AML Policy

The phenomenon of money laundering, due to its effects and its globalization, can be witnessed through its destabilizing effect on financial markets; it can affect the credibility of financial institutions, both in their relations with regulators and with society in general. Incidents of money laundering, drug trafficking, and terrorism financing have increased in recent years, and LQTY PAYMENTS INC (OneLiquidity) is adopting increasingly stringent standards to combat this scourge.

OneLiquidity adopts appropriate, sufficient measures to prevent its operations from being used to conceal, manage, invest, or use any form of money – or other assets – due to illicit activities, or to give the appearance of legality to such activities.

Establish the criteria and parameters that the institution must follow in terms of the design, implementation, and operation of a plan to prevent money laundering and terrorism financing.

OneLiquidity will implement policies and procedures in order to avoid the use of its operations for criminal purposes, as well as to cooperate with global efforts to prevent money laundering and the financing of terrorism. The policies and procedures detailed in this manual intend to provide OneLiquidity’s staff with the knowledge and resources needed to avoid money laundering and terrorism financing.

OneLiquidity is committed to implementing single global standards shaped by the most effective anti-money laundering and counter-terrorism financing standards available in Canada operated by the Company. 

The Company has established an Anti-Money Laundering Program (“AML Program”). The objective of this AML Program is to ensure that any money laundering risks identified by OneLiquidity are appropriately mitigated. This means having adequate systems and controls in place to minimize the risk of the company being used to facilitate any financial crimes. This policy is designed to represent the basic standards of Anti-Money Laundering and Combating Terrorism Financing procedures and standards, which will be strictly complied with by the Company. 

Please note that there may be supplementing policies and procedures established in other documents in support of the Policy referenced in this document, which the Company may implement from time to time This Policy (including any supplementing AML/CFT Procedures) will be periodically reviewed, with timely and suitable changes made as the risks of the business evolve over time.

The purpose of this policy is to provide the basic guidelines to the Company’s customers and its staff, irrespective of their location, regarding essential AML/CFT requirements. To achieve these objectives, and to ensure proper compliance procedures are implemented, the Company will continuously strive to ensure desired Senior Management oversight, appropriate analysis and assessment of the risks exposed to its customers and work/product types, proper systems for monitoring compliance with an emphasis on procedures and communications to be adopted, and regular updates to its staff’s knowledge and efficiency.

The “Know Your Customer” procedure is the most effective weapon against being used unwittingly to launder money and finance terrorism. Know Your Customer (KYC) is the process of a business identifying and verifying the identity of its customers. The objective of KYC guidelines is to prevent financial institutions from being used, intentionally or unintentionally, by criminal parties for money laundering activities. Related procedures also enable these institutions to better understand their customers and their financial dealings. This helps them to manage their risks prudently. Compliance with AML, Know Your Customer (“KYC”), and sanctions requirements continues to be a key focus area for management, and the company is taking all necessary steps and precautions to ensure that it is following appropriate compliance procedures to meet the increasing regulatory demands.

The requirement to verify the identity of an individual and confirm the existence of a corporation or of an entity other than a corporation under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated Regulations applies to all reporting entities (REs).

Customer due diligence (CDD) forms an integral part of a global effort to combat money laundering, terrorist financing, and fraudulent activities. Under this approach, OneLiquidity will collect information upon account opening, as well as on a periodic basis and from time to time, as required, to identify our customers and develop an understanding of their normal, expected banking activities. 

Every Customer, including its beneficial owners, connected parties, and natural persons appointed to act on behalf of, will be subject to background screening against relevant money laundering and terrorism financing information sources, as well as lists and information provided by the Authority or other relevant authorities in Canada for the purposes of determining if there are any money laundering or terrorism financing risks in relation to the customer.

Business relationships

OneLiquidity shall identify and verify the identity of customers prior to establishing a business relationship with them. A business relationship is a relationship established between OneLiquidity and a client to conduct financial transactions or provide services related to financial transactions. The company will be considered as entering into a business relationship with a client when one of the following occurs:

• The Company enters into a service agreement with a client to provide payment services;

• Account opening for a client;

• When a client does not hold an account with OneLiquidity, but for the second time within a 5-year period, engages the Company in a financial transaction for which the Company is required to verify the client’s identity.

The risk level is determined in two steps:

• A scoring process based on objective or quantifiable criteria, which can be automated or delegated to a KYC team

• The consideration of qualitative elements requiring analysis or judgment, as well as consideration of objective factors that are not taken into account at all in the scoring grid calculation, or not fully taken into account in the scoring grid calculation

• A customer risk level is associated with every Customer and determines the level of due diligence related to the information collection, the onboarding or recertification decision process, and the recertification frequency.

• There are two levels of Due Diligence: Regular Customer Due Diligence (CDD) and Enhanced Customer Due Diligence (EDD).

