Coins Market.LB
October 2022
Table of Contents
1. Introduction…………………………………………………………………………………………………………….. 3
I. Definition of Money Laundering ……………………………………………………………………………… 3
II. Definition of Illicit Funds: ……………………………………………………………………………………….. 3
III. Financial Action Task Force – FATF:…………………………………………………………………………… 5
IV. ME and North Africa Region FATF – MENAFATF:…………………………………………………………. 6
2. Purpose and Scope …………………………………………………………………………………………………… 6
4. Legal Obligations:……………………………………………………………………………………………………… 7
I. CML Tech Standards: ………………………………………………………………………………………………. 7
II. Domestic Regulations……………………………………………………………………………………………… 7
III. US Regulations ………………………………………………………………………………………………..……………….8
IV. Imposed Penalties …………………………………………………………………………………………………. 8
5. Indicators of Money Laundering…………………………………………………………………………………. 9
I. Risk Indicators during the Account Opening Process: …………………………………………………. 9
II. Risk Indicators as Part of Customer Account Activity:……………………………………………….. 10
III. Risk Indicators Concerning the Economic Right Owner:……………………………………………. 11
IV. Other Risk Indicators:…………………………………………………………………………………………… 12
6. Special Investigation Commission (SIC) Relationship…………………………………………………… 13
7. AML / CFT Policy Requirements………………………………………………………………………………… 15
I. Customer Due Diligence………………………………………………………………………………………… 15
A. Establishment of Customer Identity (KYC):…………………………………………………………… 15
B. Essential Elements of the KYC: …………………………………………………………………………… 16
i. Customer acceptance Policy ………………………………………………………………….………………..16
ii. Customer Identification ………………………………………………………………..………………………..18
iii. General identification requirements………………………….……………………….………….……… 19
iv. Ongoing Monitoring of accounts and transactions ……….…………………………….….………20
II. Transaction Monitoring (CTS) and Exemptions………………………………………………………. 21
III. Reporting of Unusual or Suspicious Transactions (eSTR)…………………………………………. 22
8. Monitoring / Systems and MIS ……………………………………………………………………………… 24
I.World Check Monitoring……………………………………………………………………………………… 24
II. Reports……………………………………………………………………………………………………………. 25
9. Record Keeping……………………………………………………………………………………………………. 25
10. Correspondent bank and ultimate Beneficiaries …………………………………………………… 25
I. Shell banks ……………………………………………………………………………………………………… 25
II. Establishment of Correspondent Accounts / Due Diligence ………………………………….. 26
11. Politically Exposed Persons (PEPs)……………………………………………………………………….. 28
12. Risk Based Approach and Classifications………………………………………………………………. 29
I. Customer Risk………………………………………………………………………………………………….. 29
II. Country Risk …………………………………………………………………………………………………… 30
III. Service Risk …………………………………………………………………………………………………… 30
13. Non-Profit Organizations……………………………………………………………………………………. 31
14. Cash Funds and Precious Metals Shipment………………………………………………………….. 32
15. Trainings…………………………………………………………………………………………………………… 32
1. Introduction
I. Definition of Money Laundering
Money laundering is the process by which large amounts of illegally obtained money is given the
appearance of having originated from a legitimate source. Criminals and their associates use the
financial system to make payments and transfers of funds from one account to another, to hide the
source and beneficial ownership of money, and to provide storage for company-notes through a
safedeposit facility.
The purpose of Money Laundering is:
1. Concealing the real source of illicit funds, or giving, by any means, a false statement
about the said source.
2. Transferring or substituting funds known to be illegal for the purpose of concealing or
disguising their source, or helping a person involved in the offence to dodge
responsibility.
3. Acquiring, holding or using illicit funds, or investing such funds in purchasing movable
or immovable assets, or in carrying out financial operations, while being aware of the
illicit nature of these funds.
If this crime is done successfully, it allows the criminals to maintain control over their proceeds
and ultimately to provide a legitimate cover for their source of income. By engaging in this type
of activity it is hoped to place the proceeds beyond the reach of any asset forfeiture laws.
Money laundering is an independent crime that does not require the offense of the original
conviction. The original conviction of the perpetrator of an offense does not preclude prosecution
of the offense of money laundering in the case of different criminal elements
II. Definition of Illicit Funds:
As per Article 1 of Law No. 318 of April 20, 2001 and its amendments and article 1 of Law No
44 of November 24, 2015,, illicit funds are to be understood as any physical or non physical
assets, movable or immovable property including documents that prove the right of ownership of
those assets or any part of them, resulting from the commission of or attempt to commit
punishable or to participate in any of the following offenses:
1. The growing, manufacturing, or trading of narcotics according to Lebanese Laws.
2. Acts committed by associations of wrongdoers, that are specified by Articles 335 and 336
of the Lebanese Penal Code, and internationally identified as organized crime.
3. Terrorist acts, as specified in Articles 314, 315 and 316 of the Lebanese Criminal Code.
4. To finance or to contribute to the financing of terrorism, terrorist acts and all related acts
such as:
– Travelling
– Organization
– Training
– Recruitment, etc…
Or financing persons or terrorist organizations, in accordance with the concept of
terrorism as defined in the Lebanese Penal Code.
5. Illegal arms trade.
6. Kidnapping by force of arms or by any other means
7. Exploitation identifiable information and the disclosure of secrets and obstruction of
freedom of sales and bid illegal speculation
8. Incitement to debauchery and exposure to ethics and morals by organized gangs
9. Corruption, including bribery and embezzlement and influence exchange and use position
power and the abuse of power and illicit enrichment
10. Theft, embezzlement and breach of trust
11. Fraud, including fraudulent companyruptcy crimes
12. Falsification of public and private documents, including checks and plastic cards (debit or
credit or charge cards). Counterfeiting of currencies, stamps and stamp papers.
13. Smuggling, according to the provisions of the Customs Act
14. Fraud, Counterfeiting and trafficking of goods
15. Piracy along the air and sea navigation
16. Human trafficking and migrants smuggling
17. Sexual exploitation, including children’s sexual exploitation
18. Crimes against environment
19. Extortion
20.Murders
21. Tax evasion, according to the Lebanese laws
Furthermore, article No 2 of Law No 44 considers Money Laundering as the act of:
1. Hide the true source of illicit funds and give a wrong justification to this source, in any
way, knowing that money is illegal.
