ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM (AML/CFT) POLICY AND PROCESS

1. INTRODUCTION

1.1. The combating of money laundering and the financing of terrorism has, in recent years, become a challenge of global proportions. Money launderers, terrorists and criminal groups have become more sophisticated in their methods and techniques.

Money Laundering is:

The process by which criminals attempt to conceal the true origin and ownership of the proceeds of criminal activities. If successful, the money can lose its criminal identity and appear legitimate. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.

The Financing of Terrorism is:

1) An offense within the meaning of the UN International Convention for the Suppression of the Financing of Terrorism (1999), where a person by any means, directly or indirectly, unlawfully and willingly, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out:

(a) An act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex of the above-mentioned treaty

(b) Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking any active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to Intimidate a population or to compel a government or an international organisation to do or to abstain from doing an act.

2) For an act to constitute an offense set forth in paragraph 1, it shall not be necessary that the funds were actually used to carry out an offense referred to in paragraph 1,sub paragraph (a) or (b). 1.2. The UAE, cognizant of the need for regulatory legislation, has enacted numerous laws at federal level to prevent and criminalize money laundering and the financing of terrorism.

1.3. Art 22 (7) of Rule No. 4 of 2002 Re. Organizing Operations at MMR GOLD TRADING LLC stipulates that any activities that violate the laws of the State including money laundering are prohibited.

Under this law, MMR GOLD TRADING LLC is obligated to establish a set of policies and procedures to ensure that it should not facilitate money laundering and/or the financing of terrorist activities. These laws are more particularly set out in section 15.

2. MMR GOLD TRADING LLC’S COMMITMENT

2.1. As a responsible Gold Bar seller MMR GOLD TRADING LLC is committed to supporting both domestic and international efforts and initiatives aimed at combating money laundering and the financing of terrorism in addition to implementing such internal measure as may be deemed necessary.

2.2. The issuance of this Policy together with the implementation and operation of the procedures and controls therein, is a reflection of MMR GOLD TRADING LLC’s commitment in this regard.

2.3. MMR GOLD TRADING LLC is willing to co-operate with:

Government agencies; and Recognized law enforcement agencies, domestic or foreign as part of any effort in combating money laundering and/or the financing of terrorism.

3. POLICY CUSTODIAN

3.1. MMR GOLD TRADING LLC’s Management shall be the appointed custodian of this Policy and shall be ultimately responsible for the implementation and enforcement of the Policy.

3.2. The Management will be supported by the Compliance and Inspection Director who will provide expertise and assistance regarding the implementation and enforcement of the Policy.

4. PURPOSE AND RATIONALE

4.1. This Policy sets out those provisions, procedures and controls as enacted by MMR GOLD TRADING LLC Concerning Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).

4.2. The rationale behind the Policy is unequivocally clear. MMR GOLD TRADING LLC will only accept those

Customers:

• Whose sources of funds can be reasonably established as legitimate; and
• Who do not pose any risk (actual or potential) to MMR GOLD TRADING LLC’s reputation.

4.3. In light of the foregoing, MMR GOLD TRADING LLC will not tolerate any involvement in illegal activities by its staff Members.

5. POLICY STATUS AND SCOPE

5.1. The provisions, procedures and controls detailed below are mandatory and shall apply to:

MMR GOLD TRADING LLC staff and Management.

5.2. Breach of the Policy by any MMR GOLD TRADING LLC staff Member or Management shall constitute a disciplinary offence and MMR GOLD TRADING LLC reserves the right to take any additional action as it, in its sole discretion, deems fit in securing the diligent and proper implementation and enforcement of this Policy.

6. PROCEDURES AND CONTROLS (GENERAL)

6.1 This Policy contains, as an integral part to it, certain procedural checks and balances so as to ensure the vigilant and effective operation of the Policy.

6.2 The Procedures & Controls are as follows:

• Identification, verification and know-your-customer (KYC) measures
• Updating of KYC information
• Automated activity monitoring
• Reporting of suspicious activities
• Training and Awareness
• Record Keeping

7. PERIODICAL REVIEW

7.1. This Policy shall be reviewed on at least an annual basis. Any review shall take into account legislative changes regarding AML and CFT and shall also examine the previous 12 months implementation of the Policy together with how such implementation may be improved. Any amendments made to the Policy under this section 7 must have received prior written sign-off from the MMR GOLD TRADING LLC Management whereupon they shall take effect immediately.

8. IDENTIFICATION (ID), VERIFICATION (VR) AND KNOW-YOUR-CUSTOMER (KYC)

KYC form the first key step in the Procedures. It enables basic background information about the Customer their business, source of funds and their expected level of activity to be obtained and an initial decision undertaken.

The carrying out of KYC procedures is mandatory.

‘Beneficial Ownership’ is where a person has ultimate ownership or entitlement over funds. The above list is a summary of the information required.

KYC Process

KYC is to be carried out via the use of two (2) mandatory checklists:

• Corporate KYC Checklist (please refer to Appendix A)
• Individual Shareholders / Managers KYC Checklist

An integral part of the KYC process is the carrying out of Applicant screening and relative risk assessment. Screening ensures that an Applicant is not listed on those official sanctions lists issued by Government and departments and law enforcement agencies. The risk assessment process classifies the applicants into three risk categories: normal, medium and high. Applicants classified under high risk, including applicants defined as Politically Exposed Persons – PEP‟s, shall be subject to enhanced CDD during both the approval and monitoring process and applications shall be submitted to management for approval.

