Search Result

Title	Chinese National Futures Association Model Guidelines for Futures Commission Merchants and Leverage Transaction Merchants Anti-Money Laundering and Counter Terrorism Financing Policies and Procedures CH
Date	2017.11.16 ( Amended )

Article Content

Article 1	These Model Guidelines are stipulated pursuant to the provisions of the Money Laundering Control Act, the Terrorism Financing Prevention Act, the Regulations Governing Anti-Money Laundering of Financial Institutions, and the Directions Governing the Internal Control System for Anti-Money Laundering and Countering Terrorism Financing of the Securities and Futures Sector.
Article 2	Futures commission merchant and leverage transaction merchants' customer due diligence (CDD) measures: A futures commission merchant or leverage transaction merchant shall decline to establish a business relationship or carry out any transaction with a customer in any of the following circumstances: The customer is suspected of using an anonymous account, an account in a fictitious name, someone else's name, a shell entity, or a shell corporation. The customer refuses to provide documents relating to CDD measures, unless the customer's identity has been verified by a reliable and independent source. A person acts on behalf of the customer, and there are difficulties in checking and verifying the veracity of the authorization and identity-related information. The customer uses forged or altered identification documents. The customer provides only photocopies of all identification documents; however, this does not apply to businesses for which photocopies or image files of identification documents, supplemented by other control measures, are permissible under regulations. Documents provided by the customer are suspicious or unclear, the customer refuses to provide other supporting documents, or the documents provided cannot be verified. The customer delays inordinately in providing identification documents. Where the counterparty for the establishment of business relations is an individual, legal entity, or group designated for sanctions in accordance with the Terrorism Financing Prevention Act or a terrorist/terrorist organization identified or investigated by foreign governments or international organizations. However, this does not apply to payments made under Article 6, Paragraph 1, Subparagraphs 2 to 4 of the Terrorism Financing Prevention Act. Other unusual circumstances exist during the process of establishing a business relationship or conducting transactions, and the customer is unable to provide reasonable explanations. Customer identity verification shall be conducted when: Establishing business relationships with any customer. A transaction suspected of money laundering or terrorism financing is discovered. There are doubts regarding the veracity or adequacy of previously obtained customer identification information. Customer identity verification measures to be taken are as follows: Identify and verify the customer using documents, data or information that are reliable and from independent sources, and retain copies of or record the customer's identification documents. Verify that any person purporting to act on behalf of a customer is so authorized, identify the person and verify the identity of the person using the method specified in the preceding Item, and retain copies of or record the person's identification documents. Adopt reasonable measures to identify and verify the identity of the beneficial owner of a customer, including using data or information from reliable sources. Customer identity verification measures shall include learning about the purpose and intended nature of the business relationship and obtaining relevant information accordingly. When the customer under the preceding Subparagraph is an individual, at a minimum the following information shall be obtained to identify the customer: Full name. Birth date. Domicile or residential address. Official identification document number. Nationality. If a foreign national, the purpose of the residence or transaction (e.g., tourism or work). When establishing a business relationship with an individual customer who is identified as a high-risk customer or who exhibits any high-risk factors under provisions relating to the assessment of risk of money laundering or terrorism financing regarding customers of futures commission merchants and leverage transaction merchants, a minimum of one of the following items of information shall be obtained: Any name(s) or alias(es) previously used: examples of a name previously used include a name used before marriage or a name used before a name change. Work address, post office box address, email address (if any). Telephone or mobile phone number. When the customer is a legal entity, an organization, or a trustee of a trust, the futures commission merchant or leverage transaction merchant shall, in accordance with Subparagraph 3, understand the business nature of the customer or trust (including any trust-like legal arrangement) and obtain, at minimum, the following information to identify the customer or the trust and verify its identity: Name, legal form, and proof of existence of the customer or trust. The charter or documents with similar authority that regulate and bind the legal entity or trust. However, this does not apply in the following circumstances: A counterparty that is listed under Subparagraph 7, Item 3 hereof, and is free of the circumstances in the proviso of Article 4, Paragraph 1, Subparagraph 3. A customer that is an organization and acknowledges that it has not established a charter or document with similar authority. With regard to the following information of persons who assume a senior management position in the legal entity, organization, or trustee (senior management personnel may include directors, supervisors, governors, general managers/presidents, chief financial officers, representatives, managers, partners, authorized signatories, or any natural person who is equivalent to any of the above senior management personnel, futures commission merchants and leverage transaction merchants shall adopt a risk-based approach to determine the scope): Full name. Birth date. Nationality. Official identification number: e.g., Unified Business Number (UBN), Logic Serial Number (LOSN), registration number. The address of the registered office of the legal entity, organization, or trustee of a trust, and the address of its principal place of business. The purpose of the dealings with the offshore legal entity, organization, or trustee of a trust. When the customer is a legal entity, an organization, or a trustee of a trust, a futures commission merchant or leverage transaction merchant shall, in accordance with Subparagraph 3, Item 3 hereof, understand the ownership and control structure of the customer or the trust, and obtain the following information to identify the beneficial owner(s) of the customer and take reasonable measures to verify the identity of such persons: For legal entities or organizations: The identity (e.g., the full name, birth date, nationality, and identification document number) of the natural person(s) who have ultimate controlling interest. Controlling interest refers to when more than 25 percent of a firm's shares or capital is directly or indirectly owned; the customer may be required to provide a list of its shareholders or other documents to assist in completing the identification procedure. When no natural person with controlling interest is identified, or when there is doubt as to whether the natural person(s) with controlling interest are the beneficial owner(s) under the provisions of the preceding Sub-item, a futures commission merchant or leverage transaction merchant shall verify whether there are any natural person(s) that exercise control of the customer through other means. When necessary, a statement produced by the customer may be obtained to verify the identity of the beneficial owner(s). Where no natural person with controlling interest is identified under the preceding two Sub-items, measures shall be taken to identify and verify the identity of senior management personnel. When the customer is the trustee of a trust: The identity of the principal(s), trustee(s), trust supervisor, trust beneficiaries, and any other person exercising effective control over the trust account, or the identity of person(s) in equivalent or similar position(s). Unless otherwise provided for in the proviso of Article 4, Paragraph 1, Subparagraph 3, or if the customer has issued bearer shares, the entity is not subject to the requirements for identifying and verifying