The Anti–Money Laundering Committee

The Anti–money Laundering Committee (AMLC) is continuing body of the RAFMM, a part of the Executive Board of the Association. It aims at every possible counteraction to laundering of proceeds of crime in accordance with Russian and international legislation. Activity of the Anti–Money Laundering is based on the Regulation of this committee. Activity of the AMLC is focused on protection of rights and legitimate interests of citizens, society and government by developing the mechanism of resistance to money laundering. Meanwhile, the RAFMM participants understand the legalization of possession, usage or disposal of proceeds of crime by money laundering.

The Russian Association of Financial Market Members jointly with the RAFMM participants in the procedure described in the Anti–Money Laundering Committee’s regulation fully share legal regulations including international ones focused on suppression of illicit trade, financial fraud, money laundering. The main negative moment leading to the risks of unfair deals at financial markets is absence of efficient information system about the shady deals and inappropriate requirements for identification of financial brokers’ customers.

However, specific character of financial market implies the availability of factor in contrast to the principle of maximal information disclosure. Exactly that part of information which commercial value characterizes the main ideas of the company’s activity. This is the main aim of the AMLC work – combination of principles of commercial confidentiality and opposition to the sharp practices.

The Anti–Money Laundering Committee bases upon the terms stated in the text of the Federal law # 115–FL d/d 07.08.2001 "On Countermeasures with Respect to Legalization (Laundering) of Income Derived from Criminal Activity" and recommendation of the Financial Action Task Force on Money Laundering (FATF) for financial brokerage firms.

Content.

1.General provisions.

2. Goals and objectives.

3. Competence of the AMLC.

4.Standards of the AMLC.

5.Reorganization.

6.Decision making.

7.Final provisions.

1. General provisions

1.1 This document regulates the activity of the Anti–Money Laundering Committee (hereinafter, AMLC) and contains definition of standards and procedures used in the AMLC work.

1.2.The document contains the main basis of normative standards of the AMLC work but can be amended by appendixes approved in order and on terms described above.

1.3.This document includes regulations concerning the AMLC activity, decision making procedures, membership and changes of the document itself.

1.4.The AMLC regulation is an agreement on the Committee’s activity which is considered to be recognized by each RAFMM participant regardless the status of the member inside the Association.

2. Goals and objectives of the AMLC activity

2.1. The AMLC is a part of the Russian Association of Financial Market Members established for assessment of service and work aspects connected with the brokerage firms’ activity.

2.2.In its work the AMLC bases on the norms of the international and Russian legislation on terms of opposition to the money laundering.

2.3. The priority orientations of the AMLC work are:

а)development of the countermeasures with respect to methods of money laundering;

b) development of methods for unscrupulous schemes’ detection;

c) timely analysis of situation and development/adaptation of the up–to–date standards;

d) assistance with the participants of the Association in following the norms of the Russian and international legislations.

2.4.During the control and assistance in following the norms of the legislation on the countering with money laundering the AMLC additionally analyzes the situation from the point of economic advisability of a method aimed at the increase of procedures’ compliance rate which are used by the companies, to the Russian and international legislations.

2.5.The main ultimate purpose of the AMLC work is adjustment of the system of principles and regulations of the market participants to the international rules on the money laundering resistance.

3. The AMLC competence

3.1. The AMLC competence includes the activity of estimation the characteristics of objects which are:

а) trading conditions of brokerage firms;

b) work of client service in brokerage firms;

c) promotion actions of brokerage companies;
d)cases of customers’ claims.

3.2. The AMLC may make decision and assess the objects on the basis of analytical work of the Committee’s members followed by submitting of the result of work for consideration by the Executive Board.

3.3 Estimation or any other consideration’s result of the AMLC can be challenged by the Executive Board in case more than 75% of votes were given for the cancellation of it during the voting of the Executive Board.

3.4. The AMLC may influence any procedures of consideration by the Executive Board of any object by means of sending the results of the AMLC analytical work.

3.5. The AMLC may be involved in the process of any object’s consideration by any other committees including the Executive Board if this necessity takes place and it is pronounced by the participants of these committees.

4. The AMLC standards.

4.1.For efficient control of the Association participant’s activity and development of the transparency increase procedures, there are recognized described in this document standards which can be used as prevailing elements during the decisions’ making by the committee.