2. Transfer, transport, exchange or invest money to buy movable or immovable funds or
make financial transactions to hide or disguise its illegal source, or assisting any person
involved in committing any of the offenses provided in paragraph II, to escape from
prosecution knowing that the funds are the subject of illegal act.
Money laundering is an independent crime and do not require an original conviction offense. The
conviction in the original crime do not preclude the prosecution in the offense of money
laundering, in case of discrepancies in criminal elements.
III. Financial Action Task Force – FATF:
The FATF is an inter-governmental policy-making body whose purpose is to establish
international standards, and develop and promote policies, both at national and international
levels, to combat money laundering and terrorist financing. It was established in July 1989 by a
Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat
money laundering. In October 2001, the FATF expanded its mandate to incorporate efforts to
combat terrorist financing, in addition to money laundering.
The FATF monitors countries’ progress in implementing AML/CFT measures, reviews money
laundering and terrorist financing techniques and counter-measures, and promotes the adoption
and implementation of the 40+9 Recommendations globally.
IV. ME and North Africa Region FATF -MENAFATF:
Recognizing the Financial Action Task Force (“FATF”) 40 Recommendations on Money
Laundering and the Special 9 Recommendations on Terrorist Financing as the worldwideaccepted
international standard for combating money laundering and terrorist financing, at an
inaugural Ministerial Meeting held in Manama, Bahrain on the 30th of November 2004, the
Governments of 14 countries in the MENA Region (18 members at present) decided to establish
MENAFATF as a FATF Style Regional Body (FSRB) whose headquarter is in the Kingdom of
Bahrain.
The MENAFATF is voluntary and co-operative in nature and is established by agreement
between its members. It does not derive from an international treaty. It is independent of any
other international body or organization and sets its own work, rules and procedures. Its work,
rules, and procedures are determined by consensus between its members. It co-operates with
other international bodies, notably the FATF to achieve its objectives.
2. Purpose and Scope
The CML Tech S.A.L. has established and adhered to a policy to prevent the use of the
Company’s operations for the legalization of revenue from criminal activity and for terrorist financing
(henceforth covered by the use of the term “money laundering”), acknowledging the importance
of fighting financial crime and money laundering, as well as of the financial damage which may
be caused due to the risks of failing to prevent these.
The objective of the policy adopted by the company against “money laundering” is to protect the
Company’s prestige and reputation and to prevent the imposing of sanctions against it due to actions
that can end up in the company being used for the legalization of revenue from criminal activities,
including also the terrorist financing.
This policy is implemented through various procedures and means, which are in accordance with
the domestic legislative and regulatory framework in force regarding the smooth operation of the
company, and it is aided by the use of information systems for the constant monitoring of accounts
and transactions
3. Legal Obligations:
I. CML Tech Standards:
The Companies’ management ensures that business is conducted in conformity with
high ethical standards and that the laws and regulations pertaining to financial transactions are
adhered to. As regards transactions executed on behalf of customers, the company shall not set out to
offer services or provide active assistance in transactions which it has good reason to suppose are
associated with money-laundering activities.
CML Tech sal cooperates fully with national law enforcement authorities to the extent permitted by
specific Lebanese regulations relating to customer confidentiality. Care is taken to avoid
providing support or assistance to customers seeking to deceive law enforcement agencies
through the provision of altered, incomplete or misleading information. Where the Company becomes
aware of facts which lead to the reasonable presumption that money held on deposit derives from
criminal activity or that transactions entered into are themselves criminal in purpose, appropriate
measure consistent with the law, are taken, for example, to deny assistance, sever relations with
the customer and close or freeze accounts after consulting with the Special Investigation Commission.
II. Domestic Regulations
As per Article 5 of Lebanese Law No. 318 of April 20, 2001 and Law No 44 of November24,
2015, CML Tech company being an institution subject to the provisions of the Companying Secrecy
Law of September 3, 1956, is subject to controlling operations with clients, in order to avoid
involvement in what may conceal money laundering operations resulting from any of the
offences, CML TECH SAL is committed to:
a. The application of due diligence on the permanent customers (Whether they are natural
or legal persons or of a special legal structure) by verifying their identities based on
documents or information or documented data.
b. Ascertain the true identity of transient clients when the value of the requested
operation or series of operations exceeds the specified amount by Banque du Liban
c. Ascertain the identity of the beneficial right owner, based on documents or
information or documented data.
d. Retain photocopies of the documents related to all transactions, information or
data as well as photocopies of clients’ identity for at least five years after the
completion of the operations or the relationship, whichever is longer.
e. Conduct continuous monitoring and review the relationship
f. The application of the procedures provided in items a to e above, on permanent
and transient clients in case of any doubt about the validity or appropriateness of
the information declared related to their identification or in case of any doubt of
Money Laundering or Terrorism Financing, independently of any limits or
exceptions limiting the application of these procedures.
g. To identify signals revealing the existence of money-laundering or terrorism
financing operations, and set out the principles of due diligence that could detect
suspicious transactions.
h. To refrain from delivering incorrect statements that aim at misleading
administrative or judicial authorities.
i. To ensure that auditors monitor the implementation of regulations, and that they report
any violation to the Governor of the Central Company.
III. US Regulations
As per Banque du Liban Circular No 137 dated May 3, 2016 Company is committed to abide by the
US Public Law 114-102 (HIFPA) Hizballah Financial Sanctions Regulations 31 CFR Part 566 to:
a. Execute its operations in line of the American Law dated 18/12/2015.
b. Inform immediately the Special Investigation Commission (SIC) of Procedures and
Measures taken especially Freezing or Closing of any Customer’s Account or refrain
Dealing with a Customer or refrain Opening an Account to a Customer, and explain the
reasons that justifies this action and measures.
c. As per SIC notification No 20, CML Tech company is committed not to take any
measure to close any customer’s account or refrain dealing with a customer or to open a
customer’s account before 30 days after having informed the Special Investigation
Commission. The information should contain a clarification of the reasons that justifies
these steps and procedures (KYC, Account movement, frequency, size}If SIC do not
answer within the 30 days time, the Company decides the appropriate action, and this
condition do not apply on accounts of persons and institutions listed on the US sanction
lists
IV. Imposed Penalties
The concerned parties must immediately report to the Special Investigation Commission the
details of operations they suspect to be concealing money laundering or terrorism financing.