• Low or Medium risk customers are subject to CDD.

• High-risk customers are subject to EDD.

Individual Account 

For a customer that is a natural person, OneLiquidity shall identify the customer by obtaining at least the following identification information: 

In verifying the identity of a customer that is a natural person, LQTY PAYMENTS INC. should verify the: 

by reference to documents, data, or information provided by a reliable and independent source, examples of which include: 

and other relevant documents, data, or information provided by a reliable and independent source (e.g. document issued by a government body).

The identification document obtained by OneLiquidity should contain a photograph of the customer.  In exceptional circumstances where OneLiquidity is unable to obtain an identification document with a photograph, OneLiquidity may accept an identification document without a photograph if the associated risks have been properly assessed and mitigated.

Corporate Account 

Where a customer is a legal person OneLiquidity is required to identify and screen all the connected parties of a customer. However, OneLiquidity may verify their identities using a risk-based approach. OneLiquidity shall identify connected parties and remain apprised of any changes to connected parties.  Identification of connected parties may be done using publicly available sources or databases such as company registries, and annual reports, or based on substantiated information provided by the customers.  

OneLiquidity shall identify the connected parties of the customer, by obtaining at least the following information about each connected party: 

In relation to trust and similar legal arrangements, OneLiquidity shall perform CDD measures on the customer by identifying the settlors, trustees, the protector (if any), the beneficiaries (including every beneficiary that falls within a designated characteristic or class), and any natural person exercising ultimate ownership, ultimate control or ultimate effective control over the trust (including through a chain of control or ownership).

In verifying the identity of a customer who is a legal person or legal arrangement, OneLiquidity would normally verify 

OneLiquidity applies Enhanced Customer Due Diligence (EDD) to customers categorized under high risk. These customers are subject to additional due diligence in addition to that required for CDD. This higher level of due diligence is required to mitigate the increased risk. Crucial to the integrity of the company’s EDD process is the reliability of information and information sources, and the type and quality of information sources used, as well as the deployment of properly trained analysts who know where and how to look for information, and how to corroborate, interpret and decide upon results.

What the EDD procedure actually entails is dependent on the nature and severity of the risk. The additional due diligence could take many forms, from gathering additional information to verifying the customer’s identity or income source(s), or perhaps an adverse media check. These checks should be relative and proportionate to the level of risk identified, providing confidence that any risk has been mitigated, and that the risk is unlikely to be realized. 

One or more of the following enhanced customer due diligence (EDD) measures may be taken in order to manage and mitigate the ML/TF risk that is higher than usual:

• Obtain additional identification documents, data, or information from credible and independent sources. 

• Gather additional information or documents on the purpose and nature of the business relationship.

• Gather additional information or documents for the purpose of identifying the source of funds and wealth of the customer.

• Gather information on the underlying reasons for planned or executed transactions.

• Increasing the number and frequency of control measures in monitoring customer relationships and/or transactions.

• Receiving permission from the senior management to establish or continue a business relationship.

Approval must be obtained from the company’s Board of Directors before establishing or continuing an account relationship with the high-risk customer or undertaking any transaction for the high-risk Customer. The Board of Directors shall provide and record written reasons for its decision as to whether to approve or reject a high-risk customer

OneLiquidity will conduct periodic ongoing monitoring whenever a business relationship is established with a client. Clients of lower-risk categories will be subject to less frequent ongoing monitoring while high-risk clients will be subject to enhanced ongoing monitoring.

High-risk customers: Every 1-year

Medium-risk customers: Every 2 years

Low-risk customers: Every 3 years 

In addition to the above periodic reviews, existing CDD records should be reviewed upon trigger events. Examples of trigger events include

• Re-activation of a dormant account.

• Change in the beneficial ownership or control of the account.

• When a significant transaction is to take place.

• When a material change occurs in the way the customer’s account is operated.

If an account relationship is established or maintained with a high-risk customer, enhanced monitoring must be undertaken throughout the course of the relationship. The degree and nature of monitoring of the account relationship and transactions undertaken for the customer must be increased accordingly, to help assess whether the customer’s conduct is in any way unusual or suspicious.

OneLiquidity will keep records of the measures taken and information obtained from the ongoing monitoring of clients. This includes the processes in place to perform ongoing monitoring, processes in place to perform the enhanced ongoing monitoring of high-risk clients, and processes for recording the information and information obtained as a result of ongoing monitoring. 

In the event EDD is unable to be performed, OneLiquidity will not open the account or commence a business relationship or perform the transaction. In the event a business relationship is already established, OneLiquidity will terminate the business relationship. In addition, OneLiquidity will consider making a suspicious activity report in relation to the customer.

