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AML Financial Crime Policy

Content

  1. Purpose
  2. Applicability / Scope
  3. Policy
  4. References
  5. Accountabilities and Responsibilities
  6. Overview
  7. Key Controls
  8. Breach Consequences
  9. Currency of this Policy
  10. Policy Owner

1.) Introduction and Purpose

The Financial Crime consists of Money Laundering, Tax Evasion, Terrorist Financing and any other illegal activities that hide the origin of criminal proceeds and this Policy is intended to address the Financial Crimes on a global basis.

“Money laundering” consists of any act or attempted act to channel (in almost any manner or any means, including by sending, delivering, transferring, altering, disposing, using, etc.) into legitimate financial and economic circulation currency or monetary instruments, or any property or proceeds originating from criminal activities such as bribery, drug-trafficking and terrorism, with intent to conceal or convert the property or proceeds.

“Terrorist financing” is the act of channeling currency or monetary instruments, or providing or collecting property, for the purposes of undertaking or facilitating terrorist activities such as intentionally causing death or serious bodily harm or endangering an individual’s life, or causing substantial damage to a property that is likely to kill, seriously harm or endanger an individual.

Money laundering, terrorist financing and tax evasion are all criminal offences. pH7 Technologies Inc. and its subsidiaries, if any (collectively, the “Corporation”), are committed to deterring and detecting the Financial Crimes and in no way does the Corporation condone, facilitate or support such activities. To this end, this Policy Relating to Anti-Money Laundering and Anti-Terrorist Financing (the “Policy”) re-affirms the Corporation’s commitment, as expressed in the Code of Business Conduct and Ethics of the Corporation, as may be amended and updated from time to time (the “Code”), to comply with all the laws, rules and regulations, including those designed to combat money laundering and terrorist financing.

pH7 Technologies takes the risk of Financial Crime very seriously and is committed to mitigating all the risks that may arise from its businesses and operations. In particular, pH7 is determined to ensure compliance with Financial Crime laws where these laws apply to its operations. A non-exhaustive list of Key Financial Crime legislation with which pH7 is complying includes the PCMLTFA, Proceeds of Crime Act 2002, the Counter-Terrorism Act 2008, Patriot Act and the Criminal Finances Act 2017. 

This Policy sets out pH7’s reasonable prevention procedures designed to mitigate the risk of Financial Crimes.

Potential Financial Crime risks may arise out of:

  • the products/services we purchase and supply.
  • the jurisdictions where we do business and or operations.
  • the processes in our financial transactions and structures we participate in or utilize.
  • the types of Third Parties with whom we deal.

pH7 may face criminal penalties and or suffer lasting damage to its reputation for being involved in Financial Crimes, including but not limited to significant fines. The company workers may also face fines and/or legal action. So, mitigating the risks of involvement in Financial Crime helps to protect and enhance pH7’s reputation with customers, regulators, other stakeholders and also its workers.

pH7 Technologies’ Board of Directors and its Management Team are fully committed to this Policy and directed the Workers to be in full compliance.

2.) Application/ Scope

This policy applies to everyone working at ph7 technologies, at any level and in all operations. It includes board members, senior managers, officers, directors, employees, consultants, contractors, trainees, home-workers, part- time and fixed-term workers, casual and agency staff and volunteers (collectively “workers” or “you”) unless otherwise specified. 

Relevant Workers (e.g. those who are more likely to encounter Financial Crime risks as part of their role) have specific responsibilities under this Policy, as detailed in Section 5.

Compliance with this Policy and the accompanying Procedures is mandatory.

pH7 reserves the right to amend, modify, suspend, change, or terminate this Policy at any time. This Policy does not create any contractual rights or obligations, whether express or implied.

This Policy sets the minimum standard that must be followed. Where local laws, regulations or rules impose a higher standard, that higher standard must be followed.