According to Law No 44 dated November 24, 2015, any person who violates the provisions listed
above shall be punishable by:
1. Imprisonment for a period of three to seven years and a fine not exceeding the double of
the amount subject to money laundering
2. For Terrorism Financing and related businesses, penalties provided in Article 316 bis and
articles 212 to 222 included of the Lebanese Penal Code.
Any person who undertakes money-laundering operations, or intervenes or participates in such
operations, shall be punishable by imprisonment for a period of three to seven years, and by a fine
of no less than twenty million Lebanese pounds
The State shall confiscate any movable or immovable assets that are proved, by a final court
ruling, to be related to, or proceeding from, offences listed in Article 14 of Law 318 dated April
20, 2001 with all its amendments, unless the owners of the said assets prove in court their legal
rights thereupon.
4. Indicators of Money Laundering
The below mentioned risk indicators classified by relationship stages present some warning signs.
These are but some general money laundering indicators to which all CML TECH SAL staff must fully
understand and be aware of, and pay due attention in locating and reporting them.
I. Risk Indicators during the Account Opening Process:
. The customer wishes to engage in transactions that lack business sense, apparent investment
strategy, or are inconsistent with the customer’s stated business/strategy.
. The customer exhibits unusual concern for secrecy, particularly with respect to his identity,
type of business, assets or dealings with firms.
. Upon request, the customer refuses to identify or fails to indicate a legitimate source for his
funds and other assets.
. The customer exhibits a lack of concern regarding risks, commissions, or other transaction
costs.
. The customer appears to operate as an agent for an undisclosed principal, but is reluctant to
provide information regarding that entity.
. The customer has difficulty describing the nature of his business.
. The customer lacks general knowledge of his industry.
. The customer is from, or has accounts in, a country identified as a haven for money
laundering.
. The customer, or a person publicly associated with the customer, has a questionable
background including prior criminal convictions.
II. Risk Indicators as Part of Customer Account Activity:
. The undertaking by a client of large cash operations in the form of deposits and withdrawals,
with insufficient personal identification.
. The customer account has unexplained or sudden extensive wire activity, especially in
accounts that had little or no previous activity.
. The customer’s account shows numerous currency or cashier’s check transactions aggregating
to significant sums.
. The customer’s account has a large number of wire transfers to unrelated third parties.
. The customer’s account has wire transfers to or from a company secrecy haven country or country
identified as a money laundering risk.
. The customer’s account indicates large or frequent wire transfers, immediately withdrawn by
check or debit card.
. The undertaking of large or recurrent foreign exchange operations by using cash funds.
. Certain movements in the client’s account, such as making large or recurrent deposits
reaching a determined ceiling or a huge volume, unjustified by the client’s apparent activities.
. The operation of an account for the main purpose of transferring abroad, or receiving from
abroad, sizeable amounts of money, while it appears to the officer in charge of such
operations that they are not justified by the client’s activities.
. The undertaking of large or recurrent operations related to the client’s offshore activities
considered by the officer in charge of such operations as disproportionate to the volume of
the client’s activities.
. A change in the pattern of deposit operations made by a client exempted from filling the cash
transaction slip (C.T.S.)
. The occurrence of cash deposits and/or company transfers followed by direct and numerous
withdrawals.
. For no apparent reason, unjustified by the nature of his activities, the customer has multiple
accounts under a single name or multiple names, with a large number of inter-account or third
party transfers or the undertaking of numerous cash transfers between and through these
accounts.
III. Risk Indicators Concerning the Economic Right Owner:
(As per BDL Circular 83 dated May 18th, 2001 – Article 4)
Doubts about the identity of the economic right owner would arise in the following instances,
which are mentioned for indicative purposes but not restrictively:
. When a power of attorney is given to a nonprofessional person (who, for instance, is not a
lawyer, a fully authorized representative, or a financial intermediate) and when it appears that
the relationship to the client does not justify the proxy operation, or
. When the business relationship is conducted through false names or numbered accounts, or
through Front institutions or companies.
. When the financial status of the client intending to make the operation is known to the officer
in charge and the operation’s value is disproportionate to the financial status of the said client.
. When, through the conduct of business with the client, any other indicator draws the attention
of the company.
IV. Other Risk Indicators:
(As per BDL Circular 83 dated May 18th, 2001 – Article 8)
. The exchange of big amounts of small-denomination bills for large-denomination bills of the
same currency or of any other currency.
. Large or recurrent foreign exchange operations (cambio), by using cash funds.
. Certain movements in the customer’s account, such as making large or recurrent deposits
unjustified by the customer’s apparent activities.
. The operation of an account for the main purpose of transferring abroad, or receiving from
abroad, sizeable amounts of money, when such operations are unjustified by the customer’s
activities.
. Large or recurrent operations related to the customer’s offshore activities, and which appear
to be incompatible with the volume of the customer’s activity.
. The replacement of large cash funds by electronic transfer requests or by company checks.
. A change in the pattern of deposit operations made by a customer exempted from filling the
cash transaction slip (CTS).
. The undertaking by a customer of large cash operations in the form of deposits and
withdrawals, with insufficient personal identification.
. The fact of receiving or cashing checks issued abroad to the bearer, or to the order of a person
but previously endorsed by persons other than the depositor, or the fact of receiving or
cashing checks of different amounts that may be unrelated to commercial transactions or
alleged to be gambling gains.
. Cash deposits and/or company transfers followed by direct and numerous withdrawals.
. The holding by the customer of several accounts unjustified by the nature of his activities, or
the undertaking of numerous cash transfers between and through these accounts.
. The occurrence of cash deposits and/or company transfers while the customer’s activities do not
justify such a volume of funds.
. The fact of depositing company / traveler checks in the account of a company / institution whose
activities do not justify such deposits.
. The occurrence of cash operations and / or company transfers that appears unusual, considering
the location of the branch.
. The undertaking of cryptocurrencies operations that appears unusual.
CML TECH SAL shall monitor the accounts opened and operations carried out, through the units and
divisions
mentioned in Article 11 of BDL Basic Circular No. 83, by using AML Reporter, a specialized
software program for retrieving (daily, weekly, monthly, annual) reports on the accounts and
operations to which indicators apply.
