Anti-money laundering and Counter-terrorism financing protection program. Guidelines

System of Internal Principles, Procedures and Control Mechanisms to Meet the Duties Imposed by Act No. 253/2008 Coll., on Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism, as amended

List of Abbreviations

AML Act: Act No. 253/2008 Coll., Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism, as amended
AMC: Qwerty Foundation s.r.o., ID 143 11 763, with registered office at Na Folimance 2155/15, Vinohrady, 120 00 Prague 2
FAÚ: Finanční analytický úřad (Financial Analytical Office)
STR: Suspicious Transaction Report

Definitions

Financing of Terrorism

means:

gathering or providing financial or other Assets knowing that such assets will be, in full or in part, used to commit criminal offence of terror, terrorist attack, or criminal offence intending to facilitate or support such crime, or to support an individual or group of individuals planning such criminal offence, or,
acting with intention to remunerate or compensate a person who has committed criminal offence of terror, terrorist attack or criminal offence intended to facilitate or support such criminal offence, or a close person to the perpetrator according to the Criminal Code, or collecting assets to pay such remuneration or compensation, or
gathering or providing financial or other Assets knowing that such assets will be, in full or in part, used by a disseminator of the weapons of mass destruction or will be used to support proliferation of such weapons in contradiction to requirements of international law.

It shall be immaterial whether the aforementioned activities have been or are supposed to be realized fully or partially in the territory of the Czech Republic or abroad.

Customer

is a person who:

is a contracting party to a legal relationship (obligation) related with business activities of AMC,
participates in interactions under which he/she/it is supposed to become a contracting party to a legal relationship (obligation) related with business activities of AMC,
represents, at interactions with AMC, a contracting party to a legal relationship (obligation) related with business activities of AMC, or
has a disposition right, arising from other facts, to the object of a legal relationship (obligation) related with business activities of AMC.

Supervisor

means the AMC´s Clerk holding the position of “AML/CTF Officer”.

Legitimisation of Proceeds of Crime or just Legitimisation

means an activity performed to conceal the illicit origin of any proceeds of crime with the intention to present the illicit proceeds as a legal income. The above activities should particularly be in the form of

conversion or transfer of Assets, knowing that such Assets come from criminal proceeds, for the purpose of concealing or disguising illicit origin of the Assets or of assisting a person involved in the commission of such activity to avoid the legal consequences of such conduct,
concealment or disguise of the true nature, source, location, disposition or movement of Assets, or change of ownership rights with respect to Assets, knowing that such Assets derive from crime,
acquisition, possession, use or handling of Assets knowing that they originate from crime, or
criminal association or any other type of cooperation serving the purpose of conduct under letters a), b) or c).

It shall be immaterial whether the aforementioned activities have been or are supposed to be realized fully or partially in the territory of the Czech Republic or abroad.

Assets

shall mean any asset, irrespective of its nature, i.e. a sum of everything the concerned person owns.

Transaction

shall mean any interaction of AMC with another person should such interaction lead to attempted handling of the other person’s Assets or providing services to such person.

Business Relationship

shall mean a contractual relationship between AMC and another person established to handle Assets of such other person or to provide services to such other person should it be evident in the time when the contractual relationship is established that such services will be provided repetitively.

Suspicious Transaction

shall mean a Transaction realized under the circumstances raising suspicion of Legitimisation of Proceeds of Crime or suspicion that funds used for the Transaction are determined to be used for Financing Terrorism or the Transaction can be otherwise related or connected with Financing Terrorism and/or other facts that can indicate such suspicion; specific forms of Suspicious Transactions are provided in Annex No. 1 hereto.

Politically Exposed Person

shall mean a natural person, who is or was in a prominent public function with nation-wide or regional responsibilities, such as a head of State, head of government, minister and deputy or assistant minister, member of parliament, member of governing bodies of political parties, leading representative of local government, member of the Supreme Court, Constitutional Court and other high-level judicial body, decisions of which are not subject to further appeal, except in exceptional circumstances, member of central bank board, high-ranking military officer, member or representative of member which is a legal person of statutory body of a state-owned business corporation controlled by the State, ambassador or chargé d’affaires, and/or natural person, who is or was in a similar function in another state or in a European Union body and/or in an international organisation,
shall mean a natural person who is
1. a person closely related to a person under letter a),
2. a business partner or beneficial owner of the same legal person, trust or other legal arrangement without legal personality as a person under letter a) or is known to AMC as a person in a close business relationship with the person under letter a), or
3. a beneficial owner of a legal person, trust or other legal arrangement without legal personality known to AMC to be created to the benefit of a person under letter

Customer´s Order

shall mean any legal act of the Customer, based on which AMC is supposed to handle Customer´s Assets.