Much international attention has been paid in recent years to the risk associated with providing financial and business services to those with a prominent political profile or holding senior public office. However, PEP status itself does not automatically mean that the individuals are corrupt or that they have been incriminated in any corruption.

However, their office and position may render PEPs vulnerable to corruption. The risks increase when the person concerned is from a foreign country with widely known problems of bribery, corruption, and financial irregularity within their governments and society. This risk is even more acute when such countries do not have adequate AML/CFT standards.

A domestic PEP is a person who currently holds, or has held within the last 5 years, a specific office or position in or on behalf of the Canadian federal government, a Canadian provincial (or territorial) government, or a Canadian municipal government. Specifically, the person has held the office or position of:

• Governor General, lieutenant governor, or head of government;

• member of the Senate or House of Commons or member of a legislature;

• deputy minister or equivalent rank;

• ambassador, or attaché or a counselor of an ambassador;

• military officer with a rank of general or above;

• president of a corporation that is wholly owned directly by Her Majesty in right of Canada or a province;

• head of a government agency;

• judge of an appellate court in a province, the Federal Court of Appeal or the Supreme Court of Canada;

• leader or president of a political party represented in a legislature; or

• mayor.

A foreign PEP is a person who holds or has held one of the following offices or positions in or on behalf of a foreign state:

• head of state or head of government;

• member of the executive council of government or member of a legislature;

• deputy minister or equivalent rank;

• ambassador, or attaché or a counselor of an ambassador;

• military officer with a rank of general or above;

• president of a state-owned company or a state-owned bank;

• head of a government agency;

• judge of a supreme court, constitutional court or other courts of last resort; or

• leader or president of a political party represented in a legislature.

In the event, that a customer or any beneficial owner of the customer is determined to be a PEP or a family member or close associate of a PEP, OneLiquidity will end business relationships immediately. 

In order to identify any Politically Exposed Persons (“PEPs”) among the related persons (UBO, Senior Managing Officials, Directors, Authorised Signatories, Guarantors), and any sanction (affecting either the entity/legal person itself, its parent companies, its related persons, its country of incorporation/registration, its location, or its countries of the activity or tax residence), the following checks are mandatory at onboarding and recertification.

A transaction may be of suspicious nature irrespective of the amount involved. A suspicious transaction involves there being reasonable grounds to suspect that the transaction is related to a money laundering offence or a terrorist activity financing offence. Suspicious transactions involve a case of there being any information, suspicion or reasonable grounds to suspect that the asset – which is subject to the transactions being carried out, or attempted to be carried out – has been acquired through illegal means (or used for illegal purposes) and is used, in this scope, for terrorist activities, or by terrorist organisations, terrorists or those who finance terrorism.

• A Transactions or instructions which have no apparent legitimate purpose and/or appear not to have a commercial rationale, e.g. a customer makes frequent purchases at a high price and subsequently sells at a considerable loss to the same party.

• Transactions, instructions, or activities that involve apparently unnecessary complexity or which do not constitute the most logical, convenient, or secure way to do business, e.g. a customer makes multiple small deposits/withdrawals to avoid currency reporting requirements.

• Where, without reasonable explanation, the size or pattern of transactions is out of line with any pattern that has previously emerged, e.g. the size and frequency of a customer’s trades unexpectedly appear to be large and active while the previous pattern has been small and inactive.

• Transfers to and from high-risk jurisdiction(s) without reasonable explanation, which are not consistent with the customer’s declared business dealings or interests.

• Routing of funds or cryptocurrencies through third-party service providers, e.g. cryptocurrency tumbler (also known as cryptocurrency mixing services) by obscuring the transaction details and making it difficult to track their original source.

• Where the customer refuses to provide the information requested without reasonable explanation or who otherwise refuses to cooperate with the CDD and/or ongoing monitoring process.

• Where a customer who has entered into a business relationship uses the relationship for a single transaction or for only a very short period without a reasonable explanation.

• A customer was introduced by someone or an entity that is based in high-risk jurisdiction(s).

• A customer uses a bank account, telephone number, or mailing address that is located in high-risk jurisdiction(s).

• A customer has opened multiple accounts for no apparent business reason.

• Changes in employee characteristics, e.g. lavish lifestyles or avoiding taking holidays without reasonable cause.

• Unusual or unexpected increase in the sales performance of an employee.

• The employee’s supporting documentation for customers’ accounts or orders is incomplete or missing.

• The use of an address that is not the customer’s home or office address, e.g. utilisation of an employee’s address for the dispatch of customer documentation or correspondence.

In the event the company faces a suspicious transaction with Reasonable Grounds to Suspect (RGS), the Compliance Officer will at the soonest file an STR with FINTRAC.

Grey list contains jurisdictions that have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.  

LQTY Payments Inc. shall consider in its risk analysis the information presented for each country under the grey list.  

https://www.fatf-gafi.org/