CML TECH SAL shall also take sufficient measures to prevent the misuse of technological developments
for money laundering or terrorist financing purposes.
Note: It is important to remember that behavior is suspicious, not people. Also, it is the
consideration of many factors, not any one factor, which will lead to the conclusion that there are
reasonable grounds to suspect a transaction is related to a money laundering or terrorist financing
offence.
5. Special Investigation Commission (SIC) Relationship
As per Law 318 Dated April 20, 2001 – Article 6 and Law No 44 dated November 24, 2015 –
Article , the Special Investigation commission (SIC) is defined as being an independent, legal
entity with judicial status established at the Central Company of Lebanon, performing its duties
without being under the authority of the Central Company of Lebanon. Its mandate is to investigate
money-laundering operations and to monitor compliance with the rules and procedures stipulated
by this Law.
The mission of the Special Investigation Commission is to investigate operations that are
suspected to be money-laundering or terrorism financing offences, and to decide on the
seriousness of evidence and circumstantial evidence related to any such offence or offences. Take
necessary measures especially the temporary precautionary freeze of accounts and / or suspicious
transactions for a maximum period of one year renewable one time for additional six months for
the assistance requests received from abroad, and for a maximum period of six months renewable
one time for additional three months for the local assistance requests and notifications.
Ensure that the Companies and Financial Institutions adhere to duties stipulated in Law No 44, as well
as, gather all information received from Companies and Financial Institutions and from the Lebanese
Official Authorities or Foreign Authorities and any other gathered information and exchange
them with counterparts as valid and official reference.
When accounts opened at companies or financial institutions are suspected to have been used for
money-laundering purposes, the lifting of companying secrecy provisions to the benefit of the
competent judicial authorities and the Higher Companying Commission represented by its chairman
shall be the exclusive right of the SIC.
In accordance with Article 7 of Law 318 Dated April 20,2001, the CML Tech company shall
immediately report to the SIC the details of operations that is suspected to be concealing money
laundering.
In addition to the “DNFS”, the “AML Reporter systems, CML Tech company also established a
Data Base for collected information and update it continuously. This Data Base includes, the
names communicated by the Special Investigation Commission, and those of holders of
suspicious accounts and reported by the Company. The CML TECH SAL will notify the SIC about any
account
opened subsequently by any of these persons, whether directly, indirectly, or by proxy.
The Special Investigation Commission issues inquiries on suspicious names, those names are
added to the local names list in the DNFS application
The CML Tech company refrains from closing a suspicious account before referring to the SIC.
The CML Tech company takes constantly into account that SIC enquiries and audits do not
prevent the company from normally dealing or continuing to deal with “the client”, as long as the SIC
does not decide the contrary.
The CML Tech company employees, subject to liability, refrain from notifying clients when the
SIC proceeds to investigate or audit their accounts, until the SIC makes a decision on freezing
and lifting companying secrecy on the said accounts and notifying the concerned clients.
6. AML / CFT Policy Requirements
I. Customer Due Diligence
A customer is any natural or legal entity, whether a company or an institution of any kind, or a
commission or an organization or a non-profit organization (mutual funds, cooperatives, welfare
centers, charities, clubs, etc.).
A. Establishment of Customer Identity (KYC):
With a view to ensuring that the CML Tech company is not used as a channel for criminal funds,
the company has developed procedures to confirm and certify the identity of the customers /
transaction parties, in efforts to determine the true identity of all customers requesting the company’s
services.
It is the company’s policy to adopt clear procedures for opening of accounts and applying Customer
Due Diligence including verifying the identity of the customers (permanent and transient,
residents and non residents) and beneficial owner before or during the course of establishing a
business relationship.
CML TECH SAL believes that sound KYC policies and procedures are critical in protecting the safety and
soundness of the company and the integrity of companying systems.
The “Know Your Customer” or KYC principle is applied, so as to make known the customer’s
actual identity, his/her business profile and his/her intentions regarding the way of operation and
use of the companying products offered to him/her by the company.
The Customer Due Diligence measures are to be taken as follows:
a- Identifying the customer and verifying the customer’s identity using reliable,
independent source documents, data or information.
b- Identifying the beneficial owner, and taking reasonable measures to verify the
identity of the beneficial owner such that the company is satisfied that it knows whom
the beneficial owner is.
c- Obtaining information on the purpose and intended nature of the business
relationship.
d- Conducting ongoing due diligence on the business relationship and scrutiny of
transactions undertaken throughout the course of that relationship to ensure that
the transactions being conducted are consistent with the company’s knowledge of the
customer, their business and risk profile, including, where necessary, the source of funds.
B. Essential Elements of the KYC:
i. Customer acceptance policy
As per BDL circular 83 dated May 18th, 2001 – Article 3: In order to check the client’s identity,
the officer in charge of the operation must request the following documents from the client:
A) In case the client is a natural person:
1. Passport or;
2. Identity card or;
3. Individual civil registration or;
4. Residence permit.
B) In case the client is a legal entity:
1. Duly registered documents regarding its by-laws
2. Registration certificate in the commercial register
3. Ownership certificate/Trade name
4. List of segregation of shares or ownerships (directly or indirectly)
5. List and Identity of the persons empowered to sign on its behalf
6. Copy of the Identity Card of the authorized and legal representatives,
managing directors, and natural persons who own, directly or indirectly,
a percentage of shares that entitles them to take actual control over the
company’s management
The Article 1 of BDL intermediate circular No 411 dated February 29, 2016 states the following:
Companies and Financial institutions are prohibited from performing any kind of companying or
noncompanying or financial or non-financial operations, whether recorded In or Off-Balance Sheet, with
companies or mutual funds whose stocks and shares are totally or partially issued in Bearer form,
or with companies or mutual funds that are directly or indirectly owned by companies or mutual
funds whose stocks and shares are totally or partially issued in Bearer form.
Article 2 of the same circular states: When the assignee is a company or a mutual fund, a duly
certified copy of their respective By-Laws or articles of association, stating explicitly that all their
shares are in registered form, and are fully and continuously owned, by natural persons or
companies whose shares are in registered form.
