CDD Exemption - Article 17 (VML004b)

1. INTRODUCTION

Under Article 17 of the MLO, firms are exempt from applying identification measures under certain limited circumstances. Viberts have chosen to limit our use of the provisions of Article 17 further to include only:

• Services provided to a TCB in drafting of one or more of the following.
• The extent of the service is limited to ‘off the shelf’ services where little modification or bespoke drafting is required, and the fee charged is reflective of this.

1.1. In respect of trusts (except employee benefit schemes) administered by a client carrying on trust company business:

• A trust deed.
• A supplemental trust deed of: appointment; advancement; disclaimer; indemnity or release; appointment, retirement and indemnity; addition; exclusion; amendment; change of proper law; revocation or termination.
• A loan agreement or loan assignment or novation.
• Factual confirmations covering matters such as the
  existence and status of a trust and its trustee’s capacity to enter into transactional documentation.

1.2. In respect of companies or partnerships administered by a client carrying on trust company business:

• incorporation documents.
• A loan agreement or loan assignment or novation.
• Minutes and other corporate authorisations.
• Stock transfer forms and share certificates.
• Memoranda and articles of association.
• Factual confirmations covering matters such as the existence and status of a company or partnership and its capacity to enter into transactional documentation.

1.3 In respect of employee benefit schemes (including pension schemes) controlled or administered by a client carrying on trust company business:

• A trust deed.
• A supplemental trust deed of: appointment; advancement; disclaimer; indemnity or release; appointment, retirement and indemnity; addition; exclusion; amendment; change of proper law; revocation or termination.
• A loan agreement or loan assignment or novation.
• Factual confirmations covering matters such as the existence and status of a trust (or other vehicle by which the scheme is structured) and its capacity to enter into transactional documentation.

1.4. In respect of a foundation administered by a client carrying on trust company business:

• Statutory forms.
• Charters and regulations.
• Supplemental deeds of: initial and further endowments; transfers of assets; indemnities and releases.
• Distributions; amendments and variations; changes of proper law; continuance and mergers, revocation, termination, winding up or dissolution; appointment/removal of guardian or any other person appointed under the regulations of the foundation to carry out a function in respect of the foundation; guardian sanctioning of council actions; addition and removal of beneficiaries and changes of purposes; addition, amendment, removal, exercise, assignment of founders’ rights; appointment and removal of council members; releases of powers; delegation of council powers.
• Factual confirmations covering matters such as the existence and status of a foundation and its capacity to enter into transactional documentation.

1.5. The above is not intended to be an exhaustive list of documents for which drafting services are provided and the firm may be able to demonstrate that other drafting services present little risk of money laundering or terrorist financing occurring.

2. Viberts recognises however, that under the Money Laundering (Jersey) Order 2008, we remain liable for any failure on the introducer or intermediary’s behalf to apply such procedures and it is therefore our policy to apply our own CDD procedures to all matters except with the prior approval of the MLCO and Supervising Partner.

3. The use of exemptions permitted by Article 17 must not be confused with the exceptions available in Article 16 which covers the reliance on Obliged Persons. To ensure the correct provisions are applied, all matters where either the provisions of Article 16 or 17 are to be applied must be approved in advance by the MLCO.

4. On occasions it is approved that the provisions of Article 17 can be applied the following steps must be followed:

• In advance of applying the exemption in respect of a TCB, a risk assessment must be carried out on both the TCB and the relevant underlying client and the reasons why applying the exemption is appropriate must be documented and approved by the Head of Department and MLCO. When considering the risk of applying the exception to a TCB, the following should be considered:

1. The risk appetite of the TCB.
2. The geographical location of its client base.
3. The nature of its client base.
4. The extent to which it carries out its business on a non-face to face basis or applies enhanced CDD measures.
5. The extent to which its clients are PEPs or present higher risk of AML/CFT.
6. The stature and regulatory track record of the TCB.
7. The adequacy of the framework to combat AML/CFT in the country or territory in which the TCB is based.
8. The adequacy of the supervisory regime in that territory.
9. The adequacy of the identification measures being applied by the TCB.

• For each TCB relationship where the exemption is to be applied, the relevant C2A form must be completed by the TCB and reviewed and signed off by the Head of Department, MLCO and Managing Partner. The form ensures that the TCB confirm their obligations under Article 17 (which we require in order to apply the exemption where appropriate). This form should be re-confirmed and resigned by
  the TCB on at least an annual basis.
• For each matter for which the exemption is to be applied, a risk assessment on the underlying client must be carried out by the firm and the relevant C2B form (or the equivalent information) must be provided by the TCB and approved by the Partner supervising the matter before any work commences. This is particularly important as it will ensure we meet the obligations of Article 17 and the exemption can be appropriately applied.
• Prior to commencing the first matter where the exemption is to be applied, the evidence of identity
  relevant to that matter must be requested and reviewed to ensure the CDD measures being applied
  by the TCB meet the requirements of the MLO
• Further periodic sample testing to ensure the CDD measures being applied by the TCB continue to meet the requirements of the MLO. This will normally take place at the same time as the annual re confirmation in b) above.