the identity of beneficial owner(s) of a customer as set out in Subparagraph 3, Item 3 if the customer or the person with controlling interest in the customer is: An R.O.C. government entity. An R.O.C. public enterprise organization. A foreign government entity. A company listed in the R.O.C. or any of its subsidiaries. An entity listed on a stock exchange or listed for over-the-counter trading outside of the R.O.C. that is subject to local regulations requiring the disclosure of its principal shareholders, or a subsidiary of such an entity. A financial institution supervised by the R.O.C. government, or an investment vehicle managed by such institution. A financial institution incorporated outside the R.O.C. that is subject to supervisory regulations which are consistent with the anti-money laundering and combating of terrorism financing standards announced by the Financial Action Task Force (FATF), or an investment vehicle managed by such financial institution; Futures commission merchants and leverage transaction merchants shall retain documentary evidence related to the aforesaid financial institution or investment vehicle (e.g., records of publicly disclosed audit information, the financial institution's anti-money laundering operational rules, records of searches for negative information, and statements by the financial institution). Funds managed by R.O.C. government agencies. An employee stock ownership trust or employee welfare savings trust. Method for verifying the identity of customers establishing business relationships with the futures commission merchant or leverage transaction merchant, and of persons purporting to act on behalf of a customer, and of beneficial owners thereof: Verification by documents: Individual: Verification of identity or birth date: Obtain unexpired official photo identification documents, e.g., national ID card, passport, Alien Resident Certificate, driver's license. If there is any doubt about the valid period of an above document, a certification or statement by an embassy or notary public shall be obtained. In addition, in the case of a beneficial owner, the futures commission merchant or leverage transaction merchant need not require provision of the original identification document for verification; alternately, the futures commission merchant or leverage transaction merchant may, in accordance with its own operational procedures, request the legal entity, organization, or representative thereof, to issue a statement regarding the information of beneficial owners. However, the futures commission merchant or leverage transaction merchant should be able to verify at least a portion of the information specified in the statement through the use of other reliable documents or sources of information, such as documents evidencing company registration or company annual reports. Verification of address: Obtain the customer's bills, reconciliation statements, or government-issued documents. Legal entity, organization, or trustee of a trust: Obtain documents such as certified articles of incorporation, government-issued business license, partnership agreement, trust instrument, or certification of incumbency. If the trustee is a trust managed by a financial institution as stated in Article 5, Paragraph 1 of the Money Laundering Control Act, a written document issued by the financial institution may substitute the trust deed. However, this does not apply if the country or region where the financial institution is located falls within the circumstances in the proviso of Article 4, Paragraph 1, Subparagraph 3. When necessary, verification may be carried out by means other than document verification. For example: Contact the customer via phone or letter after the account has been opened. Use information provided by other financial institutions. Cross validate information provided by the customer with other reliable public information or paid database information. Enhanced verification shall be conducted for any customer who is identified as a high-risk customer, or exhibits any high-risk factor under provisions relating to the assessment of risk of money laundering or terrorism financing by customers of futures commission merchants and leverage transaction merchants. For example: Obtain a reply letter that is personally signed by the customer or by an authorized person of the customer, legal entity, or organization, and which is in reply to a letter sent to the address provided by the customer, or make telephone inquiries. Obtain supporting evidentiary materials regarding information on an individual's wealth and sources of funds. Obtain supporting evidentiary materials on the sources and flow of funds of a legal entity, organization, or trustee of a trust, such as a list of main suppliers, or a list of main customers. Onsite visit. Obtain information on past dealings with futures commission merchants or leverage transaction merchants, and notify the futures commission merchants or leverage transaction merchants. Prior to completion of customer identity verification measures, no business relations may be established with the customer. However, those meeting all of the following requirements may first obtain information on the identity of the customer and its beneficial owner(s) and complete the verification after the establishment of a business relationship: Money laundering and terrorism financing risks are effectively managed, including the adoption of risk management procedures with respect to the circumstances under which a customer may utilize the business relationship to complete a transaction prior to verification. It is necessary to do so to avoid interruption to the customer's normal conduct of business. Verification of the identities of the customer and its beneficial owner(s) will be completed as soon as reasonably practicable after the establishment of a business relationship. In the event verification of the identities of the customer and its beneficial owner cannot be completed within a reasonably practicable time limit, the business relationship must be terminated and the customer shall be notified in advance. If a futures commission merchant or leverage transaction merchant allows a customer to establish a business relationship with it before customer identity verification is completed, relevant risk control measures shall be adopted, including: Stipulating a deadline for completion of customer identity verification. Before completion of customer identity verification, the supervisory officer of the business unit shall examine the business relationship with the customer and report customer identity verification progress to senior officers on a regular basis. Before the completion of customer identity verification, the number and types of the customer's transactions shall be restricted. The futures commission merchant or leverage transaction merchant shall use a risk-based approach to determine the risk rating, and set the "reasonably practical time limit" in Item 3 of the preceding Subparagraph accordingly. Illustrative examples are as follows: Customer identity verification procedures shall be completed no later than 30 days after establishing a business relationship. If customer identity verification procedures are not completed within 30 days after establishing a business relationship, the futures commission merchant or leverage transaction merchant shall temporarily suspend the business relationship with the customer, and avoid conducting any further transactions. If customer identity verification procedures are not completed within 120 days after establishing the business relationship, the futures commission merchant or leverage transaction merchant shall terminate the business relationship with the customer. When a customer is a legal entity, the futures commission merchant or leverage transaction merchant shall ascertain whether it can issue bearer shares by examining the customer's articles of incorporation, or requesting the customer to issue a statement, or by other means, and with respect to any customer that has issued bearer shares, one of the following measures shall be adopted to ensure that the information on the beneficial owners is updated: Request the customer to require its bearer share holders who have controlling interest in the legal entity to register their identities with the customer, and request the customer to notify the futures commission merchant or leverage transaction merchant when the identity of a shareholder who has controlling interest in the legal entity changes. Request the customer to, after every shareholder meeting, give the futures commission merchant or leverage