C) In case the operation is effected through an authorized representative (proxy):
1. The original power of attorney or a certified copy thereof (certified and
stamped with the fiscal stamp by the Public Notary in conformity with principles)
2. Photocopy of the identity card of the client
3. Photocopy of the identity card of the authorized representative
4. If the authorized representative is an unprofessional person, due
diligence shall be applicable as per Paragraph 7 Section I part A.
D) In case the operation is effected by correspondence:
Authentication of the client’s signature on the same document or separately.
The signature’s authentication or the verification of the non-resident
client’s identity may be obtained from:
. A correspondent or affiliated company, or
. A branch or a representative office of the concerned company, or
. Another company whose authorized signatures can be verified: the said
company should be subject to regulations and undertakes enough and
effective procedures to fight money-laundering and terrorist financing,
given that the first transaction shall be recorded from an account that
carries the client’s name in the company which is subject to regulations and
undertakes enough and effective procedures to fight money-laundering
and terrorist financing.
* The company presenting the client’s information to a third part shall take full responsibility on the
accuracy and transparency of the documents or information presented to identify and confirm
the client’s identity.
CML TECH SAL will keep the client’s information, as well as his full name, address and profession,
financial situation, and copies of all documents used to identify the proceedings for a period not less
than 5 years after the conclusion or termination of the relation with the client. CML TECH SAL shall also
keep all documents relating to all transaction conducted by the said client for at least 5 years after their
conclusion.
SIC circular No 20 dated May 26, 2015 states the following:
It is requested from banks , financial institutions, financial intermediaries and all informing
institutions not to take any action such as closing a customer’s account or abstaining from dealing
with him or opening any account for that customer before the passage of 30 days since the
notification of the Special Investigation Commission (SIC). This notification should contain a
clear explanation of the compelling reasons that justify these measures and actions (KYC…)
In case no answer was given back from the SIC, within the above mentioned delay, the company or
financial institution shall take the measures that is deemed adequate.
. these measures are not applied on accounts held by persons or institutions whose
name figures on the issued lists of the US law enforcement dated December 12,
2015.
In case due diligence was not conducted as stated above for whatever reason, CML TECH SAL shall
refuse to engage in opening an account or starting a relation or conducting a transaction for the client.
CML TECH SAL shall also report the client to the Special Investigation Commission.
ii. Customer identification
A customer includes:
. The person or entity that maintains an account with the company or those on whose
behalf an account is maintained (i.e. beneficial owners),
. The beneficiaries of transactions conducted by professional intermediaries, and
. Any person or entity connected with a financial transaction that can pose a
significant reputational or other risk to the company
Reference to Article 3 of BDL circular 83 dated May 18th 2001, checking the client’s identity
includes the following:
The CML Tech company shall adopt the present procedure for opening new accounts, in
particular for determining the economic right owner. It shall also check the identity of all its
permanent and transient clients, whether resident or non-resident, notably in the following
instances:
. The opening of all kinds of accounts, including fiduciary accounts, numbered accounts,
and accounts held by persons who might be the object of suspicion.
. Lending operations.
. The conclusion of contracts for leasing company safes.
. Electronic transfers of funds.
. Cashier’s operations totaling or exceeding USD 10,000 or its equivalent in any other
currency. Cashier’s operations include cash payments made by customers at the company’s
counter (deposit of funds, exchange of currencies, purchase of precious metals, purchase
of financial instruments in cash, cash subscription to vouchers at the counter, purchase of
checks in cash, including traveler’s checks, etc..)
Regardless of the amount involved, the officer in charge of the operation must also check the
client’s identity when noticing that, on the same account or on multiple accounts of the same
person, several operations are being carried out for amounts that are separately less than the
minimum specified above but totaling more than USD 10,000 or the equivalent. The same
identity checking should take place if the client is suspected of trying to make a money-laundering
operation.
iii. General identification requirements
The CML Tech company needs to obtain all information necessary to establish to its full
satisfaction the identity of each new customer and the purpose and intended nature of the business
relationship. The extent and nature of the information depends on the type of applicant (personal,
corporate, etc.) and the expected size of the account.
When an account has been opened, but problems of verification arise in the companying relationship
that cannot be resolved, the company shall close the account and return the monies to the source from
which they were received.
While the transfer of an opening balance from an account in the customer’s name in another company
subject to the same KYC standard may provide some comfort, CML TECH SAL shall nevertheless consider
the possibility that the previous company’s account manager may have asked for the account to be
removed because of a concern about doubtful activities. Although the customers have the right to
move their business from one company to another, however, if CML TECH SAL has any reason to believe
that an applicant is being refused companying facilities by another company, it shall apply enhanced
diligence procedures to the customer.
The CML Tech company shall never agree to open an account or conduct ongoing business with
a customer who insists on anonymity or who gives a fictitious name. Nor should confidential
numbered accounts function as anonymous accounts but they should be subject to exactly the
same KYC procedures as all other customer accounts, even if selected senior staff carries out the
procedures. Whereas a numbered account can offer additional protection for the identity of the
account-holder, the identity must be known to the needed approved senior staff to operate proper
due diligence.
iv. On-going monitoring of accounts and transactions
To ensure that records remain up-to-date and relevant, there is a need for the company to undertake
regular reviews of existing records.
In Compliance with BDL circular 83 Dated May 18th, 2001 – Article 6, the CML Tech company
shall periodically check again the identity of the client or re-determine the economic right owner,
including the owners of accounts opened before the publication of Law No 318 on fighting
money laundering, in order to modify or add, on the adopted KYC (know your customer) Form,
any new information resulting from any changes in the client’s status, especially in case of doubts
about the veracity of previously provided information, or when changes have subsequently
occurred in the client’s or the economic right owner’s identity. Subsequently, the customer must
be advised to communicate any change in his status to the company.
Therefore, the company shall set up working plans in order to fulfill these obligations.
II. Transaction Monitoring (CTS) and Exemptions
Cash Transaction Slip (CTS) is a form that is completed whenever a client performs a
transaction that exceeds USD 10,000 or its equivalent. The amount could be a lump sum or a
cumulative sum that is reached upon performing several transactions on the same day.
Upon performance of several transactions aggregating to an amount exceeding the specified
limits, in several branches, the AML & Compliance Unit shall ask, the following day, the branch
in which the last transaction was performed to fill in the CTS to be signed by the client.
