious consequences of non-compliance to employees.
9. EMPLOYEE RESPONSIBILITY
You have the obligation to read and follow this Policy, to understand and identify any red flags that may arise in their business activities and to escalate potential compliance concerns related to AML to the Compliance Officer or the Legal Department without notifying anyone involved in the transaction and should not take any actions prior to receiving advice and/or instructions.
The reporting of suspicious transactions and any other reporting in terms hereof are to be made to email@example.com.
10. DUE DILIGENCE AND RECORD KEEPING
- 10.1. It is our policy to carry out due diligence (“DD”) at the outset of any business relationship and, if necessary, where any red flags arise subsequently on our suppliers, distributors, counterparties, agents and any person with whom Severus has an established business relationship that will involve the transfer to or receipt of funds (“Customers”), so we can be satisfied that they are who they say they are and so that we can ensure that there are no legal barriers to working with them before contracts are signed or transactions occur. Various factors will determine the appropriate forms and levels of screening.
- 10.2. You should escalate any instances where you have cause for suspicion as a result of carrying out DD and ongoing monitoring to the Compliance Officer or the Legal Department, who will advise them regarding which tools and processes should be used to facilitate appropriate screening.
- 10.3. You must, in consultation with the Compliance Officer or the Legal Department, carefully consider screening outcomes before deciding whether to do business with the third party.
- 10.4. Finance managers must regularly monitor and/or review Customers to identify business activity or governance that could indicate money laundering or terrorist financing is taking place.
- 10.5. Record-keeping is an essential component of the audit trail required to assist in any investigation. You must maintain records as evidence of the DD and ongoing monitoring undertaken.
- 11.1. Any SEVERUS employee or contractor, who violates this Policy may be subject to appropriate disciplinary action, independently from potential other penalties resulting from their behaviour.
- 11.2. Internal Audit shall conduct regular checks on local businesses to ensure compliance with AML Laws.
12. UPDATES, REVIEW AND OWNERSHIP
This Policy may be updated from time, and the updated version of the Policy will be immediately made available on the Severus website.