AML/ KYC Policy

Main Objective:

The primary purpose of Kunnect’s AML & KYC policies is to establish a general framework to fight against money laundering (ML) and terrorist financing (TF). Kunnect has robust measures to control and limit ML/TF risk, including dedicating the appropriate means. Kunnect’s values are committed to high anti-money laundering and countering terrorism (AML/CFT) compliance and require all employees, management, and subsidiaries to adhere to these standards to combat money laundering or terrorism financing.

Policy Implementation Requirements:

Each significant change in Kunnect’s AML policy is subject to approval by the Board Members & Kunnect Payments LLC Local Legislative Structure Anti-Money Laundering, its Amendments and Executive Regulations; KYC rules issued by Kunnect; and AML/CFT Regulations for companies, published by Kunnect Payments LLC examining unusual and suspicious transactions referred to the Department, were substantiated with justifiable reasons. Kunnect reports to Kunnect Payments LLC the transactions suspected to be involved in money laundering, terrorist financing, or other forms designed for this purpose. We ensure compliance of all company branches & subsidiaries with AML/CFT regulations and internal controls via off-site and on-site supervision. We cooperate and coordinate with the Human Resources Department (HR) to set AML/CFT training plans for the company staff, proposing training programmes necessary to carry out such projects and following up on their implementation. We are preparing a periodical report—at least once a year—on its AML/CFT activities and submitting it to the MLRO. The MLRO reviews the information, makes comments thereon, takes the necessary actions, and then sends it with his remarks and decisions to Kunnect Payments LLC.

Customer identification and verification (KYC):

Identifying customers on entry into commercial relations is vital for the regulations relating to money laundering and the KYC policy. Identification relies on the following fundamental principles: Each customer (i.e., each person and person involved in the case of a legal entity) must use original supporting documents. These documents will be recorded in a centralised system. Kunnect will check customer background, country of origin, public or high-profile position, linked accounts, business activities, or other risk indicators that should be considered. Identification of beneficiaries of transactions conducted by professional intermediaries: any person or organisation connected with a financial transaction can pose significant reputational or operational risks. Records are to remain up-to-date and relevant. When an account has become "live" but verification problems arise in the business relationship that cannot be resolved, the company should close the account and return the funds to the source account. The company agrees never to open an account or conduct ongoing business with a customer who insists on anonymity or gives a fictitious name. Each individual identified must be registered with our internal IT system. A person or entity will not be treated as a customer if the KYC process proves incomplete.

Customer Acceptance Policy:

Kunnect ensures that the sales department has a good knowledge of the customer's KYC and KYB and will exercise due diligence appropriate to their level of risk from the start of customer relations. It will help to prevent Kunnect from entering into business relations with persons who might involve our company in money laundering or terrorism financing transactions. Kunnect screens customer vs. sanctions lists and ensures all data and documents provided and uploaded to the system are valid and accurate. Values meet legal and regulatory requirements by applying the risk-based approach run by Kunnect to categorising customers according to risk criteria. (Low, Medium, or High) Risk

Ongoing Customer Due Diligence:

Kunnect will carry out a risk-based approach review periodically to ensure that customer-related data or information will stay up-to-date for some dedicated higher-risk customer categories. The current KYC review system regarding the other customer categories is primarily based on an “awareness principle” following examining an actual file by the AML team. This awareness principle consists of asking the customer’s account manager to perform a periodic KYC review of customer care.

Ongoing Transaction Monitoring:

The AML and compliance team ensures that "ongoing transaction monitoring” is conducted to detect unusual or suspicious transactions compared to the customer profile. Kunnect will conduct transaction monitoring on two levels. The First Line of Control: Kunnect makes its network aware of the concern about possible suspicious transactions so that any contact with the customer, account holder, or authorised representative gives rise to the exercise of due diligence for transactions on the account concerned. In particular, these include Requests for the execution of financial transactions on the account Claims concerning means of payment or services on the account During investment interviews, the specific transactions submitted to the customer success team member, possibly through their compliance manager, must also be subject to due diligence. Determination of the unusual nature of one or more transactions primarily depends on a subjective assessment of the customer (KYC), financial behaviour, and the transaction counterparty. The transactions observed on customer accounts for which it is difficult to understand the lawful activities and origin of funds are more rapidly considered atypical (as they are not directly justifiable). Any Kunnect staff member must inform the AML division of any atypical transactions they observe and cannot attribute to a lawful activity or source of income attributed to the customer.

