Anti Money Laundering (AML)

109 Pages·2015·3.14 MB·English

ANNEXURE of AGENDA- 1850(13)

Anti Money Laundering (AML)
&
Combating Financing Terrorism (CFT)
Policy

Revised - 2015
(For Internal Use Only)

National Credit and Commerce Bank Limited.
Head Office
NCC Bank Bhaban,13/1- 3/2 Toyenbee Circular Road,
Motijheel Commercial Area, Dhaka-1000.
Bangladesh.
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National credit and corr"r.l's"nk
Li..nit"d.
Memo No. NCCB/HO/CCU-AML/ pOLICy/2o1
5 Dated: 27 August 2015
Subj€rt: Approval for proposed Anti Money Laundering and Combating Finatrcing Terrorism
Policy Guid€lines Revised-2015 of the Bank nrenered hw (-enfrqt c6-"-rr"--^ ,,-,* ,^,.,n, ,
Bangladesh Bank through BFIU circular Numbet 04/2012 dated l6 seprember 2012 issued guiderines for
the financial institutions including banks to formurate poricies and procedure to mrnimize the risk ofMoney
Laundering and Terror Financing. The essences of the directives were to bring about much needed
discipline and in the process establish risk management culture in the banking sector.
Inspection Teams of Bangradesh Bank conducted inspection of the Head office and submitted separate
reports including the one on Anti Money Laundering rneasures with the advice to expedite compriance by
initially preparing draft AML and CFT policy for implementation in due course.
In order to comply with the dircctives and recognizing the facts that bank may be partrcurarly wtnerable to
being used by the money launderer and tefor financing, it has become indispensable to view money
laundering prevention and combat terror financing very seriously. With the passage of the Money
Laundering Prevention Act,2012 and Anti Terrorism Act'2009 (amendment_20ll), it is mandatory for the
bank to abide by the law of the land and should be guided by a policy to combat such crimes. In this
backdrop the Central Compliance Unit (AML) ofthe bank has prepared and compiled Banks Anti Money
Laundering and Combating Financing Terrorism policy in pursuant of BFIU Master crrcular No.l0/2014
ofBangladesh Bank is conformity with the exclusive guidelines ofthe Bangladesh Bank.
The proposed AML and CFT Policy includes following essential features:
l-
NCCBL AML and CFT Policy Guidelines.
2-
Senior Management Oversigh, Review
3- Organization Structuro.
4- Customer Due Diligence & ldentification procedures
5- AML & CFT Process.
6- Recognition & Reporting of CTR and STR
7- Record Keeping.
8- Training and Awareness
9- Examplcs of Potential Suspicious Transactions
l0-Sanction Screening (tIl.{SCR, US-OFAC and BD list)
The proposed AML and CFT policy had been placed to the MANCOM for kind consideration. The
MANCOM in its 206th meeting held on 26.08.2015 went through the contents of the same and being
satisfied recommended for submission to the Board ofDirectors ofthe Bank for approval.
Manaqement Recommendation: The proposed revised AML & CFT policy-2015 has been perused and
reconmended by the Management for necessary approval ofthe Board ofDirectors ofthe Bank.
Accordingly the Policy guideline is how placed for kind consideration and approval of Board.
Jaead6{f Ch'orldra Debn ath
Sr. Vice Pre-sident and DCAMLCO Deputy Managing Director and CAMLCO
Golam
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Aclrnowledgment
Dear Colleagues
It is encouraging to state that Central Compliance Unit, AML of the Bank has prepared Bank's
Anti Money Laundering and Combating Financing Terrorism Policy Guidelines in pursuant of