In reference to SIC Circular 6, the Compliance Officer may exempt some clients from this
procedure after setting a ceiling; such exemptions must be based on justifiable criteria.
The AML / CFT & Compliance Committee in accordance with the client’s nature and line of
business and the respective projected logical account activity shall specify the exemption limit of
each client.
Those clients that are subject to exemptions shall also be monitored as not to exceed the specified
limits accorded to them.
On-going monitoring is an essential aspect of effective KYC procedures. In order to effectively
control and reduce its risk, the CML Tech company shall have an understanding of normal and
reasonable account activity of its customers so that it has a means of identifying transactions
which fall outside the regular pattern of an account’s activity. The extent of the monitoring needs
to be risk-sensitive.
For all accounts, the company shall have systems in place to detect unusual or suspicious patterns of
activity. This can be done by establishing limits for a particular class or category of accounts.
Particular attention shall be paid to transactions that exceed the limits stated above. Certain types
of transactions shall alert the company to the possibility that the customer is conducting unusual or
suspicious activities. They may include transactions that do not appear to make economic or
commercial sense, or that involve large amounts of cash deposits that are not consistent with the
normal and expected transactions of the customer. Very high account turnover, inconsistent with
the size of the balance, may indicate that funds are being “washed” through the account.
There shall be intensified monitoring for higher risk accounts. Key indicators will be set for such
accounts, taking note of the background of the customer, such as the country of origin and source
of funds, the type of transactions involved, and other risk factors. For higher risk accounts:
• The company will ensure adequate management information systems to provide managers
and compliance officers with timely information needed to identify, analyze and
effectively monitor higher risk customer accounts. The types of reports that may be
needed include reports of missing account opening documentation, transactions made
through a customer account that is unusual, and aggregations of a customer’s total
relationship with the company.
• Senior management should know the personal circumstances of the company’s high-risk
customers and be alert to sources of third party information. Significant transactions by
these customers should be approved by the AML & Compliance Committee.
III. Reporting of Unusual or Suspicious Transactions (eSTR)
Suspicious transactions are financial transactions that trigger reasonable grounds to suspect an
attempt related to the commission of a money laundering offence. Suspicious transactions also
include financial transactions that trigger reasonable grounds to suspect attempts related to the
commission of a terrorist activity financing offence.
If the company holds evidence or has reasonable grounds to suspect that the attempted or performed
companying operation involves money laundering or terrorist financing, terrorist acts or terrorist
organization, it will report immediately the matter to the Governor of Banque du Liban in his
capacity as Chairman of the Special Investigation Commission, especially:
1- When it has persistent doubts about the veracity of the written statement submitted by
the client regarding the economic right owner’s identity, or that false or inaccurate
information has been given on the said owner’s identity;
2- When it realizes that the company was misled in the course of checking the client or the
economic right owner’s identity while having persistent doubts about the information
provided by the client;
3- When transferred amounts or checks are returned, whether directly or upon the request
of concerned parties, particularly correspondent bank, either because of forgery or
because of doubts that they involve suspicious operations.
The company, its directors, officers and employees shall:
a) Be protected by legal provisions from criminal and civil liability for breach of any
restriction on disclosure of information imposed by contract or by any legislative,
regulatory or administrative provision, if they report their suspicions in good faith to
the SIC, even if they did not know precisely what the underlying criminal activity
was, and regardless of whether illegal activity actually occurred.
b) Be prohibited by law from disclosing the fact that a suspicious transaction report
(STR) or related information is being reported to the SIC. CML TECH SAL staff will be required
to maintain absolute confidentiality and refrain from notifying or permitting the
notification of customers or any other party that the company has or will inform the SIC
in case of evidence or doubts about the existence of Money Laundering/Terrorist
Financing operations, or that the SIC investigates or inquires about their operations
or accounts, until the SIC decides to lift companying secrecy on the said accounts and to
notify the concerned parties.
Through the monitoring of transactions, the compliance unit may detect possible attempts to
money laundering. Once the attempt is identified the compliance unit investigates the transaction
further and when it has serious doubts about the transaction, the issue is elevated to the
Compliance & AML committee. The Committee discusses and debates the issue and come to a
final decision. If the Committee still has serious doubt about a money-laundering attempt, it will
request the Compliance unit to inform the Special Investigation Commission immediately of the
matter in order to seek guidance through the process.
7. Monitoring / Systems and MIS
I.World Check Monitoring
In support for the Compliance function at CML TECH SAL , the Company has acquired theWorld
Compliance Online solution that satisfies the AML Compliance needs for the time being. World
Compliance
Online solution can be accessed via Internet. It offers a data entry search capabilities of a various
databases worldwide for known or suspected terrorists, money launderers, narcotics traffickers,
and Politically Exposed Persons. Sanction lists include those of OFAC, United Nations, European
Union, and various others.
AML & Compliance unit team is given access to this solution. This access assists the company’s Team to
identify names circulated worldwide though an in-depth, up-to-date large
database and reduces further the probability of being a vehicle for the purpose of moneylaundering or
terrorist financing.
As per Banque du Liban Circular No 136 of December 22, 2015, CML TECH SAL is committed to:
1. Review constantly any updates on the UN Security Council Website concerning names
designated in the lists issued pursuant to UN Security Council Resolutions 1267, 1988,
1989 as well as any related successor resolution issued by the UN or by the Special
Sanctions Committees, to automatically and immediately freeze, without any delay and
any prior notice, the funds, accounts, operations, or other assets in whatever form, (direct
or indirect, joint) related to these names, as soon as such names are listed and to inform
the Special Investigation Commission of this action and provide it with any information
in this respect within 48 hours
2. Notify the Special Investigation Commission in case of similarity between the name of a
customer and any specific name and details included in the lists issued pursuant to the
UN Security Councils Resolutions referred to in paragraph 1above.
II. Reports
The AML / CFT department at the CML Tech company relies on various daily, monthly and adhoc reports
to adequately monitor and control the opening of new accounts, accounts activities as
well as swift operations.
8. Record Keeping
According to BDL circular 83 dated May 18th, 2001 – Article 3, the CML Tech company shall
keep, at least for five years after implementing the operation or closing the account, the full name
and residential address of the client, with information about the professional and financial status
of the said client, together with copies of all documents used in the checking process. CML TECH SAL
shall also retain a special record of persons who open or activate accounts by proxy.