transaction merchant updated information on its beneficial owner(s), and provide information on shareholders who hold a certain percentage of bearer shares. However, the customer shall promptly notify the futures commission merchant or leverage transaction merchant when the customer learns, for any other reason, about any change in the identity of a shareholder who has controlling interest in the legal entity. When the futures commission merchant or leverage transaction merchant conducts customer identity verification, it shall use a database established internally or external information sources to examine whether the customer or any of its beneficial owner(s) or senior management personnel is currently or has ever been a politically exposed person either in the domestic or a foreign government or in an international organization. If the customer or a beneficial owner of the customer is currently a politically exposed person in a foreign government, the customer shall be directly deemed a high-risk customer, and enhanced customer identity verification measures specified under all Items in Article 4, Paragraph 1, Subparagraph 1 shall be adopted. If the customer or a beneficial owner is currently a politically exposed person in the domestic government or an international organization, the futures commission merchant or leverage transaction merchant shall evaluate the corresponding risks before establishing a business relationship with the customer, and shall reevaluate such risks every year thereafter. For a customer that has been recognized by the futures commission merchant or leverage transaction merchant as a high-risk customer, enhanced customer identity verification measures specified under all Items in Article 4, Paragraph 1, Subparagraph 1 shall be adopted. If any senior management personnel of a customer is currently a politically exposed person either in the domestic or a foreign government or in an international organization, the futures commission merchant or leverage transaction merchant shall consider the senior management personnel's influence over the customer to determine whether to adopt the enhanced customer identity verification measures specified under all Items in Article 4, Paragraph 1, Subparagraph 1. Regarding a politically exposed person either in the domestic or a foreign government or in an international organization who is not incumbent, the futures commission merchant or leverage transaction merchant shall consider relevant risk factors and then evaluate the person's influence, and determine through a risk-based approach whether the provisions in the preceding three Items should be applied to the person. The preceding four Items also apply to family members and close associates of any politically exposed person. The scope of family members and close associates shall be determined as provided in the latter part of Article 7, Paragraph 4 of the Money Laundering Control Act. When a beneficial owner or senior management personnel of a customer that is listed in Subparagraph 7, Item 3, Sub-items 1, 2, 3, or 8 is a politically exposed person, the provisions of Items 1 to 5 of this Subparagraph do not apply. Other compliance matters in connection with customer identity verification measures: At the time of establishing a business relationship with a customer or when it is suspected there is insufficient information for customer identification, government-issue or other identification documents shall be utilized for conducting customer identity verification and for providing a record thereof. A futures commission merchant or leverage transaction merchant shall adopt enhanced customer identity verification measures for a customer that opens a brokerage account and conducts transactions via a professional intermediary. A futures commission merchant or leverage transaction merchant shall adopt enhanced review on a customer that is blacklisted by another futures commission merchant or leverage transaction merchant. A futures commission merchant or leverage transaction merchant shall use customer verification procedures that enable it to identify non-face-to-face customers with the same effectiveness as the identification of other customers, and must further exercise special and adequate measures to mitigate risk. When a business relationship is established over the Internet, the process shall be conducted in accordance with relevant operational templates established and approved for future reference by the Financial Supervisory Commission (FSC). When a customer mandates or authorizes another to establish a business relationship, or when a futures commission merchant or leverage transaction merchant does not discover a suspicion about a customer until after the futures commission merchant or leverage transaction merchant has already established the business relationship with the customer, the futures commission merchant or leverage transaction merchant must verify the situation via telephone or written correspondence, or by making an onsite visit. When a customer establishes business relations via mail correspondence, after the business relationship is established, the futures commission merchant or leverage transaction merchant must send its return correspondence by registered mail to substantiate it. If, without violating any laws and statutes, a futures commission merchant or leverage transaction merchant discovers or finds it necessary to assume that funds flowing through a customer's account come from corruption or abuse of public assets, the futures commission merchant or leverage transaction merchant shall refuse to process the transactions or shall terminate the business relationship altogether. When a futures commission merchant or leverage transaction merchant is unable to complete customer identity verification procedures for a customer, it shall consider reporting the transaction suspected of money laundering or terrorism financing related to the customer. When a futures commission merchant or leverage transaction merchant suspects that a customer or a transaction involves money laundering or terrorism financing, and has reason to believe that carrying out customer identity verification procedures may disclose information to the customer, it may refrain from performing the procedures and report the transaction suspected of money laundering or terrorism financing instead. Other matters requiring attention in establishing business relationships shall, without exception, be handled in accordance with the internal operating rules and procedures of the futures commission merchant or leverage transaction merchant. Contractual stipulations may be adopted to provide for the handling of the following circumstances, as follows: The futures commission merchant or leverage transaction merchant may refuse business dealings or terminate business relations at its sole discretion under circumstances specified in Subparagraph 1, Item 8. For customers such as those unwilling to comply with review, refusing to provide information on beneficial owners or persons who exercise controlling interest over the customer, or unwilling to explain the nature and purpose of the transaction and sources of the funds, and so on, the transaction may be suspended or the business relationship with the customer may be temporarily suspended or terminated. The futures commission merchant or leverage transaction merchant shall report transactions suspected of money laundering or terrorism financing in accordance with Article 10 of the Money Laundering Control Act when it establishes a business relationship or conducts a transaction with any counterparty specified in Subparagraph 1, Item 8. If that counterparty is an individual, legal entity, or organization that is designated for sanctions under the Terrorism Financing Prevention Act, the futures commission merchant or leverage transaction merchant, from the day it becomes aware of such circumstance, shall refrain from engaging in any of the acts set out in Article 7, Paragraph 1 of the Terrorism Financing Prevention Act, and shall carry out reporting procedures as set out in the Terrorism Financing Prevention Act (download the format to be used from the website of the Ministry of Justice Investigation Bureau). If any circumstance specified in Article 6, Paragraph 1, Subparagraphs 3 and 4 of the Terrorism Financing Prevention Act have already occurred before the aforesaid counterparty was sanctioned, the futures commission merchant or leverage transaction merchant shall apply to the Counter Terrorism Financing Advisory Council for permission in accordance with the related sub-laws of the Terrorism Financing Prevention Act.