BFIU Master Circular No.lO/2014 of Bangladesh Bank under exclusive guidelines of the
Bangladesh Bank. NCC Bank is vigilant against Money Laundering and Terrorist Financing in its
all shape and terms. It is our corporate stance to stand against any activities that make possible
money laundering or funding to terrorist for criminal activities. The Branch Managers are advised
to take the opportunity to create a line of defense against such heinous crimes and extend
cooperation keenly & involve themselves in the AML and CFT Compliance process. This policy
would help them in discharging responsibility ensuring that the Bank is not vulnerable to money
laundering and terrorist financing. If the methods enumerated in this policy are followed
meticulously with proper understanding and perspective, then it would act as deterrent for them in
bracing the unscrupulous elements out for using banking channel to serve their ends.
The Board of Directors and Management of the Bank expect that all Branches of NCC Bank
Limited, Division/ DepartmentlUnit of Head Office, Chittagong Area Office must comply with
AML and CFT Policy Guidelines Keeping in mind that any deviation, lapses & non-compliance of
AML and CFT related instructions will be viewed seriously by the authority.
Taking this opportunity I, on behalf of the Management place for record our sincere thanks to Mr.
Jagadish Chandra Debnath, Principal, Training Institute who is also DCAMLCO of the Bank for his
relentless effort in preparing a policy on such important topic. While preparing of the same, Bank's
CAMLCO and DMD Mr. Akhtar Hamid Khan has extended his valuable guidance to make it a
wholesome one and his contribution also deserves appreciation from the management. I would also
liketo appreciate supports of all concerned towards on early completion of that policy.
I sincerely hope and believe that with the launching of the Policy the Bank would endurance
further.
With all best wishes
Sincerely Your's
Golam afiz Ahmed
Managing Director and CEO
=
List of Acronyms
ACC Anti Corruption Commission
AML Anti-Money Laundering
AMLD Anti-Money Laundering Department of Bangladesh Bank
APG Asia Pacific Group on Money Laundering
ATA Anti Terrorism Act
ATO Anti Terrorism Ordinance
AAMLCO Area Anti Money Laundering Compliance Officer
BB Bangladesh Bank
BAMCO Branch Anti Money Laundering Compliance Officer
BDT Bangladesh Taka
BFIU Bangladesh Financial Indigence Unit
CCU Central Compliance Unit
CAMLCO Chief Anti-Money Laundering Compliance Officer
CDD Customer Due Diligence
CAP Customer Acceptance Policy
CFT Combating the Financing of Terrorism
CTC Counter Terrorism Committee
CTR Cash Transaction Report
DEA Drug Enforcement Agency
DDR Due Diligence Repository
EDD Enhanced Due Diligence
FATF Financial Actions Task Force
FATCA Foreign Accounts Tax Compliance Act
FCBs Foreign Commercial Banks
FIU Financial Intelligence Unit
FSRB FATF Style Regional Body
GoB Government of Bangladesh
ICRG International Cooperation and Review Group
IOSCO International Organization of Securities Commissioners
KYC Know Your Customer
MER Mutual Evaluation Report
ML Money Laundering
MLPA Money Laundering Prevention Act
MLPO Money Laundering Prevention Ordinance
NCC National Coordination Committee on AML/CFT
NCCT Non-cooperating Countries and Territories
OFAC Organization of Foreign Asset Control
PEPs Politically Exposed Persons
STR Suspicious Transaction Report
SAR Suspicious Activity Report
TF Terrorist Financing
TP Transaction Profile
UNSCR United Nations Security Council Resolution