2 To include ‘active’ and ‘silent’ or ‘sleeping’ partners

3 In this particular context, ‘Beneficial Ownership’ means where a person owns 5% or more of the Applicant Company’s capital

4 That person having day-to-day control of the company if not a shareholder/partner, When conducting the KYC process, no reliance must be placed on third party information or hearsay
– ID, VR and KYC must all be carried out by MMR GOLD TRADING LLC itself.

Example, if the Applicant is introduced to MMR GOLD TRADING LLC by a third party, MMR GOLD TRADING LLC is still under a clear obligation to perform the ID, VR and KYC procedures.

It should be borne in mind that KYC is more than a procedure and is actually a discipline that is to be encouraged and developed. For example, KYC should become second nature so that in addition to the foregoing, any significant information related to the Customer obtained during meetings, telephone discussion, visits, etc and which is deemed to be relevant for the purposes of the Policy should be recorded. Fresh CDD should be undertaken, especially if it appears that the veracity or accuracy of previous information is doubted.

9. KYC INFORMATION UPDATING

Reasonable steps must be taken to ensure that ID, VR and KYC information is updated as and when required. As a minimum standard, KYC information must be updated every 2 (two) years.

10. AUTOMATED ACTIVITY MONITORING

Art 7 of Law No. 1 of 2003 gives MMR GOLD TRADING LLC the right to monitor, supervise and inspect the activities of its Customers.

As such, the Members Activity Monitoring will be undertaken as follows:

1) Reviewing the members‟ annual Audited Financial Statements when they apply for Renewal of their Trade Licenses.

2) Conducting Inspections on Members premises to ensure that their operations are conducted in accordance with UAE Regulatory System and MMR GOLD TRADING LLC Regulations

11. REPORTING OF SUSPICIOUS ACTIVITIES

Art 15 of UAE Federal Law No. 4 of 2002 Regarding Criminalization of Money Laundering and Art 5.1 of the ESCA circular concerning procedures for AML place a clear obligation on all MMR GOLD TRADING LLC staff and Members to report any suspicious activities or information which may point to transactions, instructions, or arrangements with which MMR GOLD TRADING LLC is involved, being related to illegal activities. As money laundering and the financing of terrorism methods and techniques are always evolving, the Compliance and Inspection Department will issue regular circulars as what are to be considered as red flags for suspicious activities in both money laundering and financing of terrorism. These red flags will be the base on which the SARs should be filed by the different parties subject to this Policy. The red flags will also cover the attempted transactions.

As such, it is the legal duty of management and staff to report any suspicious activity or information (**) to the AMLSCU through the Compliance and Inspection Director. In doing so, it is important that:

• The reason for the suspicion is fully explained; and
• No mention of the suspicion is made to the Applicant, Member or Third party the

subject of the suspicion (failure to observe this requirements may result in the

divulging party being prosecuted for the offence of „tipping off‟); and

• Any additional information as may be requested by the Compliance and Inspection Director is duly provided.

All reports received under section stated above will be treated in the strictest confidence. The Compliance and Inspection Director will investigate the report and will decide on the information available together with any additional enquiries whether or not to file a Suspicious Activity Report with the Anti-Money Laundering and Suspicious Cases Unit of the UAE Central Bank.

Settlement transactions, whose cash value is equal to or exceeds fifty-five thousand dirhams
(= > AED 55,000) and considered as suspicious should be recorded by the ALBARAAM staff and / or Members concerned and reported to the Compliance and Inspection Director.

12. TRAINING AND AWARENESS

Training shall be carried out at least once every two years for all relevant staff within ALBARAAM to ensure they are aware of those AML and CFT regulations, controls and responsibilities which require their compliance and which form the basis of this Policy.

Within one month of joining all new ALBARAAM staff must be provided with an initial induction into the Policy, AML and CFT and the need for the reporting of suspicious transactions.

Such induction may be carried out as part of the normal induction procedure.

13. RECORD KEEPING

13.1. KYC Documentation

All documentation concerning a suspicious activity report concerning a Customer together with any response/follow up; and Includes staff involved in activities from establishing the relationship, providing advice to members, and through all aspects of activities processing and monitoring

Records of AML/CFT training sessions attended by MMR GOLD TRADING LLC staff, their dates, content and attendees.

13.2. Retention Periods

All documentation required under this Policy should be retained on site for a period of at  least 5years.

13.3. Investigations

Where a Customer is the subject of an investigation of any kind then all documentation relating to the investigation must be retained for such time until the authority conducting the investigation (e.g. ESCA, Dubai Police, Interpol etc) informs MMR GOLD TRADING LLC otherwise in writing.

14. MMR GOLD TRADING LLC MANAGEMENT AND STAFF RESPONSIBILITIES

Scope of Responsibility

In carrying out the proper discharge of their duties under the Policy, both MMR GOLD TRADING LLC staff and management alike will be expected to:

1. a) Undertake their due diligence role,
2. b) Ensure their and their team’s awareness of and compliance with ID, VR and KYC,

record keeping and reporting; and

1. c) Undergo such ongoing AML/CFT training as it deems necessary from time to time, individual responsible for filing the KYC documentation in storage