3.) Policy

Prohibited Activities Under This Policy

You must not participate in Prohibited Activities. These are:

  1. Concealing, disguising, converting or transferring Criminal or Terrorist Property.
  2. Entering into or becoming concerned in any arrangement that assists another person to acquire, use, retain or control Criminal Property.
  3. Entering into or becoming concerned in any arrangement in which money or other property will be made available to a person where pH7 knows or suspects that it will be used for the purposes of crime, terrorism or tax evasion.
  4. The acquisition, use or possession of Criminal Property.
  5. Promoting the carrying on of unlawful activity, such as bribery.
  6. Participation in, attempts to commit, or aiding, abetting, facilitating and counselling any of the above activities.
  7. Tipping off another person that an investigation into ML has commenced or is ongoing or that a report or disclosure has been made in relation to ML; and
  8. Tax Evasion or providing assistance to anyone known or suspect is engaged in Tax Evasion. This principle applies regardless of what the tax is, extending to all direct and indirect taxes, including VAT and duties, and employment taxes. It also applies regardless of your or the other person’s location, and notwithstanding that the person may not actually succeed in Tax Evasion.

You must report (to your, Sector/Function Legal Adviser or, where specified under a Local Supplement, to the designated reporting officer in the Local Supplement), any knowledge you have that a Prohibited Activity has occurred.

  • Reporting Suspicions and Red Flags

You must report (to your Sector/Function Legal Adviser or, where specified under a Local Supplement, to the designated reporting officer) without delay if you have suspicions of Financial Crime. Red Flags indicating there may be a Financial Crime concern can occur at any point during a transaction or business with a Third Party. Workers must monitor and be alert to suspicions and Red Flags throughout the duration of the transaction or business with a Third Party. 

  • Due Diligence

Due diligence on a Third Party must be proportionate and risk-based depending upon the level of exposure to Financial Crime risk the Third Party presents to pH7.

The Relevant Worker responsible for engaging with a Relevant Third Party (i.e. a Third Party who poses a higher risk to pH7 from a Financial Crime perspective) must ensure that due diligence is conducted in accordance with minimum Financial Crime due diligence standards.

If other Group due diligence procedures or specific Sector/Function due diligence procedures impose more stringent due diligence standards than the Standards, the higher standards must be followed.

FC Due Diligence Standards must be followed which include but not limited to:

  • When entering into a business relationship with a Relevant Third Party;
  • Where information on the Relevant Third Party has changed or pH7 has reason(s) to believe the information has changed (e.g. change to bank details, company name, company ownership, type and location of business activities); or
  • Where there is a reason to suspect that a Third Party is involved in Financial Crime.

A record must be kept by the Relevant Worker responsible for the engagement of/relationship with the Third Party of all due diligence steps undertaken and the outcomes. Any concerns arising from due diligence must be reported to your Sector/Function Legal Adviser /Compliance Officer for resolution before a decision to engage or continue working with a Third Party is taken.

  • Contractual Protections

The Relevant Worker responsible for engaging with a Relevant Third Party must seek legal advice from their Sector/Function Legal Adviser before contracting with a Relevant Third Party. The Sector/Function Legal Adviser/Compliance Officer must ensure that appropriate Financial Crime contractual protection is included when contracting with a Relevant Third Party (i.e. higher level of contractual protection is required).

  • Financial Controls

Relevant Workers in the Finance Function must comply with financial controls in pH7’s Financial Policies and in pH7’s Minimum Financial Controls. Financial controls play a significant role in mitigating the company’s exposure to financial crime (i.e. ensuring we are comfortable with the source of funds/materials coming into pH7, ensuring sufficient control over payments made by pH7 to Third Parties, and having appropriate financial controls in place to identify changes to incoming or outgoing payments that might indicate exposure to financial crime).

  • Complex Structures

Unusual or complex supply chain or transaction structures without a legitimate reason can heighten pH7’s risk of participating in or facilitating Financial Crime. If pH7 is asked to participate in an unusual or complex supply chain or transaction, the Relevant Worker responsible for the relationship must consult with their Sector/Function Legal Adviser/Compliance Officer before proceeding, and any recommendations as to structuring must be followed.

  • Communication and Training

Relevant Workers must have appropriate and regular training regarding compliance with the Policy, tailored where appropriate to cover specific functional or business unit risks and jurisdictional issues. Those delivering the training must maintain training attendance records. All Relevant Workers have access to this Policy, the Procedures and any relevant Local Supplements.

  • Refusal to do Business and Record Keeping

You must decline to do business with Third Parties involved in any Prohibited Activities or that pH7 suspects of being engaged in Financial Crime. The Relevant Worker responsible for the relationship with the Third Party must make a written record where pH7 declines such business. A written record must be made of the reasons for that decision in consultation with your Sector/Function Legal Adviser/Compliance Officer, and where applicable, to the reporting officer designated in the Local Supplement.