Scheme

shall mean a scheme of AMC´s own activities against Legitimisation of Proceeds of Crime

Identity Card

shall mean an identity card, travelling passport or other document issued by a public administration authority containing the first name and surname, date of birth, visual image and potentially other identification features enabling identification of its bearer as the true holder.

Manager

shall mean the AMC´s Clerk holding the position “Fund Manager”.

Sanctions Act

shall mean Act No. 69/2006 Coll., on Carrying Out of International Sanctions.

Guidelines

shall mean these guidelines providing a system of internal principles, procedures and control mechanisms to meet the duties imposed by Act No. 253/2008 Sb., on Selected Measures against Legitimisation of Proceeds of Crime and Financing of Terrorism, as amended, including all Annexes.

Records Kept

shall mean all records kept according to Chapter II of the AML Act.

AMC´s Clerk

shall mean an employee of AMC or a person working for AMC under a service agreement or an external supplier of AMC.

Country of Origin

as for a natural person, this means every country a state citizen of which this person is and also all other countries where he/she is registered for permanent or other kind of residence,
as for a legal person having branch offices or subsidiaries in countries that are not members of the EU or of the EEC, this means the country where it has its headquarters,
as for a legal person not having any branch offices or subsidiaries in the above-mentioned countries, this means the country where it has its headquarters and, at the same time, all countries where it has its branch office, organisational unit or place of business.

3. Introduction

3.1. These Guidelines provide a Scheme and regulate the procedure of AMC´s Clerks on the area of fulfilment of duties arising for AMC from the AML Act.

3.2. The person in charge of organisation and methodology of fulfilment of tasks arising for AMC from the AML Act and of professional education and training of AMC´s Clerks is AML/СTF Officer.

3.3. These Guidelines are also binding upon third parties acting in the name or on behalf of AMC. AMC shall remind every such third party of this fact and make it possible for such party to get a detailed knowledge of these Guidelines.

4. Duties Arising for AMC from the AML Act

4.1. AMC is not the obliged party within the meaning of the AML Act; nevertheless, it has voluntarily decided to fulfil some duties of the obliged party arising from the AML Act.

5. Minimum Identification Requirements within the procedure – KYC (Know Your Customer)

5.1. The minimum set of identifiers includes:

Customer´s full name;
Customer´s date of birth;
Citizenship of the client;
if the documents are in the name of a third party, it is necessary to explain how this person is related to the account holder;
address of permanent residence at the moment of time or the client’s legal address;
Identification number or registration number if the customer is a legal person;
The source of the funds to be used under this agreement;
profession and employer information (if the client is a private entrepreneur, it is necessary to clarify the scope of activity).

Qwerty Foundation may require the following documents from the customer to verify and authenticate the above data.

5.2. Minimum Identification Requirements – Consumer (Individual) Accounts:

Name
Surname
Patronymic (if present)
Date of Birth
Citizenship
National Identification Number or Social Security Number (if present)
Information about permanent residence and contacts:
1. Country of Residence
2. City
3. Postcode
4. Address
5. Contact number

5.3. Minimum Identification Requirements – Commercial (Legal) Accounts:

Company name
Taxpayer identification number (Tax id)
Date of Entity incorporation / establishment
Type of ownership and append an owners details (if available)
Details of shareholders or ultimate beneficial owners with a holding of 10% or more
Full Legal (Registered) Address
Primary Business Address (if different from registered address)
List of foreign branches (if applicable)
Information about contact person:
1. Name
2. Surname
3. Patronymic (if present)
4. Date of Birth
5. Job title
6. Contact number

5.4. Furthermore, customers must confirm required documents (for consumer accounts: internal passport, international passport or ID card; for commercial accounts: passport or ID card of the contact person, company registration certificate, license to carry out activities within the powers (if provided by law)) by uploading photos of them and taking a selfie with one of the chosen required documents. Images must be legible and free of glare.

5.5. Qwerty Foundation reserves the right to check non-documentary verification from state databases and other independent sources.