NCCBL AML and CFT Policy Guideline- Revised 2015 Page 1
TABLE OF CONTENT
CHAPTER- I
AML & CFT POLICY FUIDELINE

Chapters Topic Page Number
1.0 Introduction: 4 - 4
1.1 Meaning of Money laundering: 5 - 5
1.2 Offence of Money Laundering and Punishment: 5 - 5
1.3 Why Money Laundering is done: 6 - 6
1.4 How the Money Laundering is done: 6 - 7
1.5 Predicate Offences: 7 - 7
1.6 Powers and responsibilities of BFIU of Bangladesh Bank: 8 - 9
1.7 Responsibilities of the reporting organizations in prevention of ML: 9 - 10
1.8 Why NCC Bank Limited must combat Money Laundering & Terrorist Financing: 10 - 11

CHAPTER- II
ORGANIZATIONAL STRUCTURE & POLICY STATEMENTS
2.1 Senior Management Commitment & Policy State ment: 12 - 12
2.2 Organization Structure: 12 - 12
2.3 Organogram of NCCBL for Implementation of AML CFT Program: 13 - 13
2.4 Formation of Central Compliance Unit (CCU) & Appointment of Chairman: 14 - 14
2.5 Qualifications of Chairman/CAMLCO: 14 - 14
2.6 The Chairman shall possess: 14 - 14
2.7 Functions & Responsibilities: 15 - 15
2.8 The Chief Anti Money Laundering Officer ( CAMLCO): 15 - 15
2.9 Roles and Responsibilities DCAMLCO: 16 - 16
2.10 Roles and Responsibilities BAMLCO: 17 - 17
2.11 Records and Maintenance of File (Branch level): 18 - 18
2.12 Manager AMLCO (Branch): 19 - 19
2.13 Account Officer/ Relationship Manager/ Staff Responsible for account opening: 19 - 19
CHAPT ER- III
AML AND CFT PROCESS
CUSTOMER DUE DILIGENCE (CDD) & IDENTIFICATION PROCEDURES

3.1 Know Your Customer (KYC) Policies and Proced ures: 20 - 24
3.2 Customer Acceptance Policy: 24 - 25
3.3 Customer Identification: 25 - 26
3.4 Internet or Online Banking: 26 - 28
3.5 Requirements in respect of Pre 2002 Accounts: 28 - 28
3.6 Provision of Safe Custody, Lockers and Safety Deposit Boxes: 28 - 28

CHAPTER- IV
MONEY LAUNDERING RISK MANAGEMENT PROCESSES

4.1 Know Your Customer (KYC) Procedures: 29 - 30

4.2 Transaction Monitoring & SAR. 31 - 31

4.3 Self Assessment of Money Laundering Prevention Activities 31 - 31

4.4 System of Independent Procedures Testing 32 - 32

CHAPTER- V
RECORD KEEPING

5.1 Statutory Requirements 33 - 34

CHAPTER- VI
RECOGNITION AND REPORTING OF CTR & STR:
6.1 Recognition of Cash Transactions: 35 - 35
6.2 Online CTR Submission 36 - 36
6.3 Recognition of Suspicious Transactions: 36 - 38
6.4 Reporting of Suspicious Transactions 38 - 39

CHAPTER- VII
SANCTION SCREENING OF UNSCR & OTHERS
7.1 Sanction Screening of UNSCR & Others 40 - 40

CHAPTER- VIII
TRAINING /AWARENESS & SENIOR MANAGEMENT REVIEWS

8.1 Training/Awareness & Senior Management Revi ews 41 - 43

ANNEXURE

Annexure A BFIU BB Master Circular No. 10/2014 44 – (Enclosed 57 Page)
Annexure B Examples of Potentially Suspicious Transactions as per B B Guidance notes: 45 - 48
Annexure C Concise form of KYC For Walk- in and Online Banking Customer (depositor / withdrawer) 49 - 49
NCCBL AML and CFT Policy Guideline- Revised 2015 Page 2
Forewords,

