Extract from Banking Circle’s AML/CTF Risk Appetite Policy detailing the Prohibited and Restricted Business activities.
This extract replaces the “Code of Conduct” as referenced in Banking Circles General Business Terms (defined in clause 44.ix).
Purpose and Scope
Banking Circle S.A. (“Banking Circle” or the “organisation”) is a European credit institution authorised in Luxembourg which also operates a branch network.
The organisation provides foreign exchange (“FX”), banking and payment services to a client base comprising banks, non-bank financial institutions (“NBFIs”) and mid-to-large corporates. The organisation does not provide investment services. The purpose of this Anti-Money Laundering / Counter Terrorist Financing (“AML/ CTF”) Risk Appetite Policy (the “Policy”) is to define Banking Circle’s risk tolerance and the guiding principles governing Money Laundering and Terrorist Financing (“ML/TF”) risk identification, measurement, reporting, management and monitoring, as required by applicable laws….
… Because of its business model, Banking Circle carries also the reputational risk that some of its Clients process funds that are connected with Money Laundering or Terrorism Financing activities, and that some of those funds are processed through it.
As a general principle, Banking Circle shall not onboard Clients carrying out businesses or activities that are illegal, conducted in absence of required licenses or permissions, or present an excessive reputational risk (which includes any material adverse media) for Banking Circle and/or the Luxembourg financial centre. In the case of correspondent banking relationships, Banking Circle’s Clients’ underlying customers must also comply with this requirement.
In general, Banking Circle will not do business with groups, legal entities, bodies, and similar which have been sanctioned for major offences irrespective of when the client was sanctioned and the jurisdiction(s) in which it was sanctioned. However, in some circumstances the Onboarding Committee may approve such Clients undertaking a risk based approach, depending on the facts and merits of the sanction.
This implies, inter alia, that:
- As required, Clients (and in the case of correspondent banking relationships, Banking Circle’s Clients’ underlying customers) must hold the appropriate licenses or permissions to operate and provide services/sell goods in their country/territory of establishment, and in the countries/territories they provide services or sell goods to.
- As required, products and services sold or provided by Banking Circle´s Clients’ (and in the case of correspondent banking relationships, Banking Circle’s Clients’ underlying customers) must comply with applicable legal or regulatory standards.
Prohibited Client Types and Prohibited Payment Flows:
Banking Circle does not permit pay in or pay outs from its accounts in physical cash. Banking Circle does not onboard, nor will it process the payment flows for its Payment Service Provider (“PSP”) Clients, for the following:
- Groups, legal bodies or similar subject to international sanctions or embargoes, in particular as issued by the Commission de Surveillance du Secteur Financier (“CSSF”), HM Treasury (UK),the European Union (“EU”), the United Nations (“UN”) or the US Office of Foreign Assets Control (“OFAC”);
- “Non-standard” or “non transparent” activities – those carried out through special-purpose or assimilated legal entities (special purpose vehicles) (structures) or in jurisdictions that impede transparency or which do not meet international banking standards;
- Bidding fee auctions, penny auctions, or any type of all-pay auction in which all participants must pay a non-refundable fee to place each small incremental bid;
- Shell banks; (banks based in countries where they have no physical presence involving decision-making and management and which are typically not connected to wider regulated financial groups);
- Shell companies; (a company with no physical presence involving effective decision-making, operations or assets other than cash or equivalents of cash);
- Entities involved in the legal cannabis business (which includes CBD), or assimilated businesses, sale of legal substances that provide the same effect as an illegal drug, as well as equipment designed for making or using drugs;
- Bearer share corporations and companies connected to nominee or similar arrangements for the purpose of hiding or mask the true beneficial ownership (some trust structures may be permitted, depending on the merits of the case and there is no suggestion of untoward behaviour);
- Escort services, sale and/or advertising or suggestion of sexual services that may imply or suggest prostitution;
- Holding companies of private individuals;
- Unregulated or offshore holding/investment companies involved in managing or investing own- or third-party funds (This does not include regulated investment companies or regulated investment funds in Countries permitted for correspondent banking relationships);
- Weapons of war, automatic weapons, ammunitions or defence equipment: Includes merchants involved in the sales, intermediation or commerce of war or automatic weapons, including but not limited to chemical weapons, cluster bombs, ammunitions, or other defence equipment or similar.
Banking Circles PSP Clients – the underlying flows that require additional due diligence and approvals
While Banking Circle will not directly onboard any of the following client types, it may process the flows for its PSP Clients underlying customers, subject to additional due diligence and approvals, for the following:
- Adult contents, adult entertainment, Dating or pornography businesses
- Binary Options, CFDs, pure F/X speculation and other financial products platforms;
- These firms must be subject to an AML supervisory regime and authorized and regulated within the UK / EEA and only provide services in countries where they are permitted to do.