6. Method of identification of the Customer, including measures towards recognition of Politically Exposed Persons and entities against which the Czech Republic applies international sanctions according to the Sanctions Act

6.1. Prior to the start of the business relationship with the client KYC procedure is conducted. Verification of customer information (including various lists, sanctions lists, information from the media and other sources) is carried out by AMC’s Clerk.

6.2. AMC shall perform identification of the Customer if:

a) this is a case of a Suspicious Transaction,

b) this is a case of an establishment of a Business Relationship, or

c) it is obvious that the amount of the Transaction will exceed EUR 1,000.

6.3. The scope of the identification data checked is determined by the respective provisions of the AML Act (especially Section 5 and Section 8) and by the identification form, which is devised for these purposes by AMC.

6.4. The initial identification of the Customer being a natural person shall be performed by AMC without physical presence of the identified person, in accordance with Section 11(7) of the AML Act:

6.5. Should AMC have any suspicion when executing a Transaction (or when establishing a Business Relationship) that the Customer is not acting on his/her behalf or conceals that he/she is acting on behalf of a third person, AMC shall demand a power of attorney from the Customer and perform the identification of the principal.

6.6. Within the identification process, AMC shall check and record whether the Customer is a Politically Exposed Person or a person against whom the Czech Republic imposes international sanctions under the Sanctions Act.

6.8. Detection of Politically Exposed Persons:

6.8.1. Within the identification process, AMC shall ascertain whether the person who wants to execute a Transaction (or to establish a Business Relationship) is/isn´t a Politically Exposed Person. In this regard, it is necessary to check the Customer and the persons authorized to act on behalf of the Customer.

6.8.2. If it is ascertained that this is a Politically Exposed Person, it is necessary, in addition to the identification, to perform also the Customer due diligence – see Article 6 hereof.

6.9. Detection of persons and entities subjected to international sanctions:

6.9.1. Within the identification process, it is always necessary to check whether the party to the intended Transaction (or a Business Relationship) is not included in the sanctioned party list. In this regard, it is necessary to check the Customer and the persons authorized to act on behalf of the Customer.

6.9.2. The check with sanctioned party lists shall be performed already before execution of the Transaction (or before establishment of the Business Relationship). If match with the sanctioned party list is found for the person, the Transaction (or the Business Relationship) shall be rejected and a STR shall be filed.

6.10. Other duties within identification process

6.10.1. AMC shall record all data received within the identification process by making copies, scans or other forms of records of official and other documents on a data carrier.

6.10.2. The AMC´s Clerk is obliged for each Transaction to demand a proof of identity of the Customer. Execution of the Transaction with keeping the Customer in anonymity shall be denied by the AMC´s Clerk.

6.10.3. Within the identification process, AMC shall determine also the degree of check of the Customer adequately to the risk of the Legitimisation or Financing of Terrorism; the risk of the Legitimisation or Financing of Terrorism shall be assessed by the AMC´s Clerk depending on the Customer, type of Transaction, Business Relationship or the specific Transaction.

6.10.4. The AMC´s Clerk shall verify the identity of the Customer already before establishment of the Business Relationship or before execution of the Transaction.

6.10.5. The verification of the identity of the Customer can be finished at the stage when the establishment of the Business Relationship is in progress only if it such prolonged process is needed for continuity of the ordinary course of business and if there is a low risk of Legitimisation or Financing of Terrorism. Anyway, in such cases the AMC´s Clerk shall finish the verification of the identity of the Customer at the latest before execution of the first Transaction.

6.10.6. Depending on the risk of the Legitimisation or Financing of Terrorism, the AMC´s Clerk shall verify and record changes in the identity and completeness of the identification data and information also during the existence of the Business Relationship.

6.10.7. Within the identification process, the AMC´s Clerk shall ascertain whether the Customer acts on his/her own behalf. If the AMC´s Clerk ascertain that the Client does not act on his/her own behalf, the AMC´s Clerk shall demand from him/her to prove, in the form of a binding written statement, the first name, surname, birth certificate number or, if no such number has been allocated, the date of birth of the natural person or the business name, registered office and identification number of the legal entity on behalf of which he/she executes the Transaction. The same procedure shall be applied by the AMC´s Clerk also if doubts arise about whether the Customer acts on his/her own behalf.