Sanction’s Screening:

To ensure compliance with the applicable sanctions against persons and entities, Kunnect has implemented a list matching system to compare its customers’ names with official lists from Kunnect Payments LLC, the EU, the OFAC, and the UN. Transactions are also filtered through an online matching system to ensure compliance with sanctions obligations for fund transfers with foreign banks.

In addition to the above, and to provide all business lines with up-to-date information related to jurisdictions under embargo, Kunnect internally edits and maintains a Country Watchlist, including the following authorities:

Jurisdictions subject to Hong Kong economic and trade sanctions (including the sanctioned people, entities, or transactions)

Jurisdictions subject to EU economic sanctions (including the sanctioned people, entities, or transactions)

Jurisdictions subject to US sanctions (including the sanctioned people, entities, or transactions)

Jurisdictions designated by officials (like FATF) are subject to a higher money laundering risk.

Such jurisdictions are considered fiscal paradises by the Hong Kong authorities and the FIU.

Enterprise-Wide Assessment:

Risk assessment is a critical component of the Kunnect AML/CFT compliance management program. Kunnect has conducted an AML “enterprise-wide risk assessment” to identify and understand risks specific to Kunnect and its business lines as part of its risk-based approach. The Values The AML risk profile will be determined after identifying and documenting the risks inherent to its business lines, such as the products and services a company offers. The customers to whom such products and services are provided, transactions performed by these customers, delivery channels used by the company, the geographic locations of the company’s operations, customers, and sales, and other qualitative and emerging risks The identification of AML/CFT risk categories will be based on Kunnect's understanding of regulatory requirements, regulatory expectations, and industry guidance. The enterprise-wide risk assessment is reassessed annually.

Risk Profile Calculation:

To assist and determine the level of AML/CFT due diligence to be exercised concerning a customer, a “compliance” risk profile is calculated upon entry into relations (low, medium, or high) and will be recalculated based on the risk.

Data Access and Staff Protection:

Officials at the Compliance Department have the following abilities and powers:

To directly communicate with any of the company’s staff to access any files or information necessary for performing their duties.

To check potential non-compliance incidents and request support from the team in charge at the company’s (legal advisor-internal audit).

Guarantee of Staff Protection:

The company guarantees the protection of those employees who report, in good faith, suspicious transactions.

Suspicious Transaction Reporting:

Kunnect describes precise terms and the instructions of its staff members when it is necessary to report and proceed with such reporting. Kunnect will analyse the transactions within the AML team following the precise methodology described in the internal procedures.

Depending on the result of this examination and the information gathered, the AML team will decide whether it is necessary to send a report to the FIU under the legal obligations provided by Kunnect Payments LLC.

All transactions suspected of involving money laundering or terrorist financing, including attempts to conduct such transactions, must be reported, regardless of their volume or type.

The report will include detailed reasons and causes that led the company to suspect the transaction.

Kunnect shall make the report in the form designed by Kunnect Payments LLC for this purpose. Kunnect should attach all data and copies of documents related to the suspicious transaction to the said form.

Transactions suspected of involving money laundering or terrorist financing, or data related to it, shall not be disclosed to the customer, beneficial owner, or any other entity, except to the authorities and entities responsible for enforcing the provisions of the Anti-Money Laundering Law.

Policies & Procedures:

The AML/CFT rules, including minimum KYC standards, have been translated into operational guidelines or procedures available on the Internet website of Kunnect.

Kunnect should maintain the following documentation for five years:

Unusual transaction reports and the documents are being reviewed.

Kunnect will keep the suspicious transactions, including copies of documents (the originals will be kept with the company’s records at the archive), as well as copies of reports sent to Kunnect Payments LLC.

Copies of documents and reports that the Head of Compliance Dept. has decided to keep

Records of training programmes are provided that such documents contain data on all AML/CFT programmes offered to the company’s staff, trainees’ names, divisions or departments, content, the timeframe of training programmes, and the training entity, whether at home or abroad.

Ongoing Training:

Kunnect has developed different training and awareness programmes to keep its staff aware of their AML/CFT duties.

The training and awareness program is reflected in its usage by:

Mandatory AML e-learning training programmes follow the latest regulatory evolutions.

Academic AML learning sessions for all new employees.

The content of the AML and KYC training programme will be determined by the kind of business the trainees are working in, Kunnect. These sessions will be conducted by an AML specialist working on the Kunnect AML team.