4.2. All types of singular transactions – objects under the Anti–Money Laundering Committee’s test are divided into some categories determining the transparency degree of the transaction type. The list of categories is the following:

а)Transaction under total control – operation of withdrawal or depositing of trading sub–account, as a result of which there are no controversial financial obligations of both parties. Transaction of funds is held by bank transfers using payment information of the parties indicated in the contract which is signed on paper.

b)Transaction under limited control – operation of withdrawal or depositing of trading sub–account, as a result of which there are no controversial financial obligations of both parties. Transaction of funds is held by bank transfers using payment information of the parties without signing the paper contract, but after the acceptance of the Public Offer Agreement.

c)Transaction under nominal control – operation of withdrawal or depositing of trading sub–account, as a result of which there are no controversial financial obligations of both parties. Transaction of funds is held using electronic payment information of the parties without signing the paper contract, after the acceptance of the Public Offer Agreement.

All types of settlement systems used by the objects of the Anti–Money Laundering Committee’s control are divided into some categories which determine the transparency degree of any mean of settlement. The list of categories of settlement systems used by the objects of the Anti–Money Laundering Committee’s control are the following:

а)System of settlements under total control – the complex of fully controlled transactions.

б)System of settlements under limited control – the complex of restrictedly controlled transactions or the complex of nominally controlled transactions. For withdrawals in this type of settlements the same method of withdrawal and the same electronic details are used as there used for replenishment of trading account.

c)System of settlements under nominal control – the complex of nominally controlled transactions.

4.4.The following systems of settlements are assumed according to the standards of the AMLC:

а)By stock brokers – usage of only fully controlled systems of settlements or restrictedly controlled systems of settlements when a trading account passes the procedure of nominal verification.

b)By Forex–brokers – usage of fully controlled and limited controlled systems of settlements with clients.

4.6.One of the main principles determined by the AMLC is recognition and simultaneous use of the following notions:

а)The notion of difficulty level during the procedures of trading account verification or identification of a client offered by the brokerage firms which are depend on time necessary for the processes of verification, the volume of requested information, means of information delivery from a client to a brokerage company;

b) The notion of marketing efficiency of any trading account verification or client’s identification offered by a brokerage firm which is evaluated by the correlation of necessity level proceeded from the Russian and international legislation on the countermeasures to the money laundering, to propriety of complicated from the client’s point of view procedures;

c) The notion of inevitable relativity of the systems of settlements transparency used between a Client and brokerage company;

d)Subsequent upon the item c) the notion of maximum allowable limits for each type of transaction or mean of settlements between a client and brokerage firm permitting to optimize the system of norms of Russian and international legislation fulfillment depending on the volumes of settlements and singular transactions held between a client and brokerage firm.

4.7.The procedure of successful verification is recognized by the AMLC as generally accepted standard for opening of accounts with Forex–brokers and stock brokers in accordance with market requirements and marketing efficiency.

5.Reorganization

5.1. The AMLC may be reorganized by affiliation of new members or by excluding of participants from the list of active members of the AMLC.

5.2. Two alternative variants of reorganization process has the following procedure:

5.2.1.In case of affiliation/exclusion of the AMLC members at the initiative of one of the participants, there is held a voting inside the committee on the principle of majority of votes.

5.2.2.In case of affiliation/exclusion of the AMLC members at the external initiative, there is held a voting in the Executive Board on the principle of votes’ majority.

6. Decision making

6.1. The following types of decisions are recognized as the main results of objects’ consideration by the AMLC members:

- – conformity assessment of a procedure supporting by a company–member of the Association to the norms of Russian and international legislations on countermeasures with respect to legalization of income gained from criminal activity.

– Detection of violations in the procedures of the Association’s company–member of norms of legislation or work principles prescribed by the AMLC.

6.2.Recommendations for a company–member of the AMLC on the discrepancies’ removal with the norms of legislation or excluding the possibility of appearing the same in future are recognized as additional results of the objects’ consideration by the members of the AMLC.

6.3.The result of objects’ consideration by the members of the AMLC is accepted by putting different variants of assessment offered by any participant of the AMLC for voting.

6.4. The decision which won the majority of votes is recognized as the result of consideration by the AMLC. In case no one variant has won the majority of votes, the members of the AMLC hold additional counsels and negotiations in follow–up of which a new voting is appointed.

7. Final provisions

7.1. This document includes the description of all types of activities of the AMLC members and the main principles which are followed by the Committee.

7.2. The document can be amended or revised by rectification in accordance work principles of the AMLC or after enactment of new legal acts related to the committee’s activity. Amendments can be made in the text after the voting of the AMLC members in case more than 75% of the AMLC members voted for enactment and this decision was affirmed by the Executive Board.

7.3. The document can be amended or revised by rectification after the voting of the AMLC members in case more than 75% of the Executive Board members voted for enactment.

7.4. The document can be amended at the initiative of the RAFMM president.

7.5. Activity of the AMLC is based upon the decision making as a result of consultations and thorough analysis of the considered objects. Members of the AMLC may express their disagreement by voting and negotiations..

7.6. The competence of the AMLC determined by this document is exhaustive insofar as it does not contradict the Basic Regulations.