7. Procedures of Customer Due Diligence, Determination of Scope of Customer Due Diligence Adequate to the Risk of Legitimisation of Proceeds of Crime and Financing of Terrorism

Performing CDD is a critical requirement for Qwerty Foundation to mitigate the risk of financial crimes, including money laundering and terrorism financing. The CDD process should be applied when:

Establishing a Business Relationship: CDD must be conducted before starting any new business relationship with a customer. This includes individuals, entities, or organizations, such as banks, insurance companies, and money services businesses.
Suspicious Transactions: If a transaction appears to be suspicious, even if it is a one-time transaction, CDD should be conducted to verify the customer´s identity, source of funds, and other relevant information.
High-Risk Customers: Qwerty Foundation should also perform CDD for customers that pose a higher risk of financial crime, such as PEPs, customers from high-risk countries, or customers with complex ownership structures.

7.1. AMC shall perform the Customer due diligence:

a) prior to the execution of a Transaction outside of a Business Relationship

i. when it is obvious that the transaction amounts to EUR 50,000 or more at the latest,

ii. with a Politically Exposed Person, or

iii. with a person settled in a country which is, based on a designation by the European Commission or for another reason, considered as high-risk,

b) in situations covered by the obligation of identification under Article 5.1 lit. a) and lit. b) prior the realization of a Transaction at the latest,

c) in the course of the Business Relationship.

7.2. The Customer due diligence process entails the following:

a) collection of information about the purpose and intended nature of the Transaction or Business Relationship,

b) if the Customer is a legal person, a trust or other legal arrangement without legal personality the ascertainment/establishment of the ownership and control structure of the Customer and its beneficial owner and the adoption of measures enabling to identify and verify the identity of the beneficial owner – n.a. if the Client is a natural person,

c) ongoing monitoring of the Business Relationship including scrutiny of Transactions undertaken throughout the course of that Business Relationship with the purpose of detecting whether these Transactions are consistent with the AMC´s knowledge of the Customer, its business and risk profile,

d) a scrutiny of sources of funds or other Assets affected by a Transaction or Business Relationship, and

e) within a Business Relationship with a Politically Exposed Person also adequate measures for identification of the origin of his/her Assets.

7.3. The AMC´s Clerk shall perform the Customer due diligence under Article 6.2 lit. c) and lit. d) to the extent necessary to determine the potential risk of Legitimisation of Proceeds of Crime and Financing of Terrorism depending on the type of Customer, Business Relationship, product or Transaction.

7.4. These are the steps involved in the CDD process, explained in more detail:

Collect basic customer information: The first step in the CDD process is to collect basic information about the customer, such as their full name, contact details, date of birth, and nationality. This information is used to verify the customer´s identity and ensure that they are not on any watchlists or sanctions lists.
Identify and assess the customer´s risk level: Once basic customer information is collected, Qwerty Foundation must assess the customer´s risk level. This involves evaluating factors such as the customer´s occupation, source of funds, and the nature of the business relationship. Higher-risk customers, such as those in certain industries or with connections to PEPs, may require EDD procedures.
Conduct background checks: To verify the information collected from the customer, Qwerty Foundation may need to conduct background checks, such as credit checks, criminal record checks, or checks with external databases. This helps to ensure that the customer is who they claim to be and that their activities are legitimate.
Monitor customer activity: Ongoing monitoring of customer activity is an essential component of the CDD process. Qwerty Foundation must monitor customer transactions and activities for any unusual or suspicious behavior that may indicate financial crimes, such as money laundering or terrorist financing. If suspicious activity is detected, companies must report it to relevant authorities and take appropriate action.
Maintain accurate records: Qwerty Foundation must maintain accurate and up-to-date records of their CDD checks and monitoring activities. This includes documentation of the customer´s identity, risk assessment, background checks, and ongoing monitoring. Maintaining accurate records is essential for demonstrating compliance with relevant regulations and providing evidence of due diligence in the event of an audit or investigation.

8. Reasonable and Appropriate Methods and Procedures of Risk Assessment, Risk Management, Internal Controls and Compliance with Obligations Stipulated in the AML Act

8.1. Rules and procedures applying which AMC shall perform the below specified activities, depending on the risk profile of the Customer:

a) categorization of Customers – according to the Country of Origin, whether he/she is a Politically Exposed Person, whether the Customer is included in sanctioned party lists – subsequently in breakdown into high-risk Customers and other Customers;

b) decision about execution of the Transaction (or establishment of the Business Relationship) with the Customer or cancellation of a Transaction being already in progress (or termination of an existing Business Relationship) with the Customer – if the Transaction is assessed as suspicious or, if the Customer is classified as high-risk;

c) ascertainment of risk factors as for new Customers (and on an ongoing basis during the existence of the Business Relationship as for all Customers) and, at the same time, keeping the classification of the Customer according to the relevant risk degree updated with new information received;

d) implementation of appropriate measures against Customers as for which a risk factor has been ascertained.