9. Correspondent bank and ultimate Beneficiaries
I. Shell Banks
Shell bank is a bank incorporated in a jurisdiction in which it has no physical presence and which
is unaffiliated with a regulated financial group. It is a company that:
– Does not conduct business at a fixed address in a jurisdiction in which the shell bank is
authorized to engage in banking activities.
– Does not employ one or more individuals on a full time basis at this fixed address.
– Does not maintain operating records at this address.
– Is not subject to inspection by the companying authority that licensed it to conduct companying
activities.
According to Recommendation 18 of the FATF 40 Recommendations:
Countries should not approve the establishment or accept the continued operation of shell
banks. Financial institutions should refuse to enter into, or continue, a correspondent banking
relationship with shell banks. Financial institutions should also guard against establishing
relations with respondent foreign financial institutions that permit their accounts to be used by
shell banks.
The CML Tech company will not establish, maintain, administer or manage a Correspondent
Account for a Shell bank and will take reasonable steps to ensure that its Respondent bank will
not use its Correspondent Account to provide companying services to a shell bank.
The CML Tech company will obtain a Certification from each applicant and any Respondent
bank with an existing account that:
– The respondent bank is not a shell bank.
– The respondent bank has a physical presence based on documentary evidence.
– The respondent bank does not deal with shell companies.
– The respondent bank has a good reputation.
– The respondent bank is subject to good control
– The respondent bank implements sufficient and effective regulations to fight money
laundering and terrorist financing.
II. Establishment of Correspondent Accounts / Due Diligence
The CML Tech company, in accordance with BDL circular 83 dated May 18th, 2001 – Article 2,
shall ascertain the identity and activities of its correspondents and make sure, when dealing with
them for the first time, that they really exist, based on submitted documentary evidence. In
particular, make sure that the foreign company with which it deals is not a shell bank.
Prior to the opening of a Correspondent Account for an applicant, the company should conduct due
diligence with regard to the applicant.
The CML Tech company’s due diligence policies, procedures and controls include:
– Establishing that the applicant has been duly organized and is in good standing in its
jurisdiction of organization.
– Obtaining the applicant’s annual report and financial statements (audited)
– Identifying key Senior Management of the applicant and determining changes during the past
five years.
– Reviewing the Anti-Money Laundering or due diligence policies, procedures and controls of
the applicant.
– Reviewing reports by company rating agencies regarding the applicant if available.
– Determining the applicant’s primary line of business.
– Inquiring into the applicant’s local market reputation, through review of media reports or by
other means.
– Evaluating the applicant’s creditworthiness (where credit is being extended).
– Obtaining one or more company references.
– Determining the expected activity of the applicant through the Correspondent Account.
– Requesting general information on the applicant’s categories of customers, including such
categories as Shell companies, Offshore Companies and other High Risk Respondent Companies.
– Determining whether the applicant is a public or private institution.
– For privately held applicant, ascertaining the identity of each of the Owners of the Applicant,
and performing an appropriate level of due diligence with regard to such owners.
– Determining the type of and restrictions under the applicant’s license.
– Determining the relationship between the applicant and the government of its home country
jurisdiction.
– Reviewing publically available information to determine whether the applicant has been the
subject of a money laundering or over criminal investigation.
– Document steps taken prior to the opening of a Correspondent Account for the applicant.
CML TECH SAL shall apply the following procedures after due diligence:
1- Obtain approval of the Senior Management prior to engaging in any relationship with
correspondent bank.
2- Ascertain the nature and line of business of the respondent bank’s business.
3- Determine and allocate responsibilities of both CML TECH SAL and the respondent bank
Particularly with regards to the Payable Through Accounts opened by foreign correspondent bank,
And make sure that the latter has the ability to provide CML TECH SAL with the relevant customer
identification data of any client upon its request.
10. Politically Exposed Persons (PEPs)
International consensus as to what constitutes a “Politically Exposed Person”, or PEP, is to a large
extent informed by the Financial Action Task Force* (FATF) definition. Significantly, it has
also been adopted by the International Monetary Fund (IMF), the World Company and most other
official regulatory authorities around the world.
PEPs are often high net-worth and prestigious individuals, and thus highly sought after as
private clients. They are individuals who are or have been entrusted with prominent public
functions in a foreign country, for example Heads of State or of government, senior
politicians, senior government, judicial or military officials, senior executives of state owned
corporations or important political party officials. Business relationships with family members
or close associates of PEPs involve reputational risks similar to those with PEPs themselves.
The definition is not intended to cover middle ranking or more junior individuals in the
foregoing categories
“A “clean” PEP’s source of wealth, their position (or exposure to someone in a high position) and
income-generating activities are transparent and able to withstand scrutiny. A “dirty” PEP, on
the other hand, is a problem.
Dirty PEPs will go out of their way to conceal not only their identity, but the source of t heir
wealth as well. It therefore comes as no surprise that PEPs often look to company their money in
countries other than their own. The most common forms of PEP concealment entails the
use of a family member or associate through whom access to the companying system is gained, or
alternatively, the formation of a company, trust, charity or similar financial or fiduciary
vehicle to facilitate legitimate transactions.
What needs to be understood, however, is that PEPs are not automatically to be treated as “high
risk”, but rather that they may potentially constitute a reputational risk.
It is CML TECH SAL ’s policy, in relation to politically exposed persons, and that, in addition to
performing normal due diligence measures, to obtain general management approval for
establishing business relationships with such customers.
11. Risk Based Approach and Classifications
Adopting a risk-based approach implies the adoption of a risk management process for dealing
with money laundering and terrorist financing. This process encompasses:
– Recognizing the existence of the risks,
– Undertaking an assessment of the risks and,
– Developing strategies to manage and mitigate the identified risks.
Higher risk areas shall be subject to enhanced procedures. The risk Based approach assists the
Company to effectively manage potential money laundering and terrorist financing risks.
Potential Benefits of Risk Based Approach includes:
– Better management of risks and cost-benefits.
– Focusing on real and identified threats.
– Flexibility to adapt to risks that change over time.
Risk recognition and identification is of major importance as it is the base of the Risk Based
Approach.