Article 3	A futures commission merchant or leverage transaction merchant's customer identity verification measures shall include ongoing review on customer identity, and shall be conducted in accordance with the following provisions: A futures commission merchant or leverage transaction merchant shall conduct review of existing customer identity information on the basis of materiality and risk level, and conduct review on existing relationships at appropriate times after giving due consideration to whether and when CDD measures have been previously undertaken and the adequacy of information so obtained. The aforesaid appropriate times shall include, at a minimum: When the customer sets up additional accounts or establishes additional business relationships. When it is time for periodic review of the customer as scheduled on the basis of materiality and risk. When it becomes known that there is a material change to the customer's identity or background information. A futures commission merchant or leverage transaction merchant shall conduct ongoing due diligence on the business relationship to scrutinize transactions undertaken throughout the course of the relationship, to ensure that the transactions being conducted are consistent with the futures commission merchant or leverage transaction merchant's knowledge of the customer, its business and risk profile and, where necessary, the sources of funds. A futures commission merchant or leverage transaction merchant shall periodically review the adequacy of the information obtained regarding customers and beneficial owners and ensure that the information is kept up to date; for high-risk customers, in particular, reviews shall be conducted a minimum of once every year; meanwhile the review frequency for other customers shall be determined by a risk-based approach. A futures commission merchant or leverage transaction merchant may engage in identification and verification based on existing customer records from previously conducted identity verification procedures. Therefore, a futures commission merchant or leverage transaction merchant is allowed to carry out transactions without repeatedly identifying and verifying the identity of an existing customer. However, if there is any suspicion with regard to the veracity of the customer's information, or if the customer is found to be involved in transactions suspected of money laundering or terrorism financing, or if the operation of the customer's account or transactions differs significantly from that of its normal course of business, the customer's identity shall be reconfirmed in accordance with Article 2.
Article 4	A futures commission merchant or leverage transaction merchant shall determine the extent to which customer identity verification and ongoing review measures shall be applied using a risk-based approach (RBA), including: For high-risk circumstances, a futures commission merchant or leverage transaction merchant shall perform enhanced customer identity verification or ongoing review measures by additionally adopting a minimum of the following enhanced measures: Before establishing or entering a new business relationship, the entity shall obtain the approval of senior management personnel with the appropriate level of approval authorization based on internal risk considerations. A futures commission merchant or leverage transaction merchant shall take reasonable measures to understand the sources of the customer's wealth and funds. Sources of funds refer to the real sources of funds; for example, salary and wages, investment income, and real estate transactions. Conduct ongoing enhanced monitoring of business relationships. For customers from countries or regions at high risk for money laundering or terrorism financing, a futures commission merchant or leverage transaction merchant shall conduct enhanced measures consistent with the risks identified. For low-risk circumstances, a futures commission merchant or leverage transaction merchant may apply simplified measures, which shall be commensurate with the lower risk factors. However, simplified customer identity verification measures are not allowed in any of the following circumstances: Such customers come from high-risk countries or regions that have not adopted effective anti-money laundering (AML)/counter terrorism financing (CFT) measures, including without limitation countries or regions announced by international anti-money laundering organizations and relayed by the FSC as being severely deficient in countering money laundering and combating terrorism financing, and countries/regions that fail to comply or full comply with recommendations made by international anti-money laundering organizations. Where there are sufficient grounds to suspect that the customer or transaction is involved in money laundering or terrorism financing. Futures commission merchants and leverage transaction merchants may adopt the following simplified customer identity verification measures: Reduce the frequency of customer identity information updates. Lower the level of ongoing monitoring, and establish a reasonable threshold amount as the basis for reviewing transactions. When the purpose and nature of the type of transaction or the established business relationship can be inferred from the transactions or relationship themselves, the futures commission merchant or leverage transaction merchant is not required to further collect specific information or carry out special measures to examine the purpose and nature of the business relationship.
Article 5	A futures commission merchant or leverage transaction merchant shall perform its own customer identity verification operations. However if it is otherwise provided in laws and statutes or FSC regulations that a futures commission merchant or leverage transaction merchant may rely on third parties to perform the identification and verification of the identities of customers, persons acting on behalf of customers, and beneficial owners or the purpose and intended nature of the business relationship, the futures commission merchant or leverage transaction merchant relying on the third party shall still bear the ultimate responsibility for such identity verification measures and shall comply with the following provisions: A futures commission merchant or leverage transaction merchant shall be able to immediately obtain the necessary customer identity verification information. A futures commission merchant or leverage transaction merchant shall take adequate steps to ensure that identification information and other relevant documentation relating to the customer identity verification requirements are made available by the third party upon request without delay. A futures commission merchant or leverage transaction merchant shall ensure that the third party it relies on is regulated, supervised or monitored, and has adopted appropriate measures for compliance with customer identity verification and record-keeping requirements. A futures commission merchant or leverage transaction merchant shall ensure that the jurisdiction where the third party it relies on is located adopts AML/CFT regulations that are consistent with the standards established by the FATF.
Article 6	A futures commission merchant or leverage transaction merchant's watch list filtering mechanisms for customers and connected parties of transactions shall be handled in accordance with the following provisions: A futures commission merchant or leverage transaction merchant shall, using a risk-based approach, establish policies and procedures for watch list filtering of customers and connected parties of transactions so as to to detect, match, and filter whether customers, or the senior management personnel, beneficial owners or connected parties of transactions of customers are individuals, legal entities or organizations designated for sanctions under the Terrorism Financing Prevention Act, or are terrorists or terrorist groups identified or investigated by a foreign government or an international organization. If applicable, such procedures shall be implemented in accordance with the provisions in Subparagraph 16 of Article 2. The policies and procedures for watch list filtering of customers and connected parties of transactions shall include a minimum of matching and screening logics as well as implementation procedures and evaluation standards, and shall be documented. The circumstances of watch list filtering shall be recorded and stored in accordance with the time period specified in Article 10. The filtering mechanism shall be tested, including testing for the following aspects: Whether the sanctions list and threshold settings are based on the risk-based approach. Correctness and completeness of data input and corresponding fields in the system. Matching and screening logic. Model validation. Correctness and completeness of data output. Based on the test results, confirm whether the filtering mechanism is still capable of adequately reflecting risks, and modify the mechanism in a timely manner.