8.2. The contact person for FAÚ is Supervisor.

9. Suspension and Rejection of Suspicious Transaction

9.1. Suspension of Suspicious Transaction

9.1.1. The AMC´s Clerk having assessed a business transaction, whether intended or in progress, as a Suspicious Transaction, shall suspend this transaction:

a) if the AMC´s Clerk concludes that execution of such transaction may thwart or substantially hinder seizure of proceeds of crime or funds intended for Financing of Terrorism, otherwise always upon Supervisor´s written instruction, or

b) if FAÚ demands so in writing from AMC, until further notice from FAÚ permitting to execute the Suspicious Transaction.

9.1.2. AMC shall suspend the Suspicious Transaction until further notice from FAÚ permitting to execute the Suspicious Transaction; AMC may execute the Customer´s Order concerning such Suspicious Transaction no sooner than after 24 hours from reception of announcement of the Suspicious Transaction from FAÚ, unless FAÚ decides, under the AML Act, that the Customer´s Order shall be suspended for a longer time, at maximum however for 3 working days.

9.1.3. The suspension of a Suspicions Transaction shall be reported by AMC to FAÚ immediately.

9.1.4. AMC shall keep suspending the Suspicious Transaction after receiving a written notice from FAÚ stating that the matter was referred to law enforcement authorities. AMC shall execute the Customer´s Order after lapse of 3 working days from the date of lodging a criminal complaint if the law enforcement authority does not decide on confiscation or seizure of the object of the Suspicious Transaction within such time limit.

9.1.5. AMC shall not suspend a Suspicious Transaction if

a) the suspension is not possible for operational or technical reasons; AMC shall inform FAÚ about such fact without any delay;

b) the suspension according to prior notice from FAÚ could thwart investigation of the Suspicious Transaction.

9.2. Rejection of a Transaction

9.2.1. The AMC´s Clerk shall refuse to carry out a Transaction (or to establish a Business Relationship) if:

a) there is a duty to perform the identification and the Customer refuses to undergo the identification;

b) there is a duty to perform the identification and the Customer is represented per power of attorney, but the representative refuses to present the letter of attorney;

c) the Customer does not provide necessary cooperation within the customer due diligence process;

d) lack of identification data would make a repeated identification impossible or significantly hindered;

e) the identification of the Customer and/or the Customer due diligence cannot be performed for other reasons;

f) AMC has doubts about the correctness of information provided by the Customer or about authenticity of presented documents;

g) this is a Transaction with a Politically Exposed Person and the origin of Assets used in the Transaction is unknown to AMC; or

h) the Customer or the person acting on behalf of the Customer is a person included in the sanctioned party list.

9.2.2. The AMC´s Clerk shall not execute a Transaction with a Politically Exposed Person without consent of the immediately superior of such AMC´s Clerk or without consent of a statutory body of AMC.

9.2.3. Qwerty Foundation has automatic Transaction Monitoring System (TMS), which check:

Transfers from “Blacklisted wallets” (for violation failing to comply with company policy)
Suspicious cyclic conversions
Transfers between related accounts

10. Procedure from Detection of Suspicious Transaction to Delivery of Report to FAÚ, Rules for Processing of the Suspicious Transaction and Designation of Persons to Assess the Suspicious Transaction

10.1. If AMC detects, in the course of its activity, a Suspicious Transaction, it shall report it to FAÚ without undue delay, at the latest within 5 calendar days from the date of detection of the Suspicious Transaction. If the end of the time limit falls on a Saturday, a Sunday or a public holiday, the last day of the time limit shall be the nearest next working day.

10.2. If circumstances of the Suspicious Transaction require so, especially if there is a danger in delay, AMC shall report the Suspicious Transaction immediately after detection thereof. This procedure is necessary in situations when there is a danger that the execution of the Customer´s Order may cause that the Assets constituting the object of the Transaction or the funds used in the Transaction would get out of reach of law enforcement agencies. In such a case, AMC shall report the Suspicious Transaction immediately after detection thereof, even at the price that the report will not contain all relevant information (the report will be completed later).