Money Laundering (ML) and Terrorist financing (TF) can potentially damage and pose serious
threats to the integrity and stability of a financial system. To protect the Banking industry from
these threats, the Bank Authority has been working in partnership with financial institutions and
BFIU, government departments and other key stakeholders to put in place an effective regime
to fight against these crimes.
In response to the growing concern about money laundering and terrorist activities, the
international community has acted on many fronts Central Bank in an agreement over the issue
with the rest of the world, have been prompt to identify it as one of the Core Risks in our
Banking Sector. Consequently, In line with the international initiatives and standards,
Bangladesh has also enacted Money Laundering Prevention Act (MLPA), 2012 (repealing the
MLPA, 2009) and Anti Terrorism Act (ATA), 2009 (as amended in 2012). The new acts address
all the deficiencies identified in the 2nd Mutual Evaluation of Bangladesh conducted by APG in
2008 to determine the extent of its compliance, with the global standards. Both the Acts have
empowered Bangladesh Bank (BB) to perform the anchor role in combating ML&TF through
issuing guidance and directives for reporting agencies including NCC Bank (FIs), as defined in
section 2(g) of MLPA, 2012.
National Credit and Commerce Bank Ltd being an active member of the main stream banking
industry of the country, obviously remains obliged to comply with the directives of the Central
Bank towards a cause which has not been identified in isolation but collectively by various
International agencies including UN General Assembly. In this regard, over the past few years
the Basle Committee on Banking Supervision issued numerous statements of principles and
developed a set of Core Principles for Effective Banking Supervision as important guidelines to
eliminate the risks related to Money Laundering in the NCC Bank. Therefore, the subject policy
has been prepared in compliance with the spirit considered as standard principles aimed at
elimination of the menace and as conveyed under the BFIU Master Circular No.10/2014, dated
28.12.2014 to join in the forces against a common enemy of our Banking Sector.
The prevention of money laundering and terrorist financing requires collective effort from all
relevant government and private organizations. An effective AML/CFT regime can only be
implemented if all the major participants of the financial system comply with the country‗s
AML/CFT laws, rules and regulations.
NCC Bank Limited devises this ‗Revised‘ Policy Guideline in the line of Government ―The
Money Laundering Prevention Rules 2013‖ & ―The Anti Terrorism Rules 2013‖ Gazette
Notification Vide SRO. No357-Law/ 2013 (Ministry of Finance) & Vide SRO. No. 325-Law/ 2013
(Ministry of Home)
This Policy Guideline on ―Money Laundering Prevention‘‘ to be used in National Credit and
Commerce Bank Limited is prepared and DRAFT copy placed for kind approval of Board of
Directors

Central Compliance Unit (AML)
Head Office.
Dated: 25 August 2015
NCCBL AML and CFT Policy Guideline- Revised 2015 Page 3
CHAPTER- I
AML & CFT POLICY GUIDELINE
1. Introduction.
Money laundering is a financial crime & punishable offense. As per Money Laundering
Prevention Act 2012. the definition of money laundering is massive interpretive. It includes
earning/acquiring property through illegal way. This definition is so wide that offences like theft,
robbery, dacoity, cheating, forgery etc. Well defined in the Penal Code, also quality to be an act
of money laundering. Further, it includes illegal transfer, change of nature, and concealment of
property, acquired or earned through legal or illegal way. This part was added to stop transfer of
money by unauthorized channel namely ―Hundi‖. The problems of the second part of the
definition are that it imposes serious allegation of money laundering on innocent persons, in
particular wage earners. They transfer their hard-earned legal money to their family living in
Bangladesh by using some informal channels because the authorized channels are not found
reliable. This ‗wrong‘ may not be a crime at all as there is no intention to change black money
into white.
Meaning of money laundering is concealing or disguising the illicit money, source, location,
ownership or control of the proceeds of predicate offenses. It includes illegal transfer, change
of nature, and camouflage of property, acquired or earned through legal or illegal way or
assisting any person involved in the commission of the predicate offence to evade the legal
consequences of such offences or acquiring, possessing or using any property, knowing that
such property is the proceeds of predicate offences In order to ensure and monitor compliance
with the Money Laundering Act latest version Act No-02. Dated 20.02.2012 including record
keeping and reporting as per Circulars issued by Bangladesh Bank BFIU, National Credit &
Commerce Bank shall develop and administer a written Anti Money Laundering Policy
Guideline which shall have approval from the Board Of Directors of the bank. Such written
Policy shall send clear signals about the alertness of the institution and shall deter criminals
from using their facilities for money laundering purposes.