4.) References

To comply with this policy, you are required to read and follow the detailed requirements contained in the AML/ KYC and matrix documents and any applicable local supplement issued by regional or local government entities.

Financial crime is often complex and, in many cases, can be linked to bribery and corruption, which is dealt with separately in ph7 – global anti-bribery and corruption policy.

Where applicable, relevant workers must read this policy in conjunction with ph7’s financial policies and minimum financial controls. All activities conducted under this policy (e.g. Due diligence and record keeping) must be carried out in accordance with the ph7 – data protection policy.

5.) Accountabilities and Responsibilities

The Chief Executive has overall accountability for compliance with this Policy.

Each member of the Management Team is accountable for, and must be able to demonstrate, compliance with Financial Crime legislation and this Policy in relation to his/her Sector or Relevant Function. Each Management Team Member may appoint delegates to carry out the Sector/Relevant Function responsibilities and to assist with their accountability for this Policy.

All Relevant Workers (first line of defence)

  • Have read this Policy and, where requested, completed any related Financial Crime training.
  • Where notified, are aware of and comply with any additional local law requirements.
  • Ensure that relationships with Third Parties are conducted in accordance with the principles and requirements set out in this Policy, any applicable Local Supplement.
  • Are responsible for raising Financial Crime Concerns and complying with the Escalation Process.

Each Sector and Relevant Function (second line of defence)

  • Embeds the Policy within the Relevant Function and demonstrates senior level commitment to it.
  • Ensures all Relevant Workers in the Sector/Relevant Function are identified and have completed any intended Financial Crime training and maintains current training records.
  • Creates and maintains due diligence procedures in accordance with the requirements of this Policy and maintains associated records (consistent with any applicable document retention policies/procedures).
  • Where applicable and, upon receiving instruction to do so, appoints a sufficiently senior or experienced person to be a designated reporting officer in those territories and regulated sectors where pH7 has a legal requirement to do so.
  • Creates and maintains detailed records of reports or suspicions of Money Laundering or other Financial Crime (consistent with any applicable document retention policies and procedures and in conjunction with their Sector/Function Legal Adviser or, where applicable, to the reporting officer designated, where there is a Policy or legal requirement to do so.

Finance Function (second line of defence)

  • Is responsible for ensuring that pH7 Financial Policies and Minimum Controls are adequate to mitigate against Financial Crime risks.
  • Ensures that Relevant Workers understand and comply with the Financial Policies and implement the Minimum Financial Controls.
  • Ensures that its Relevant Workers have completed Financial Crime training, are able to identify Financial Crime Concerns and will report these to their Sector/Function Legal Adviser/Compliance Officer (or, where applicable, to the designated reporting officer).
  • Upon receiving a request from a Sector/Function Legal Adviser/Compliance Officer, is responsible for identifying Relevant Workers who can help to resolve Financial Crime Concerns.

Sector/Function Legal Adviser (second line of defence)

  • Is responsible for responding to and providing guidance on Financial Crime Concerns raised by Workers and is responsible for co-ordinating the Escalation Process when Financial Crime Concerns are reported.
  • Ensures that appropriate Financial Crime contractual protection is included when contracting with a Relevant Third Party; and
  • Is responsible for creating or co-ordinating relevant records and reports in accordance with the requirements of the Policy and applicable law.

Designated Reporting Officer (second line of defence)

  • Understands its responsibilities in the Local Supplement and has completed any specific Financial Crime training.
  • Complies with all its responsibilities contained in the Local Supplement; and
  • Informs the Sector/Function Legal Adviser/Compliance Officer of any FC Concerns that come to its attention.

Legal Adviser/ Compliance Officer (second line of defence)

  • Informs and advises pH7 and its Workers of obligations under applicable FC laws.
  • Implements and manages pH7’s Financial Crime compliance program.
  • Monitors compliance with this Policy and applicable Financial Crime laws.
  • Makes Financial Crime training available to Each Sector/Relevant Function.
  • Reviews and submits reports or suspicions of ML or other Financial Crime where there is a legal requirement to do so.
  • Acts as the internal contact point for any relevant authority investigating Financial Crime issues potentially involving pH7.