10.3. The procedure of AMC´s Clerks after detection of a Suspicious Transaction

10.3.1. The AMC´s Clerk shall consider each Transaction, whether intended or in progress, brought to his/her knowledge and if it is ascertained that there are indicators of a Suspicious Transaction, the AMC´s Clerk shall report such Suspicious Transaction to the Supervisor without any delay. If the reported transaction is assessed by the Supervisor as a Suspicious Transaction, the Supervisor shall forward the STR to the Manager, together with all data according to Article 9.4 hereof and documents related with the reported Suspicious Transaction in the form of an attachment.

10.3.2. According to the nature of the Suspicious Transaction, the AMC´s Clerk processing the transaction shall provide suspension thereof within the meaning of Article 8.1 hereof. In doubts, he/she shall consult the matter on the phone with the Supervisor.

10.3.3. The AMC´s Clerk having reported the Suspicious Transaction is obliged to collect all available documentation related with the concerned transaction so that it could be forwarded to FAÚ, to the Supervisor or to the Manager without any delay, if needed.

10.3.4. The Manager shall repeatedly consider the received STR and, after scrutiny of the facts entailing that there are indicators of a Suspicious Transaction, he/she shall decide whether this is really a case of a Suspicious Transaction or not.

10.3.5. The STRs that have been found unsubstantiated, after the scrutiny performed, by the Supervisor or by the Manager shall be filed away to the other documentation of AMC.

10.3.6. The Supervisor shall keep records of STRs for the purpose of compilation and update of an overview of forms of Suspicious Transactions cropping up in the course of AMC´s business.

10.4. Requisites of STR

10.4.1. The STR shall contain all information available to the reporting person about this transaction, about connections of the transaction and about parties involved in the transaction, in particular the identification data about the reported party, identification data about all parties involved in the transaction, information about material circumstances of the transaction and any other information that have any connection with the suspicious transaction and are relevant for assessment of the transaction in terms of the measures against legitimisation of proceeds of crime or financing of terrorism.

10.4.2. If the report includes information about Assets subject to international sanctions declared for the purpose of maintaining or restoring international peace and security, protection of basic human rights or fight against terrorism, this fact should be stressed in the report. The report shall also include a short description of this Assets, information about its location and owner if the reporting entity has such information, and information whether there is an imminent risk of damage to, deterioration or illicit usage of such Assets;

10.4.3. The reporting person shall always mention whether and when the Transaction was executed or whether it was suspended, or the reason why the Transaction was or wasn´t executed. If the execution of the Customer´s Order is suspended, AMC is not allowed to disclose this fact to the Customer (see the provision about confidentiality duty);

10.4.4. The STR shall contain the name, surname and job title of the person filing the report on behalf of AMC and possibilities of reception of instructions from FAÚ, including the possibility of contact outside normal working hours (phone, fax, e-mail).

10.4.5. The STR shall not contain information about the AMC´s Clerk or about the person in a similar labour-law relation who has detected the Suspicious Transaction.

10.4.6. AMC is not allowed to disclose the existence of the filed STR to the Customer.

11. Measures to Prevent Thwarting or Substantially Hindering the Seizure of Proceeds of Crime by Immediate Execution of Customer’s Order

11.1. Execution of a Customer´s Order shall mean also finishing any Transaction in which there is a suspicion of Legitimisation of Proceeds of Crime and Financing of Terrorism.

11.2. Should immediate execution of a Customer’s Order thwart or significantly hinder seizure of proceeds of crime or funds intended for Financing of Terrorism, AMC shall execute the Customer´s Order concerning the Suspicious Transaction no sooner than 24 hours after FAÚ received an STR on such transaction. (The above-mentioned danger arises especially when the execution of Customer´s Order causes that the Suspicious Transactions can no more be monitored or potentially seized by state authorities of the Czech Republic.)

11.3. If moreover the investigation of the Suspicious Transaction due to its complexity requires more time, FAÚ may decide:

a) to get the time of suspension of the Customer’s Order extended, but for no more than for additional 2 working days;

b) to get the Customer’s Order suspended or the Assets constituting the object of the Suspicious Transaction seized at AMC´s place where the Assets are located, for a period of up to 3 working days.

11.4. The execution of the Customer´s Order is not suspended in cases where the suspension of Customer´s Order is not possible (especially in transactions executed by electronic means of payment) or where such suspension could thwart or otherwise jeopardize the investigation of the Suspicious Transaction. If the Transaction has been executed by the time of filing the STR, the reporting person shall state this information about execution of the Transaction directly in this report; if the Transaction is executed later, the reporting person shall provide the information with reference to the filed report and state the exact date of execution of the transaction therein.