The policy shall include standards and procedures to comply with applicable laws and
regulations to reduce the scope of criminal abuse. Procedures shall address Know Your
Customer policy (KYC), Transaction Profile (TP) and identification procedures before opening
new accounts, monitoring existing accounts for unusual or suspicious activities, information
flows, Suspicious Transactions Reporting (STR), Cash Transaction Reporting (CTR) hiring and
training employees and a separate audit or internal control function to regularly test the
program's effectiveness. It shall include a description of the roles the Anti-Money Laundering
Compliance Officers(s)/Unit and other appropriate personnel will play in monitoring compliance
with and effectiveness of money laundering policies and procedures.
In addition, the policy shall emphasize the responsibility of every employee to protect the
institution from exploitation by money launderers, and shall set forth the consequence of non-
compliance with the applicable laws and the institution's policy, including the criminal, civil and
disciplinary penalties and harm to reputation that could ensue from any association with money
laundering activity.

NCCBL AML and CFT Policy Guideline- Revised 2015 Page 4
1.1 Meaning of Money Laundering
(a) ―money laundering‖ means –
i. knowingly moving, converting, or transferring proceeds of crime or property
involved in an offence for the following purposes:-
ii. concealing or disguising the illicit nature, source, location, ownership or control of
the proceeds of crime; or
iii. assisting any person involved in the commission of the predicate offence to evade
the legal consequences of such offence;
iv. smuggling money or property earned through legal or illegal means to a foreign
country;
v. knowingly transferring or remitting the proceeds of crime to a foreign country or
remitting or bringing them into Bangladesh from a foreign country with the intention
of hiding or disguising its illegal source; or
vi. concluding or attempting to conclude financial transactions in such a manner so as
to reporting requirement under this Act may be avoided;
vii. converting or moving or transferring property with the intention to instigate or assist
for committing a predicate offence;
viii. acquiring, possessing or using any property, knowing that such property is the
proceeds of a predicate offence;
ix. performing such activities so as to the illegal source of the proceeds of crime may
be concealed or disguised;
x. participating in, associating with, conspiring, attempting, abetting, instigate or
counsel to commit any offences mentioned above;

1.2 Offence of money laundering and punishment.–
(1) For the purposes of this Act, money laundering shall be deemed to be an offence.
(2) Any person who commits or abets or conspires to commit the offence of money laundering,
shall be punished with imprisonment for a term of at least 4(four) years but not exceeding
12(twelve) years and, in addition to that, a fine equivalent to the twice of the value of the
property involved in the offence or taka 10(ten) lacks, whichever is greater.
(3) In addition to any fine or punishment, the court may pass an order to forfeit the property of
the convicted person in favors of the State which directly or indirectly involved in or related with
money laundering or any predicate offence.
(4) Any entity which commits an offence under this section shall be punished with a fine of not
less than twice of the value of the property or taka 20(twenty) lacks, whichever is greater and in
addition to this the registration of the said entity shall be liable to be cancelled.
(5) It shall not be a prerequisite to charge or punish for money laundering to be convicted or
sentenced for any predicate offence.