- Charities, social service organisations and other non-profit or political organisations;
- These institutions must be registered, or local equivalent, in the country of incorporation.
- The organisation must not be located in high-risk countries (as defined by Banking Circle), and must not use Banking Circle to pay to any restricted countries
The organisation must not sponsor or support any act of violence or hate.
- Acceptable jurisdictions are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Greenland, Hungary, Isle of Man, Italy, Latvia, Malta, Poland, Portugal, Romania (subject to the PSP holding 2nd Class Gambling license), Spain, Slovakia, Sweden and United Kingdom. Note: the firm must have relevant license where they are established or provide services to, including by means of a website in a country-specific language
- Accepted activities are: online gambling, betting, poker, sport, horse racing, skill games (except for Portugal where such activity is prohibited), casino, lottery, arcade.
Restricted Client Types and Restricted Payment Flows:
Banking Circle has placed restrictions on the client types listed below, which apply to both Banking Circle directly onboarding these Clients, and to PSP Clients’ underlying customers that process flows through Banking Circle. Banking Circle may process these flows for its PSP Clients underlying customers, subject to additional due diligence and approvals on the PSP clients. The client types and restrictions are:
- Affiliate Marketing schemes, including network marketing, referral marketing, multilevel marketing. These must:
- Not be established as a multilevel scheme for the purpose of circumventing credit card schemes rules;
- Comply, in letter and in practice, with distant marketing or online selling legislation, including US negative option features and EU withdrawal rights, or equivalent;
- Not engage in aggressive tax planning or transfer pricing, make use of nominees or similar structures to hide or mask true beneficial ownership of the entities involved in the scheme;
- Not have unfair pricing or charges, or withdrawal / cancellation rights that cannot be effectively exercised without unfair costs or penalties.
Note: Banking Circle must ascertain beyond any doubt that the service or product provision is legitimate and that they do not consist of a scam or online fraud in regard to the above.
- Corporate service provider and other legal and accounting services. These must:
- Have licensing/registration in an AML/CTF regime in the UK/EEA.
- Crowdfunding, crowdlending and similar activities businesses. These must:
- Hold the appropriate license in the country or territory where they are established and provide services to;
- Have three full years´ or more track record; and
- Be established within the countries permitted for correspondent relationships.
- Virtual Currencies / Cryptoasset firms (i.e. firms engaged in exchange services between virtual currencies and fiat currencies):
- Firms must be a Credit Institution, Investment Firm, Payment Institution or Electronic Money Institution in UK/EEA;
- In regard to underlying flows linked to these from types, Banking Circle does not accept
- Inflows from these firms;
- Outflows to these firms that are not a Credit Institution, Investment Firm, Payment Institution or Electronic Money Institution in UK/EEA.
- Drugs and pharmaceuticals (includes any drug paraphernalia, pseudo-pharmaceuticals, substances designed to mimic illegal drugs, and any other associated product, service or equipment.) These must:
- Possess the appropriate licenses in those jurisdictions where they are established or sell products into;
- Not be involved in legal cannabis business (including THC) or assimilated businesses, as these are prohibited.
- Precious metals and stones, arts and antiques, other valuable commodities, sale of vehicles or other merchants dealing with high value goods. These must:
- Have Enhanced Due Diligence applied to mitigate the increased risk these industry types present.
- Weapons (i.e. knives and accessories for weapons intended for hunting, fishing and recreational activities; antique weapons or collectibles). These must:
- Be evidenced to be for legitimate sport or recreational activities and not for military or dual use purposes.
- Financial services firms, where correspondent banking is provided by Banking Circle:
- Clients must be licensed in one of the Countries Permitted for correspondent banking Relationships (noted below);
- There cannot be a circumvention of this via onward reliance by the Client;
- Downstream correspondent banking is prohibited.
- Clients must be licensed in one of the Countries Permitted for correspondent banking Relationships (noted below);
- Marketplaces (as Direct clients or as PSP Clients underlying customers): These must:
- Have a five year or more track record;
- Onboard sellers under financial services-equivalent standards; and
- Not process flows through Banking Circle that relate to goods or services that are prohibited within this policy.
Countries permitted for correspondent banking relationships
All Clients of Banking Circle, making use of correspondent banking services offered by Banking Circle, will exclusively be regulated entities subject to AML/CTF professional obligations and situated in:
- European Economic Area (i.e. European Union Member States plus Iceland, Liechtenstein and Norway);
- United Kingdom (including Gibraltar, and excluding Crown dependencies such as: Isle of Man, Guernsey, Jersey);
- United States of America;
- New Zealand;
- Hong Kong;