Article 7	A futures commission merchant or leverage transaction merchant's ongoing monitoring of accounts and transactions shall be conducted in accordance with the following provisions: A futures commission merchant or leverage transaction merchant shall progressively make use of information systems to integrate the basic information and transaction information of the entire company's customers, thereby allowing the head office and branches to carry out inquiries for AML/CFT purposes, so as to strengthen its ability to monitor accounts and transactions. A futures commission merchant or leverage transaction merchant shall also establish internal control procedures for requests and inquiries as to customer information made by various units, and shall exercise care to ensure the confidentiality of such information. A futures commission merchant or leverage transaction merchant shall establish policies and procedures for account and transaction monitoring using a risk-based approach, and use the information system to assist in the detection of transactions suspected of money laundering or terrorism financing. A futures commission merchant or leverage transaction merchant shall review its policies and procedures for account and transaction monitoring based on AML/CFT statutes, the nature of the customers, business size and complexity, money laundering and terrorism financing trends, and related information gathered from internal and external sources, as well as its internal risk assessment results, and shall update those policies and procedures periodically. A futures commission merchant or leverage transaction merchant's policies and procedures for account and transaction monitoring shall include, at a minimum, complete money laundering and terrorism financing monitoring indicators, parameter settings, monetary threshold amounts, alerts and monitoring operations, and examination procedures and reporting standards for monitored cases, and shall be documented. The mechanism of the preceding Subparagraph shall be tested, including testing for the following aspects: Internal control process: Examination of the roles and responsibilities of personnel or units relating to the account and transaction monitoring mechanism. Correctness and completeness of data input and corresponding fields in the system. Detection scenario logic. Model validation. Data output. The futures commission merchant or leverage transaction merchant shall further examine the customer's identity when it discovers or has reasonable grounds to suspect that one of its customers, the customer's funds or assets, or transactions that a customer plans to conduct or already has conducted are related to money laundering or terrorism financing, regardless of the monetary amount or value, and regardless of whether the transaction is completed. Red flags for transactions suspected to involve money laundering or terrorism financing are listed in the Appendix. However, the Appendix may not be exhaustive. A futures commission merchant or leverage transaction merchant shall choose or develop types of transactions that should be watch-listed by the futures commission merchant or leverage transaction merchant as possible money laundering or terrorism financing activities, based on its own asset scale, geographical distribution, business characteristics, the natures and transaction characteristics of its customer groups, and its internal risk assessment of money laundering and terrorism financing or information regarding normal transaction activities. The reasonableness of identified watch-listed transactions under the preceding Subparagraph shall be examined and determined on a case-by-case basis, and records of the examination shall be retained. (The determination of reasonableness may include determining whether there are situations such as transactions that are incommensurate with a customer's identity, income level, or business scale, unrelated to the nature of a customer's business, inconsistent with a customer's business model, or have no reasonable economic purpose, use, or explanation, or which involve unclear or inadequately explained source of funds.) When a transaction is examined and determined not to be a transaction suspected of money laundering or terrorism financing, the reasons for the exclusion shall be recorded and analyzed. For any transaction suspected of money laundering or terrorism financing, the futures commission merchant or leverage transaction merchant shall perform customer identity verification and retain related records for verification, and furthermore shall file a report with the MJIB within 10 business days of the date on which the futures commission merchant or leverage transaction merchant internally discovers and confirms that there is a suspicion of money laundering or terrorism financing. This also applies to cases in which the transaction is not completed. A futures commission merchant or leverage transaction merchant shall identify via a risk-based approach which transaction patterns suspected of money laundering or terrorism financing as listed in the Appendix require establishing an information system to aid in their monitoring. Regarding types of transactions that are not included for monitoring by the information system, the futures commission merchant or leverage transaction merchant shall also use other methods to help its employees identify transactions suspected of money laundering or terrorism financing. The information system cannot completely replace employee judgment. The futures commission merchant or leverage transaction merchant shall continue to strengthen the training of its employees so that its employees are able to identify transactions suspected of money laundering or terrorism financing. Ongoing monitoring of accounts or transactions shall be recorded and stored in accordance with the time period specified in Article 10.
	Appendix_Red_Flags_for_Transactions_Suspected_to_Involve_Money_L aundering_or_Terrorism_Financing.odt
Article 8	Before offering new products, new services, or launching new business categories (including new delivery mechanisms, or employment of new technology on existing or new products or businesses), products should undergo money laundering and terrorism financing risk assessments so as to establish corresponding risk management measures and to reduce the occurrence of risks identified.
Article 9	Report of transactions suspected of money laundering or terrorism financing: A case handler in any unit who discovers an unusual transaction shall immediately report it to the supervisory officer. Upon receipt of such a report, the supervisory officer shall promptly decide if it is indeed a matter that should be reported. If it is determined that the matter should be reported, the supervisory officer shall instruct the case handler to fill out a report form immediately (download the format to be used from the website of the MJIB). After the report form has been approved by the supervisory officer of the unit and forwarded to and verified by the chief AML/CFT officer, the report shall immediately be filed with the MJIB. Within 15 days after the end of each fiscal year, the categories of red flags for transactions suspected to involve money laundering or terrorism financing and the quantities of suspicious transactions therein shall be submitted to the FSC for review, and copies shall also forwarded to the Taiwan Futures Exchange and the Chinese National Futures Association. If the transaction suspected of money laundering or terrorism financing represents an obviously serious or urgent case, the futures commission merchant or leverage transaction merchant shall promptly report to the MJIB by fax or other feasible method, and then immediately supplement the written materials. However, if the futures commission merchant or leverage transaction merchant has received an acknowledgment of receipt (download the format to be used from the website of the MJIB) from the MJIB by fax, the written materials need not be supplemented to the MJIB. The fax containing acknowledgment of receipt shall be retained on record. Confidentiality of reported information: All employees shall uphold confidentiality with respect to information filed in reports of transactions suspected of money laundering or terrorism financing. The futures commission merchant or leverage transaction merchant shall provide its employees with training or instructional materials to prevent information disclosure during interactions between employees and customers and in the course of daily operations. Documents relating to reported matters shall be treated as confidential documents. If confidential information is disclosed under any circumstances, the futures commission merchant or leverage transaction merchant shall take corresponding measures under applicable provisions. AML/CFT personnel, regulatory compliance personnel, and internal audit personnel, for purposes of carrying out their duties, should be able to promptly access customer information and transaction records, but such individuals are nevertheless still required to comply with confidentiality requirements.
