Anti-money laundering and counter-terrorist financing

Policy for scrapthat®

1. Introduction to the policy

1.1     Infinity Metals Limited is required to put in place appropriate systems and controls to combat money laundering and terrorist financing under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLR 2017).

1.2     For more details on the MLR 2017, see sections 9 and 10 below.

2. Scope and application

2.1     This policy contains the procedures we have developed to comply with the MLR 2017.

2.2     This policy applies to all our premises, employees, officers, consultants, contractors and to other workers including agency workers, casual workers, volunteers, interns and home workers.

2.3     All staff must be familiar with this policy and comply with its terms.

2.4     This policy does not form part of any contract of employment and we may amend it at any time.

3. Responsibility for anti-money laundering (AML) and counter-terrorist financing (CTF) compliance

3.1     The Company itself is primarily responsible for compliance with the MLR 2017, including all systems and control requirements.

3.2     We have appointed a board-level officer as the officer responsible for compliance with the MLR 2017 with Ian Taylor. Our nominated officer Ian Taylor has a separate responsibility to:

         3.2.1  receive and assess suspicious activity reports (SARs)—see section 11 below; and

         3.2.2  determine whether the SAR gives rise to knowledge or suspicion (or reasonable grounds for knowledge or suspicion) that a person is engaged in money laundering or terrorist financing.

4. Failure to comply with this policy

4.1     Failure to comply puts both you and the Company at risk.

4.2     You may commit a criminal offence if you fail to comply with this policy. The AML and CTF regimes carry heavy criminal penalties ranging from 2 years’ imprisonment for failing to apply appropriate customer due diligence (CDD) measures to 14 years’ imprisonment for committing a principal money laundering or terrorist financing offence.

4.3     We take compliance with this policy very seriously. Because of the importance of this policy, failure to comply with any requirement may lead to disciplinary action under our procedures, which may result in dismissal.

5. Accounts procedures

5.1     We have robust systems to ensure that the Company’s business and Company bank account details are only disclosed to customers and third parties where necessary.

5.2     All managers and staff must understand that:

         5.2.1  members of the Accounts department must not be pressurised into actions or omissions that place the Company at risk of involvement in financial crime;

         5.2.2  where a member of the Accounts team has concerns about a matter or transaction, they are expected to consult their manager, the Compliance Officer for Finance and Administration (COFA) or the nominated officer;

         5.2.3  the Accounts team will always consult the nominated officer before taking steps to return any unidentified funds to the originator; and

         5.2.4  an explanation will always be required for payments into or out of customer account by or from a third party.

6. What are money laundering and terrorist financing?

6.1     Money laundering is the process through which the true origin and ownership of the proceeds of crime are changed so that the proceeds appear legitimate. The money laundering offences that are relevant to our Company and staff are explained below at section 8.

6.2     Terrorist financing is providing or collecting funds, from legitimate or illegitimate sources, to be used to carry out an act of terrorism. The terrorist financing offences that are relevant to our Company and staff are explained below at section 9.

6.3     Why are anti-money laundering and counter-terrorist financing important to me?

         6.3.1  Scrap metal is used by criminals for placement activities (see 6.4 below);

         6.3.2  the Company has obligations under the AML/CTF regime to spot and report money laundering and terrorist financing. Failure to meet these obligations can lead to criminal penalties, substantial fines, and untold damage to the Company’s reputation.

6.4     How does money get laundered?

         6.4.1  Typically, money laundering involves three stages:

                   (a)     Placement—the process of placing criminal property into the financial system (e.g. by breaking up large sums of cash into smaller amounts or by using a series of financial instruments (such as cheques or money orders) which are deposited at different locations).

                   (b)     Layering—the process of moving money that has been placed in the financial system in order to obscure its criminal origin (usually through multiple complex transactions often involving complicated offshore company structures and trusts).

                   (c)     Integration—once the origin of the money is disguised it ultimately must reappear in the financial system as legitimate funds (involves investing the money in legitimate businesses and other investments such as property purchases, or setting up trusts).