11.5. Suspension of execution of the Customer´s Order shall not apply to seizure of the Assets concerned by the STR, if these Assets are supposed to be seized according to the relevant legal regulation issued for implementation of international sanctions.

12. Technical and Personnel Measures for Provision of Suspension of Execution of Customer´s Orders according to Section 20 of the AML Act and Fulfilment of the Obligation to Inform within the Stipulated Time Limit Duty according to Section 24 of the AML Act

12.1. The measures regarding suspension of execution of a Customer´s Order

12.1.1. If AMC executes the Customer´s Order because the suspension of the Customer´s Order could thwart or otherwise jeopardize the investigation of the Suspicious Transaction, AMC shall always inform FAÚ about execution of the Customer ‘s Order.

12.1.2. The announcement of suspension of execution of a Customer´s Order may be done orally, by phone, by fax or electronically; a written copy shall always follow.

12.1.3. If AMC has reported the Suspicious Transaction to FAÚ, the time limit for suspension of the Customer´s Order including extension thereof shall begin to run from the time when the report is received by FAÚ.

12.1.4. If AMC has not reported a Suspicious Transaction to FAÚ and FAÚ decides to suspend execution of the Customer´s Order or to seize the Assets, the time limit shall begin to run from the time defined by FAÚ in its announcement about investigation of the Suspicious Transaction.

12.1.5. By return of post, AMC shall inform FAÚ about realization of the suspension of execution of the Customer´s Order, about extension of such time limit, or about realization of seizure of the concerned Assets, and confirm the time from which the time limit shall begin to run.

12.1.6. AMC shall execute the Customer’s Order if FAÚ does not inform it before the end of the time limit that a criminal complaint has been lodged.

12.1.7. If the relevant time limit expires, AMC may execute the transaction no matter whether the time limit expired on a working day or on another day.

12.1.8. Should FAÚ within the defined time limit lodge a complaint to a law enforcement authority, FAÚ shall inform AMC about this fact, which renders the time limit defined in hours expired. AMC shall then execute the Customer´s Order no sooner than after expiration of the new time limit - 3 working days beginning with the day of lodgement of the criminal complaint, unless the law enforcement authority decides on confiscation or seizure of the subject of the Suspicious Transaction before the end of this time limit.

13. Provisions about Trainings of AMC´s Clerks

13.1. Trainings focused on enhancement of professional skills of AMC´s Clerks in the area of protection from legitimisation of Proceeds of Crime shall especially cover typologies and indicators of Suspicious Transactions, requirements determined by the obliged entity for the identification and customer due diligence and procedures for detecting customer’s risk factors and suspicious transactions.

13.2. All new AMC´s Clerks shall be trained at commencement of their employment. The other AMC´s Clerks shall be trained in regular intervals. Contents of the training shall be regularly adapted to changes in the legislation, internal rules or to the needs of the market at least once a year.

13.3. AMC shall maintain records about the AMC´s Clerks trained, about contents and dates of their trainings. The records shall be kept for at least 5 years.

14. Provisions about Confidentiality Duty

14.1. AMC is obliged to keep confidentiality about each Suspicious Transaction reported and about measures applied by FAÚ in relation to third parties, including persons whom such information may concern. The confidentiality duty applies also to fulfilment of the duty to inform FAÚ.

14.2. The confidentiality shall be also kept by each AMC´s Clerk having reported a Suspicious Transaction, as well as a legal entity and a natural person working for AMC under another kind of contractual relationship.

14.3. The confidentiality duty of the persons mentioned in the previous clause hereof shall survive after termination of employment or of another kind of contractual relationship.

14.4. The confidentiality duty can´t be claimed in relation to authorities and persons mentioned in Section 39(1) of the AML Act.

14.5. All documents, including customer information (KYC, CDD), transaction information and business relationship history are kept for 5 (five) years at the end of the business relationship. The information is strictly confidential and is not provided to third parties, except for the provision of a legal order.