Article 10	A futures commission merchant or leverage transaction merchant shall retain records of all business relationships and transactions with its customers in hardcopy or electronic form in accordance with the following provisions: All necessary records on transactions, both domestic and international, shall be retained for a minimum of 5 years, or for longer periods as required by the law. The above necessary records include: Full name and account number of transactions. Transaction dates. Types of currency and monetary amounts. With respect to verification records and records of reports on transactions suspected of money laundering or terrorism financing, originals of such transactions shall be retained for a minimum period of 5 years. One method for documenting customer verification procedures should be selected based on internal considerations and the principle that the entire company should adopt a consistent system. In a case duly under investigation pursuant to the law, relevant transaction records and vouchers shall not be destroyed before the case is closed, even where the time period for their preservation lapses. All of the following information shall be retained for a minimum of 5 years after the end of the business relationship, or for a longer period as required by the law: All records obtained through customer identity verification measures, such as copies or records of official identification documents such as passports, national ID cards, driver's licenses or similar documents. Account files. Business correspondence, including inquiries to establish the background and purpose of complex, unusual transactions, and the results of any analysis undertaken. Transaction records retained shall be sufficient to permit reconstruction of individual transactions so as to provide, if necessary, evidence for prosecution of criminal activity. It shall be ensured that transaction records and customer identity verification information is promptly made available to the competent authorities when such requests are made with appropriate authority.
Article 11	Internal control system The AML/CFT internal control system of a futures commission merchant or leverage transaction merchant, and any amendments thereto, shall be adopted by its board of directors; the same applies to any amendment thereto. The system must address the following: Policies and procedures adopted to identify, evaluate, and manage risks of money laundering and terrorism financing in accordance with the Guidelines for Futures Commission Merchants and Leverage Transaction Merchants Regarding Assessment of Money Laundering and Terrorism Financing Risks and Adoption of Prevention Programs (see Attachment). AML/CFT programs formulated based on the Guidelines, the results of risk assessments, and business scale to manage and mitigate identified risks. Regarding high risks, in particular, enhanced measures for control and management shall be adopted. Standard operational procedures to supervise, control, and manage AML/CFT legal compliance and the execution of AML/CFT measures, which shall be included in self-audit and internal audit items, and enhanced when necessary. The identification, evaluation, and management of money laundering and terrorism financing risks in Item 1 of the preceding Subparagraph shall, at a minimum, cover aspects such as customer, geographic area, transactions and services, and shall be conducted in accordance with the following provisions: Risk assessment reports shall be made. All risk factors that determine the overall risk rating and appropriate measures for mitigating such risks shall be considered. A mechanism for updating risk assessment reports shall be established to ensure that the risk data is kept up to date. Submit a copy of the completed or updated risk assessment report to the FSC for future reference. The AML/CFT program in Subparagraph 1, Item 2 shall include the following policies, procedures, and control and management mechanisms: Customer identity verification. Customer watch list filtering. Ongoing monitoring of accounts and transactions. Record retention. Reporting transactions suspected of money laundering or terrorism financing, and filing reports pursuant to the Terrorism Financing Prevention Act. Designating compliance matters for which the chief AML/CFT officer is responsible. Employee selection and appointment procedures. Ongoing employee training programs. Independent auditing functions regarding the effectiveness of the AML/CFT system. Other matters stipulated in applicable AML/CFT statutes and by the FSC. A futures commission merchant or leverage transaction merchant that has a foreign branch office (or subsidiary) shall establish a group-level AML/CFT plan, and implement the plan in its foreign branch offices (or subsidiaries). In addition to the policies, procedures, and control and management mechanisms in the preceding Paragraph, the following matters shall also be stipulated in accordance with the information confidentiality regulations of the R.O.C. and of the jurisdictions where its foreign branch offices (or subsidiaries) are located: Policies and procedures for sharing, within the group, of information that is collected for the purpose of customer identity verification and risk management regarding money laundering and terrorism financing. For AML/CFT purposes, when necessary, require foreign branch offices (or subsidiaries) to provide information on customers, accounts, and transactions, in accordance with group-level regulatory compliance, audit, and AML/CFT functions. The security and protection of the use and confidentiality of exchanged information. To the extent permitted by the laws and regulations of the jurisdictions where the futures commission merchant or leverage transaction merchant's foreign branch offices (or subsidiaries) are located, ensure that foreign branches and subsidiaries comply with the same strict AML/CFT measures as adopted by the head office (or parent company). Where the minimum requirements of the jurisdictions where the head office (or parent company) and branches (or subsidiaries) are located are different, the branch (or subsidiary) shall choose to comply with the higher standards. However, if there is any doubt regarding the determination of higher or lower criteria, the determination by the competent authorities of the place in which the head office (or parent company) of the futures commission merchant or leverage transaction merchant is located shall prevail. If the same criteria as those practiced by the head office (or parent company) cannot be adopted due to prohibitions by foreign laws and regulations, appropriate additional measures shall be taken to manage risks of money laundering and terrorism financing, and a report shall be made to the FSC. The policies and procedures adopted by a branch or subsidiary of a foreign financial organization located in the R.O.C. to identify, evaluate and manage the risks of money laundering and the financing of terrorism, as well as its AML/CFT plans, must include policies, procedures, and control and management mechanisms as stated in Subparagraph 1, Items 1 and 2 in accordance with the Guidelines for Futures Commission Merchants and Leverage Transaction Merchants Regarding Assessment of Money Laundering and Terrorism Financing Risks and Adoption of Prevention Programs . If the parent group has established policies and procedures no less strict than, and not in violation of, the laws and regulations of the R.O.C., the R.O.C. branch or subsidiary may adopt the policies and procedures of the parent group. The board of directors of the futures commission merchant or leverage transaction merchant shall bear ultimate responsibility for establishing and maintaining appropriate and effective AML/CFT internal control. The board of directors and senior management personnel shall understand the futures commission merchant or leverage transaction merchant's money laundering and terrorism financing risks as well as the operation of the AML/CFT program, and shall adopt measures to create an organizational culture that emphasizes AML/CFT.