         6.4.2  We are most likely to become involved in the placement stage but potentially could be involved in any stage.

7. Money laundering/terrorist financing warning signs

7.1     You do not have to behave like a police officer, but you do have to remain alert to the warning signs of money laundering and terrorist financing and make the sort of enquiries that a reasonable person (with the same qualifications, knowledge and experience as you) would make.

7.2     Typical signs of money laundering and terrorist financing can be broken down into four categories: (i) the customer, (ii) the parties, (iii) the instructions and (iv) the money and then further by area of law.

         7.2.1  The customer—red flags

                   (a)     obstructive or secretive clients;

                   (b)     customers who are reluctant to provide information or documentation on, or the documentation provided is suspicious;

                   (c)     customers who ask repeated questions on the law and procedures relating to our identifying and reporting procedures under the AML and CTF regime,

                   (d)     the customer has an unusual level of knowledge about money laundering processes.

         7.2.2  The money – red flags

                   (a)     the customer asks you to return funds or send funds to a third party,

                   (b)     multiple bank accounts used with no logical explanation,

                   (c)     requests to change payment procedures that are already agreed.

         Remember: payments made through the mainstream banking system are not guaranteed to be

         clean.

7.3     Criminals are always developing new techniques so this list can never be exhaustive.

8. Money laundering offences

8.1     The Proceeds of Crime Act 2002 (POCA 2002) establishes a range of money laundering

         offences:

         8.1.1  the principal offences,

         8.1.2  failure to disclose offences, and

         8.1.3  the offences of tipping-off and prejudicing an investigation.

8.2     Each offence is explained below. All money laundering offences relate to criminal property, which is property that constitutes or represents a person’s benefit:

         8.2.1  in whole or in part,

         8.2.2  from criminal conduct,

         8.2.3  whether directly or indirectly.

8.3     This definition covers the proceeds of all crimes. There is no minimum limit on what is considered to be criminal property.

8.4     Criminal conduct is all conduct that constitutes an offence in any part of the UK or overseas conduct that would constitute a criminal offence in the UK that would attract a maximum sentence of more than 12 months’ imprisonment.

8.5     The principal offences

         8.5.1  You will commit a principal money laundering offence if you:

                   (a)     conceal, disguise, convert, transfer or remove criminal property from the UK

                            (POCA 2002 s.327),

                   (b)     enter into or become concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property for or on behalf of another (POCA 2002 s.328), or

                   (c)     acquire, use or have possession of criminal property (POCA 2002 s.329).

         8.5.2  Concealing (POCA 2002 s.327)

                   (a)     You will commit an offence if you: (i) conceal, (ii) disguise, (iii) convert, (iv) transfer, or (v) remove from the UK

                   criminal property.

                   (b)     This includes concealing or disguising its: (i) nature, (ii) source, (iii) location, (iv) disposition, (v) movement, or (vi) ownership

                   or any rights with respect to it.

                   (c)     You must know or suspect that the criminal property represents a benefit from criminal conduct.

         8.5.3  Arrangements (POCA 2002 s.328)

                   (a)     You will commit an offence if you (i) enter into or become concerned in (ii) an arrangement which you know or suspect facilitates (by whatever means) (iii) the acquisition, retention, use or control of criminal property (iv) by or on behalf of another.

                   (b)     Arrangement is not defined in POCA 2002 though POCA 2002 s.328 catches a wide range of involvement in money laundering offences. It can easily catch you when you are conducting transactional work for laundering customers.

                   (c)     POCA 2002 s.328 will not catch legal professionals conducting genuine litigation or carrying out the terms of a court order. However, any property will remain criminal after litigation has concluded and any resulting court order implemented, so you may decide to advise the customer to seek advice in relation to the property from an independent legal professional. For example: (i) in matrimonial proceedings between husband A (a criminal) and wife B; (ii) the court orders the transfer of the matrimonial home from A to B; (iii) the matrimonial home represents the proceeds of A’s crime.

                   (d)     You will not commit the arrangement offence by effecting the transfer under the court order. However, the matrimonial home remains criminal property in B’s hands. If B later instructs you to transfer the property, you will commit the arrangement offence if you do not first disclose your knowledge about the property and receive appropriate consent, or a defence, from the National Crime Agency (NCA) to transfer it.