15. Final Provisions

15.1. Supervision over adherence to the rules provided herein is the responsibility of the Supervisor and the Manager.

15.2. These guidelines shall come into effect on the date when they were issued.

Annexes:

1. Detailed non-exhaustive list of indicators of Suspicious Transactions that may crop up in the course of AMC´s business.
2. Assessment of risks of Legitimisation of Proceeds of Crime and Financing of Terrorism for types of provided Transactions and Business Relationships

Annex No. 1

Detailed non-exhaustive list of indicators of Suspicious Transactions that may crop up in the course of AMC´s business

1. Indicators of possible Suspicious Transactions:

a) More than 10 transactions in one day.

b) The amount of transactions per one operating day exceeds 10,000 euros.

c) Small transactions (up to EUR 1,000) are made on a one-time basis.

d) A full withdrawal before the end of the business relationship.

e) Splitting (cyclical) funds into several accounts.

! This list of possible Suspicious Transactions serves just as an example, because there is no accurate definition of a Suspicious Transaction.

2. Non-exhaustive list of Suspicious transactions according to the AML Act:

a) withdrawals or transfers to other accounts immediately after deposits,

b) a realization of numerous transactions exceeding the Customer’s typical activity in one day or several consecutive days,

c) number of various accounts opened by the same Customer which are in an obvious discrepancy with his/her business activity or financial situation,

d) transfers of Assets without obvious economic reason and/or complicated or unusually large Transactions,

e) assets managed by the Customer are in obvious discrepancy with the nature and scope of his/her business activity or financial situation,

f) an account is used contrary to the purpose of its opening,

g) the Customer carries out activities that can help conceal his/her identity or the identity of the beneficial owner,

h) the Customer or beneficial owner are nationals of a country which does not fully enforce, or fails to fully enforce, measures to combat Legitimisation of Proceeds of Crime and Financing of Terrorism, or

i) doubts of obliged entity about the correctness of received Customer’s identification data.

! A transaction shall be perceived as suspicious, should:

a) the Customer or beneficial owner be a person against whom the Czech Republic has imposed international sanctions under the Act on Implementation of International Sanctions,

b) the subject of the transaction or Customer’s business be goods or services against which the Czech Republic has imposed sanctions under the Act on Implementation of International Sanctions, or

c) the Customer refuse to undergo the due diligence process or refuse to submit the identification data of the person on behalf of which he/she is acting.

Annex No. 2

Assessment of risks of Legitimisation of Proceeds of Crime and Financing of Terrorism for types of provided Transactions and Business Relationships. Parameters taken into account during the risk assessment:

Customer type
Purpose of Business Relationship
Regularity of Business Relationship
Length of Duration of Business Relationship
Transaction amount
Method of execution of the Transaction
Risk degree of the country to which the Transactions relate
Risk of Legitimization of Proceeds of Crime and Financing of Terrorism

There are four risk levels, and these are:

Low: Customers whose identity is easily identified.
Medium: Customers who pose a higher risk than an average customer.
High: Customers whose financial activities are monitored with Customer Due Diligence.
Prohibited: Customers who are banned from financial activities due to their involvement in financial crimes.

Basis	High Risk	Medium Risk	Low Risk
Type of Customer	Private Ltd., Company Public Ltd Company (Closely held) Politically Exposed Persons Customers having adverse publicity. Firms with operative transaction authorized by sleeping partner. Inconsistent level of business activity	Public Ltd companies (widely held) Firms with sleeping partners.	Professional & Self-employed persons. Self Help Groups Government companies. Public Sector companies. Government Departments.
Source (Nationality) of funds	Foreign Remittances from national of Pakistan, Afghanistan	Foreign Remittance from national of Eastern Bloc Countries, Indonesia, Taiwan, Vietnam	Foreign Remittance nationals of the European Countries. Foreign Remittances from Natives
Location of Customer	Developing Countries, African Countries, South American Countries	Asian Countries	European Countries
Business Activity	Jewelry Finance Companies Foreign Exchange, Money Market Brokers Travel Agencies Export / Import Trade SMEs with an annual turnover exceeding EURO 1 million and above Overly complicated ownership structures	Commodity SMEs with an annual turnover EURO 5 million and above, but < 20 million	Industry Hotel SMEs with a turnover of less than EURO 5 million. Retail Trade
Composition of partners, directors	Entirely foreign nationality	A mix of foreign and native	Exclusively Native

The responding AMC’s Clerk completes each client’s risk management table before starting a business relationship.

The periodicity of check is as follows:

The check reports are to be marked by the AML Officer. The AML Officer has to obtain the rectification reports for the features pointed out in the checks.
The AML Officer, in turn, shall place a consolidated note once in a quarter for high-risk accounts, once in a half year for medium-risk accounts, and once in a year for the low-risk accounts. The AML Officer should verify whether corrective action has been taken for the features stated in the verification reports.