	Guidelines_for_Futures_Commission_Merchants_and_Leverage_Transac tion_Merchants_Regarding_Assessment_of_Money_Laundering_and_Terr orism_Financing_Risks_and_Adoption_of_Prevention_Programs.odt
Article 12	Chief AML/CFT officer: Adequate AML/CFT personnel and resources shall be allocated in accordance with scale and risks, and the board of directors shall appoint one senior officer to be the chief AML/CFT officer who shall be granted adequate authority of office to coordinate and supervise AML/CFT operations; it shall also be ensured that AML/CFT personnel and the chief officer do not concurrently hold any positions involving a conflict of interest with their AML/CFT duties. The chief AML/CFT officer in the preceding Subparagraph is responsible for the following matters: Supervising planning and execution of the policies and procedures for identification, assessment, and monitoring of money laundering and terrorism financing risks. Coordinating and supervising the execution of comprehensive identification and assessment of money laundering and terrorism financing risks. Monitoring risks relating to money laundering and terrorism financing. Developing AML/CFT programs. Coordinating and supervising the execution of AML/CFT programs. Verifying compliance with AML/CFT-related statutes, including related templates or self-discipline regulations formulated by the affiliated financial industry association and approved for future reference by the FSC. Supervision of reporting transactions suspected of money laundering or terrorism financing to the MJIB and the reporting of assets and property interests of counterparties designated by the Terrorism Financing Prevention Act and the locations of such assets and interests. The chief AML/CFT officer under Subparagraph 1 shall report to the board of directors and supervisors (or the audit committee) at a minimum of every 6 months. When any material violations of statutes are found, the chief AML/CFT officer shall promptly report to the board of directors and supervisors (or the audit committee). A foreign business unit of a futures commission merchant or leverage transaction merchant shall take the number of its local subsidiaries, business scale, and risks into overall consideration to arrange adequate AML/CFT personnel, and appoint a person to be the officer responsible for coordinating and supervising AML/CFT matters. The appointment of the AML/CFT supervisory officer by the futures commission merchant or leverage transaction merchant's foreign business unit shall be conducted in compliance with the statutes of the host jurisdiction and requirements of the local competent authority. The supervisory officer shall have adequate authorities of office to coordinate and supervise AML/CFT matters, including the ability to communicate directly with the chief AML/CFT officer of Subparagraph 1. He or she shall be full-time in the position of supervisory officer, with the exception that he or she may concurrently hold the position of legal compliance officer. If the supervisory officer concurrently holds any other position, the foreign business unit shall communicate with the local competent authority to ensure that there is no likelihood of a conflict of interest, and report to the FSC for future reference.
Article 13	The implementation, internal auditing, and statement of the AML/CFT internal control system: The futures commission merchant or leverage transaction merchant's domestic and foreign business units shall assign a member of the senior management to be the AML/CFT supervisory officer who shall be responsible for supervising matters relating the implementation of the AML/CFT operations of his/her business unit. A business unit shall conduct self-inspections in accordance with the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets. The firm's internal audit unit shall audit the following matters in accordance with the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, and issue an audit opinion: Whether the money laundering and terrorism financing risk assessments and AML/CFT programs meet related statutory and regulatory requirements and are implemented faithfully. The effectiveness of the AML/CFT programs. The powers and duties of the internal audit unit: The internal audit unit shall conduct periodic audits in accordance with the internal control measures adopted and other relevant provisions, and carry out testing of the effectiveness of the AML/CFT program and the quality of risk management in its operations, departments, and branches (or subsidiaries). The audit method shall encompass independent transaction tests, including screening relevant transactions involving products, customers, and geographic areas that the futures commission merchant or leverage transaction merchant has assessed as high-risk, and verifying that the futures commission merchant or leverage transaction merchant is effectively implementing the applicable AML/CFT provisions. The internal audit unit, when it discovers any deficiencies in the implementation of the management measures by any unit, shall regularly report such cases to the chief AML/CFT officer in writing, and such cases shall be provided for reference in employee in-service training programs. Auditors who uncover major violations and intentionally withhold their findings shall be disciplined by the responsible department of the head office. The general manager/president shall supervise all units in scrupulously assessing and reviewing the implementation of the AML/CFT internal control system. An AML/CFT internal control system statement shall be jointly signed by the chairperson of the board, the general manager/president, the chief internal audit officer, and the chief AML/CFT officer, and shall be submitted to the board of directors for approval. The content of the statement shall be disclosed on the company website within 3 months after the end of every fiscal year, and shall be publicly announced and filed on the website designated by the FSC. With regard to the branch office of a foreign futures commission merchant or leverage transaction merchant located in the R.O.C., the responsible person of the R.O.C. branch office who is authorized by the board of directors of the head office will be responsible for matters relating to the board of directors or supervisors provided in these Model Guidelines. The statement of the preceding Subparagraph shall be jointly signed and submitted by the responsible person of the R.O.C. branch office who is authorized by the board of directors of the head office, the chief AML/CFT officer, and the chief internal audit officer responsible for the R.O.C. region.