                   (e)     Entering into an arrangement means becoming party to it. Being concerned in an arrangement has a wider scope, e.g. taking steps to put an arrangement in place.

                   (f)      Preparatory or intermediate steps which do not in themselves involve the acquisition, retention, use or control of property will not constitute the making of an arrangement.

         8.5.4  Acquisition (POCA 2002 s.329)

You will commit an offence if you: (i) acquire; (ii) use; or (iii) have possession of criminal property.

         8.5.5  Possession means having physical custody of the criminal property.

         8.5.6  The principal money laundering offences carry a maximum penalty of 14 years’ imprisonment, a fine or both.

         8.5.7  You will have a defence to a principal money laundering offence if you submit a SAR to the Company’s nominated officer.

8.6     Failure to disclose

         8.6.1  Making a SAR to the nominated officer can be a defence to a principal money laundering offence.

         8.6.2  Failing to make a SAR to the nominated officer where you know or suspect money laundering is an offence in itself which is punishable by up to 5 years’ imprisonment, a fine or both.

         8.6.3  See further section 11 below.

8.7     Tipping-off and prejudicing an investigation

         8.7.1  You will commit the tipping-off offence if you:

                   (a)     disclose that you or anyone else has made a SAR to the nominated officer (or the NCA) of information which came to you in the course of business, and

                   (b)     that disclosure is likely to prejudice any investigation that might be conducted following the SAR.

         8.7.2  You will commit the prejudicing an investigation offence if you disclose that an investigation is being contemplated or carried out, and that disclosure is likely to prejudice that investigation.

         8.7.3  You will also commit an offence if you know or suspect an investigation is being or is about to be conducted and you interfere with documents that are relevant to the investigation.

         8.7.4  Tipping-off can only be committed after a SAR (including an internal SAR to the nominated officer) has been made.

         8.7.5  You will not commit tipping-off by discussing your concerns with or submitting a SAR to the nominated officer.

         8.7.6  All these offences are punishable by up to 5 years’ imprisonment, a fine or both.

         8.7.7  The existence of these offences does not prevent you from making normal enquiries about your customers’ instructions. You are able to make enquiries in order to:

                   (a)     obtain further information to help you decide whether you have a suspicion, and/or

                   (b)     remove any concerns that you have.

         8.7.8  Your enquiries will only constitute an offence if you disclose that a SAR has been made or an investigation is being carried out or contemplated.

         8.7.9  It is also not tipping-off to warn customers of our duties under the AML/CTF regime by providing them with our terms of business.

9. Terrorist financing offences

9.1     Terrorists need funds to plan and carry out attacks. The Terrorism Act 2000 (TA 2000) criminalises both the participation in terrorist activities and terrorist financing.

9.2     In general terms, terrorist financing is:

         9.2.1  the provision or collection of funds,

         9.2.2  from legitimate or illegitimate sources,

         9.2.3  with the intention or in the knowledge,

         9.2.4  that they should be used in order to carry out any act of terrorism,

         9.2.5  whether or not those funds are in fact used for that purpose.

9.3     The TA 2000 establishes a similar pattern of offences to those contained in POCA 2002 i.e.:

         9.3.1  principal terrorism offences of:

                   (a)     fundraising,

                   (b)     use or possession,

                   (c)     arrangements,

                   (d)     money laundering,

         9.3.2  failure to disclose offences,

         9.3.3  tipping-off offences.

9.4     All offences carry heavy criminal penalties.

9.5     While the terrorist financing and money laundering regimes are different, they share similar aims and structures and run together in UK legislation.

9.6     Many of the provisions of POCA 2002 and TA 2000 mirror one another and the definitions are deliberately matched.

9.7     Both POCA 2002 and TA 2000 run parallel to the MLR 2017, which are explained below.

10. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLR 2017)

         The MLR 2017 set administrative requirements which require us to have systems and controls to combat money laundering and terrorist financing. Failure to comply with these requirements carries a maximum penalty of 2 years’ imprisonment, a fine or both.