6.) Overview

This Policy is created to assist directors, officers and employees of the Corporation in conducting the dealings of the Corporation appropriately such that legitimate business activities are distinguished from illegal or suspicious activities which are connected in whole or in part with money laundering and terrorist financing. To this end, this Policy should be considered to form an integral part of the Code with which all directors, officers and employees of the Corporation are required to comply.

In general, anyone subject to this Policy and the Code should:

  1. not knowingly instigate or otherwise participate in any money laundering or terrorist financing schemes;
  2. conduct appropriate risk-based review and due diligence of all third parties dealing with the Corporation;
  3. not deal (directly or indirectly) with persons known to be involved in such schemes; 
  4. report any illegal, suspicious or abnormal activity immediately.

Those subject to this Policy and the Code will be expected to rely on their professional judgment to determine what is reasonable and what is suspicious or abnormal in normal business circumstances. In particular, you should be wary of “red flags” such as:

  1. Payment irregularities including:
    1. payments made by someone not party to a contract;
    2. payments to or from accounts other than normal business relationship accounts;
    3. requests to make multiple payments for one invoice for no apparent reason;
    4. requests for overpayment;
    5. attempts to make payments for cash equivalents; and
    6. request to make payments in countries different from the place of business of contractual party, or that are tax safe havens.
  2. Contracting irregularities including:
    1. “Secret Contracts” or contracts that cannot be known or approved by the persons normally in charge of the processes;
    2. contracts executed with parties that have not been good performers in previous contracting experiences; and
    3. parties that fail to provide all information, provide inconsistent or incomplete information, or that are reluctant to explain when asked.
  3. Contractual parties who appear to lack integrity, which requires:
    1. continual assessment of the integrity of current and potential business relationships in addition to compliance with any business relationship identification requirements of the Corporation; and
    2. regular communication with current and potential business relationships as to the Corporation’s expectations under the Code and this Policy.

As an employee, if you believe that a violation of this Policy or the Code has occurred, or if you suspect any illegal, suspicious or abnormal activity that may be related to money laundering or terrorist financing, you have an obligation to promptly report the relevant information to your supervisor.

The consequences of non-compliance with the applicable laws, rules and regulations regarding money laundering and terrorist financing, and with this Policy, are not only significant criminal, civil and disciplinary penalties but also considerable reputational harm from any association with such activities.

7.) Key Controls

The key controls listed in this Section set out the minimum control standard required as part of pH7’s Assurance Framework. They are not intended to be an exhaustive list of the controls in this Policy.

Key Risk

pH7 engages with inappropriate Third Party, leaving the company exposed to involvement in Financial Crime.

Financial Crime Concerns are not understood and/or reported by Workers, leaving pH7 exposed to involvement in Financial Crime.

Financial Crime Concerns are reported but there is no internal process for resolving disagreements over conclusions.

Internal financial controls are not followed or are inadequate to mitigate Financial Crime risks.

Key Controls

Identifying Third Party
Prior to engaging a Relevant Third Party, and on an ongoing basis, Relevant Workers must conduct due diligence in accordance with the FC Due Diligence Standards (or higher if required).

Identifying and reporting Financial Crime Concerns
All Relevant Workers are trained and are able to identify and report Financial Crime Concerns.

Escalation Process
All Relevant Workers are trained and are able to identify and report Financial Crime Concerns.

Complying with pH7’s Minimum Controls

The finance division must implement the minimum control standard and related workers must comply with the controls defined.

 

8.) Breach Consequences

Failure to comply with this Policy and any applicable Local Supplement will be a disciplinary offence and may result in disciplinary action up to and including dismissal. In extreme cases, breach by Workers could be a criminal offence and could result in law enforcement agencies taking action against the Workers and/or pH7.

Investigations

Any concerns relating to a breach of this Policy will be investigated and coordinated by the Compliance Officer, reporting to the Legal Division.

Raising Concerns

Concerns relating to any actual, alleged or suspected breach of this Policy should be raised via any number of channels, including: (i) your line manager or HR manager; (ii) any member of Group Legal or Compliance; (iii) an anonymous email.

9.) Currency of this Policy

This Policy was initially adopted and approved by the Board of Directors effective [January 1, 2023].

10.) Policy Owner

This Policy is owned by the Compliance Department of pH7 Technologies.