NCCBL AML and CFT Policy Guideline- Revised 2015 Page 5
1.3. Why Money Laundering is done:
First- money represents the lifeblood of the organization/person that engages in criminal
conduct for financial gain because it covers operating expenses and pays for an extravagant
lifestyle. To spend money in these ways, criminals must make the money they derived illegally
appear legitimate.
Second- a trail of money from an offense to criminals can become incriminating evidence.
Criminals must obscure or hide the source of their wealth or alternatively disguise ownership or
control to ensure that illicit proceeds are not used to prosecute them
Third-the proceeds from crime often become the target of investigation and seizure. To shield
ill-gotten gains from suspicion and protect them from seizure, criminals must conceal their
existence or, alternatively, make them look legitimate
1.4. How the Money Laundering is done:
There is no single method of laundering money. Methods can range from the purchase and
resale of a luxury item (e.g. a house, car or jewelry) to passing money through a complex
international web of legitimate businesses and ‗shell‘ companies (i.e. those companies that
primarily exist only as named legal entities without any trading or business activities).There are
a number of crimes where the initial proceeds usually take the form of cash that needs to enter
the financial system by some means. Bribery, extortion, robbery and street level purchases of
drugs are almost always made with cash. These proceeds of crime have to enter the financial
system by some means so that it can be converted into a form which can be more easily
transformed, concealed or transported. The methods of achieving this are limited only by the
ingenuity of the launderer and these methods have become increasingly sophisticated. Despite
the variety of methods employed, money laundering is not a single act but a process
accomplished in 3 basic stages which are as follows:
Placement–
Physically depositing ―cash‖ into Banks and Non-Bank financial institutions such as currency
exchanges; converting ―cash‖ into other financial instruments such as by purchasing monetary
instruments (travelers‘ checks, payment orders); or using ―cash‖ to purchase expensive items
that can be resold. Launderers often seek to deposit cash into Banks and then transfer these
funds to Banks in regulated environments as ―clean‖. Smurfing– a form of Placement where
the launderer makes many small cash deposits instead of a large one to evade local regulatory
reporting requirements applicable to cash transactions. Launderers intend to avoid the
threshold of Cash Transaction for dodging the reporting to Regulatory or competent authority.
Layering–
Separating the proceeds of criminal activity from their source through the use of layers of
financial transactions (multiple transfers of funds among financial institutions, early surrender of
an annuity Manual on Prevention of Money Laundering and Combating Financing on Terrorism
without regard to penalties, cash collateralized loans, L/Cs with false invoices/bills of lading,
etc.) to disguise the origin of the funds, disrupt any audit trail, and provide anonymity.
Launderers want to move funds around, changing both the form of the funds and their location
in order to make it harder for law enforcement authorities to identify ―dirty‖ money.
NCCBL AML and CFT Policy Guideline- Revised 2015 Page 6
Integration–
Placing the laundered proceeds back into the economy in such a way that they re-enter the
financial system as apparently legitimate funds. The three basic steps may occur as separate
and distinct phases. They may also occur simultaneously or, more commonly, may overlap.
How the basic steps are used depends on the available laundering mechanisms and the
requirements of the criminal organizations

1.5. Predicate offences:
―predicate offence‖ means the offences mentioned below, by committing which within or
outside the country, the money or property derived from is laundered or attempt to be
laundered, namely:-
(1) corruption and bribery;
(2) counterfeiting currency;
(3) counterfeiting deeds and documents;
(4) extortion;
(5) fraud;
(6) forgery;
(7) illegal trade of firearms;
(8) illegal trade in narcotic drugs, psychotropic substances and substances
causing intoxication;
(9) illegal trade in stolen and other goods;
(10) Kidnapping, illegal restrain and hostage taking;
(11) murder, grievous physical injury;
(12) trafficking of women and children;
(13) black marketing;
(14) smuggling of domestic and foreign currency;
(15) theft or robbery or dacoity or piracy or hijacking of aircraft;
(16) human trafficking;
(17) dowry;
(18) smuggling and offences related to customs and excise duties;
(19) tax related offences;
(20) infringement of intellectual property rights;
(21) terrorism or financing in terrorist activities;
(22) adulteration or the manufacture of goods through infringement of title;
(23) offences relating to the environment;
(24) sexual exploitation;
(25) insider trading and market manipulation using price sensitive information
relating to the capital market in share transactions before it is published for
general information to take advantage of the market and attempting to
manipulate the market for personal or institutional gain;
(26) organized crime, and participation in organized criminal groups;
(27) racketeering; and
(28) Any other offence declared as predicate offence by Bangladesh Bank, with
the approval of the Government, by notification in the official Gazette, for the
purpose of this Act.

NCCBL AML and CFT Policy Guideline- Revised 2015 Page 7