11. Reporting suspicions

11.1   POCA 2002 and TA 2000 impose obligations to report knowledge or suspicion of money laundering or terrorist financing by way of a SAR. These obligations can override your duty of confidentiality.

11.2   Any member of staff can submit a SAR form to the nominated officer.

11.3   What are knowledge and suspicion?

         11.3.1 Knowledge under POCA 2002 means actual knowledge.

         11.3.2 Suspicion is a possibility which is more than fanciful. A vague feeling of unease will not suffice.

         11.3.3 There is no requirement for the suspicion to be clear or Company grounded on specific facts, but there must be a belief which is beyond mere speculation.

         11.3.4 The test for whether you hold a suspicion is generally subjective. However, there is an objective element to the test, i.e. would the reasonable solicitor, with the same knowledge, experience and information, have formed a suspicion.

         11.3.5 The suspicion held must be that another person is engaged in money laundering and not simply that there is something ‘fishy’ about the customer or the transaction.

11.6   When should I report suspicions?

         11.6.1 ALWAYS and as soon as reasonably practicable.

         11.6.2 If you know or suspect that another person is engaged in money laundering or terrorist financing you must complete the SAR form (see Appendix) and send it to the nominated officer.

11.7   What should I do if I am unsure why I am suspicious?

If you are unsure whether you suspect money laundering or terrorist financing, e.g. something just does not feel right with the matter, do not complete the SAR form but discuss your concerns with the nominated officer, who will advise whether you need to submit a SAR form. We will keep a note of that discussion.

11.8   What can I tell the customer?

         11.1.1 You must not tell the customer that a SAR has been submitted. If you do you will be committing the offence of tipping-off and could be exposed to a criminal record and up to 5 years’ imprisonment.

         11.2.2 There is very little, if anything, that you can tell the customer after a SAR as been submitted.

         11.1.3 Always speak with the nominated officer if you are in any doubt.

11.9   SuperSARs

         11.9.1 SuperSARs are SARs compiled by more than one regulated organisation which are then submitted jointly to the NCA. They are designed to reduce the number of SARs the NCA receives by allowing private sector entities to share information about suspected money laundering or terrorist financing before providing this information to the NCA in a single SAR.

         11.9.2 If you receive a request or notification from the NCA or another regulated organisation relating to a superSAR, you must inform the nominated officer immediately.

12. CDD—what is customer due diligence?

12.1   Customer due diligence is usually referred to as CDD. There are three basic components of CDD:

         12.1.1 identifying and verifying the customer’s identity,

         12.1.2 identifying the beneficial owner where this is not the customer, and

         12.1.3 obtaining details of the purpose and intended nature of the business relationship.

Customers who cannot provide the standard documents

12.2   Sometimes customers are unable to provide standard verification documents.

12.3   In these circumstances we will consider whether the inability to provide us with standard verification is consistent with the customer’s profile and circumstances or whether it might make us suspicious that money laundering or terrorist financing is occurring.

12.4   Where we decide that a customer has a good reason for not meeting the standard verification requirements, we will consider accepting other forms of documentation.

13. CDD records

13.1   We also have an obligation to keep documents, data or information used for the purposes of applying CDD measures up to date. Our system to record when CDD records (e.g. passports) are due to expire so you can obtain the updated version or alternative documentation involves setting flags within our IT system or accounts software.

13.2   We are obliged to keep the following records:

         13.2.1 a copy of CDD records,

         13.2.2 sufficient supporting records (originals or copies) in respect of a matter to enable the transaction/matter to be reconstructed.

Appendix

 Internal suspicious activity report form

(nominated officer use only)

A record of this Suspicious Activity Report (SAR) will be kept by the nominated officer for at least five years.

You must use this form in every case where you know or suspect that another person is engaged in money laundering or terrorist financing or where you have knowledge or suspicion of:

• bribery or corruption
• property or mortgage fraud
• slavery or human trafficking
• organised crime group involvement or
• tax evasion facilitation

If you are unsure as to whether you have such a suspicion, please do not use this form but instead seek guidance from the nominated officer.

• General (complete all sections)