CML TECH SAL policy will be to adopt a risk-based approach to classify clients and transactions in
accordance with the level of risks, low, medium and high, while taking into account, for
indicative purposes but not restrictively, the following risks:
I. Customer Risk
Customer Risk include, in reference to BDL circular 421 dated May 4th, 2016 – Article 1
* Customers whose professional activities depend mainly on cash (money exchange, gold
and precious stones dealers, restaurants and night-clubs, real estate companies, car
dealers, specialized lending entities known as Comptoir, “Governed by the provisions of
article 183 and 184 of the code of money and credit”, non companying institutions
performing cash transfers through electronic means …).
* Foreign politically exposed persons who hold or have held important official positions.
* Offshore companies.
* Companies established in countries known to be tax havens.
* Non face-to-face customers.
* Customers dealing only through intermediaries.
* Customers dealing through fiduciary contracts or trusts.
* Customers who are nationals or residents in countries that do not or insufficiently apply
the FATF Recommendations.
* Companies with a capital totally or partly constituted of bearer shares.
* Charities and other “not for profit” organizations, particularly new established NPO
that do not have clear programs or clear funding sources, and which are not subject to
monitoring or supervision (especially those operating on a “cross-border” basis)
II. Country Risk
Country Risk include, in reference to BDL circular 83 dated May 18th, 2001 – Article 9:
* The strictness of laws on fighting money laundering and terrorism financing, and the
efficiency of the regulatory and judiciary authorities in charge of their implementation.
* The existence of companying secrecy.
* The situation of the country regarding corruption and organized crime.
III. Service Risk
Service Risk include, in reference to BDL circular 83 dated May 18th, 2001 – Article 9:
*Private banking.
*Payable through Accounts, which are accounts opened by banks and financial institutions
at other banks and put at their customers’ disposal to be used directly or through
subaccounts.
* Electronic companying.
To the above objective, CML TECH SAL will establish risk-based control measures and procedures, and
adopt at least, according to risk scoring of customers and transactions classified as high risk, the
following measures and procedures:
1- To raise awareness concerning strict control as a priority.
2- To obtain more detailed information about clients (Increased KYC Levels), notably the
source of their wealth.
3- To obtain, according to risk levels, the necessary administrative approvals, which allow
dealing or continuing to deal with customers and executing transactions.
4- To undertake periodic reviews of relationships with customers.
5- To make continuous peer comparisons.
6- To set up an adequate system in order to determine whether the foreign customer is a
Politically Exposed Person.
CML TECH SAL shall take into consideration the duration of the business relationship and prior dealings
with the customer along with using a specialized software (AML Reporter) for performing controls
according to the adopted classification.
12. Non-Profit Organizations
A non-profit organization (NPO) refers to a legal entity or organization that primarily engages in
raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social
or fraternal purposes, or for the carrying out of other types of “good works”.
The ongoing international campaign against terrorist financing has unfortunately demonstrated
that terrorists and terrorist organizations exploit the NPO sector to raise and move funds, provide
logistical support, encourage terrorist recruitment or otherwise support terrorist organizations and
operations.
This misuse not only facilitates terrorist activity but also undermines donor confidence and
jeopardizes the very integrity of NPOs. Therefore, protecting the NPO sector from terrorist abuse
is both a critical component of the global fight against terrorism and a necessary step to preserve
the integrity of NPOs.
Non-profit organizations are particularly vulnerable, and CML TECH SAL is committed to ensure that it is
not misused by terrorist organizations posing as legitimate entities for terrorist financing or for the
purpose of escaping asset-freezing measures.
For that purpose, CML TECH SAL will ensure adequate screening for all NPOs, their members and
transactions activities continuously and will report any such suspicion that might comes across
during the process. In case of any doubt CML TECH SAL will refrain from opening an account to any NPO
approaching the company for to transact with such NPOs in any form.
13. Cash Funds and Precious Metals Shipment
In reference to BDL intermediary circular No 263 dated 21/05/2011, article 4.
1- In case of Cash Funds and/or Precious Metals Shipment, from and to Lebanon, the
Company should provide the BCC and the Financial Markets Department at the End of
Each Month with:
– A detailed Situation on a monthly basis clearly showing the quantity of the Cash
/ Metals shipped from and to Lebanon. (Exhibit No 1 attached to the circular)
– A detailed Situation on a monthly basis clearly showing how many times the
Cash / Metals has been shipped. (Exhibit No 2 attached to the circular)
– A detailed Situation on a monthly basis clearly showing the Total Volume of the
transition of Cash / Metals within Lebanon between the Company and Exchange
Institutions. (Exhibit No 3 attached to the circular)
– The said situations should be sent to BDL on Medias within 10 days after the end
of the month.
Additionally, Law No 42 of November 24, 2015 states in Article 2:
Every person transporting money tradable cross-border (import & export) carrying it personally
or in a suite case or in any other way including shipping by container or by registered mail, shall
declare to Lebanese Customs when the amount is above USD 15,000. Or counter-value in any
other currency, by filling a special form containing the requested information about these funds.
Exception made, it is possible and only in case of export cross-border tradable currencies to
disclose Lebanese Customs when amount is above USD 15,000. Or counter-value in any other
currency Instead of making a declaration according to the applied policy.
14. Trainings
In reference to BDL Circular No. 83 Dated May 18th, 2001 – Article 12, CML Tech company
will ensure an ongoing training of its staff and the participation of the concerned officers and
those responsible for training in relevant seminars, workshops and lectures, so that they may keep
abreast of money laundering and terrorism fighting methods.
The CML Tech company shall have an ongoing employee-training program so that employees
are adequately trained to be able to detect AML / CFT possible violation and cases as well as on
KYC procedures. The timing and content of training for various sectors of staff will be adapted
by the company for its own needs. Training requirements shall have a different focus for new staff,
front-line staff, compliance staff or staff dealing with new customers.
New staff shall be educated on the importance of KYC policies and the basic requirements at the
company. Front-line staff members who deal directly with the public shall be trained to verify the
identity of new customers, to exercise due diligence in handling accounts of existing customers
on an ongoing basis and to detect patterns of suspicious activity.
Regular refresher training shall be provided to ensure that staff are reminded of their
responsibilities and are kept informed of new developments. It is crucial that all relevant
employees fully understand the need for and implement KYC policies consistently.