Article 14	Employee appointment and training: The firm shall establish prudent and appropriate employee selection and appointment procedures, including review of the integrity and professional knowledge employees should possess to perform their duties. A firm's chief AML/CFT officer, AML/CFT personnel, and the supervisory officers of domestic business units shall each meet one of the following requirements within 3 months after his/her appointment, and related mechanisms for control and management shall be established to ensure compliance with regulations: The officer has served as dedicated legal compliance or AML/CFT personnel for at least 3 years. The chief AML/CFT officer and AML/CFT personnel have attended at least 24 hours of courses held by institutions recognized by the FSC, and have passed examinations and obtained certificates of completion for such courses. Supervisory officers of domestic business units have attended at least 12 hours of courses held by institutions recognized by the FSC, and passed examinations and obtained certificates of completion for such courses. However, legal compliance officers concurrently serving as chief AML/CFT officer, or compliance personnel who concurrently serve as AML/CFT personnel, are deemed to meet the qualification requirements in this Item after they have attended 12 hours of AML/CFT educational training offered by institutions recognized by the FSC. Obtained domestic or international AML/CFT professional certification held by institutions recognized by the FSC. A person under the preceding Subparagraph who is appointed before June 30, 2017 shall be deemed to be qualified if he or she meets any one of the following qualification requirements. Meets the qualification requirements in Item 1 or Item 3 of the preceding Subparagraph prior to June, 30 2017. Meets the qualification requirements in Item 2 of the preceding Subparagraph within the following time limits: AML/CFT personnel and chief AML/CFT officer: within 6 months after appointment,. Supervisory officers of domestic business units: within 1 year after appointment. Chief AML/CFT officer and personnel, and supervisory officers of domestic business units, shall attend a minimum of 12 hours of AML/CFT educational training held by an internal or external unit agreed by the chief AML/CFT officer. The content of the training shall cover, at a minimum, newly amended statutes, trends in money laundering and terrorism financing risks, and red flags for transactions suspected to involve money laundering and terrorism financing. If in the current year a person has obtained a domestic or international AML/CFT professional certification issued by an institution recognized by the FSC, it may be used to offset his or her training hours for the year. A foreign business unit's supervisory officer, chief AML/CFT officer and AML/CFT personnel shall have expertise in money laundering prevention, be well informed in relevant local statutes, and attend not less than 12 hours of AML/CFT educational training offered by foreign competent authorities or relevant institutions every year. If no such training is available, the officers and personnel may attend AML/CFT courses offered by internal or external training units agreed to by the chief AML/CFT officer. Appropriate content and hours of AML/CFT educational training shall be arranged for directors, supervisors, general manager/president, compliance personnel, internal audit personnel, and business personnel according to the nature of their job duties, to familiarize them with their AML/CFT duties and equip them with the professional knowhow to carry out those duties. When any of the following circumstances exists with respect to an employee, sample checks of the business matters handled by that employee shall be conducted, and assistance from the internal audit unit may be requested as necessary: The employee leads an extravagant lifestyle that is incommensurate with his or her level of income. The employee has arranged for leave, but cancels the leave without reason. Employees who have made the following contributions to AML/CFT work shall be adequately rewarded: Employees who discover and report suspected money laundering or terrorism financing transactions according to AML regulations that lead to the prevention or resolution of criminal cases by the police. Employees who receive AML/CFT training either domestically or abroad and achieve outstanding results, or who gather and present valuable research materials on foreign statutes that aid in the AML/CFT activities of the futures commission merchant or leverage transaction merchant. Orientation and on-the-job training may be conducted as follows: Orientation training: Training for new employees shall include a certain number of hours of training courses relating to AML/CFT statutes and financial services personnel's legal responsibilities, so as to familiarize new employees with relevant provisions and responsibilities. On-the-job training: Preliminary legal awareness training: After the Money Laundering Control Act and the Terrorism Financing Prevention Act enter into force or are amended, the futures commission merchant or leverage transaction merchant shall as quickly as possible provide employees with legal awareness training. Personnel shall be familiarized with the Money Laundering Control Act, the Terrorism Financing Prevention Act, and related statutes, and the futures commission merchant or leverage transaction merchant's compliance measures shall be explained to them. The chief AML/CFT officer shall be responsible for the planning and design of the training, after which, the employee training unit will be responsible for conducting the training. Regular on-the-job training: The employee training department shall offer regular annual training courses for study by employees, so as to improve employees' judgment, ensure that AML/CFT functions are effectively performed, and prevent employees from violating laws. Courses relating to this training may be arranged in other suitable professional training classes. In addition to instructors trained by the futures commission merchant or leverage transaction merchant, academics and experts may also be hired as necessary to teach AML/CFT training programs. In addition to introducing related statutes, the courses shall also introduce actual case histories so that employees can understand the characteristics and typologies of money laundering and terrorism financing, and can spot transactions suspected of money laundering or terrorism financing. The dedicated AML/CFT unit shall periodically check up on employees' attendance at training, and shall urge employees who have not attended training to participate in relevant training in accordance with actual needs. In addition to internal on-the-job training, employees may also be selected for participation in training courses held by external training institutions. Topical lectures: To enhance employees' understanding of AML/CFT statutes, the firm can invite academics and experts to give topical lectures.
Article 15	Other matters for attention: If any of the following circumstances arises with respect to a customer, services shall be withheld, and the circumstance shall be reported to an immediate supervisor: Refuses to provide relevant information when informed that relevant information must be provided for the purpose of identity verification in accordance with the law. Any individual or organization coerces or intends to coerce practitioners into forgoing documentation of transaction records or filing of submitted forms. Attempts to persuade the practitioner to forgo the completion of mandatory transaction information. Inquires about the possibility of avoiding reporting requirements. Eager to explain that the source of their funds is legal or that no money laundering is being conducted. Attempts to offer a practitioner interest in exchange for the futures commission merchant or leverage transaction merchant's services. Insists that a transaction must be completed immediately, without a reasonable explanation. The customer's description is clearly inconsistent with the actual transaction. Futures commission merchant or leverage transaction merchant business departments concurrently engaging in other types of business shall refer to the Model Guidelines for Anti-Money Laundering and Countering Terrorism Financing applicable to their categories of business.
Article 16	Futures commission merchants and leverage transaction merchants shall stipulate their Guidelines in accordance with these Model Guidelines. The Guidelines shall be implemented upon approval by the board of directors, reported to the FSC for future reference, and reviewed on an annual basis; the same applies to any amendment thereto.