Kanbee BSA/AML Policy
Updated as of February 9, 2021
1. Firm Policy
It is Kanbee’s policy to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities by working with our financial software provider Sila Inc. (“Sila”) and banking partner(s) to comply with all applicable requirements under the Bank Secrecy Act (“BSA”), the USA PATRIOT Act (the “Patriot Act”), and their implementing regulations.
Money laundering means any activity that is meant to conceal or disguise the origins of criminally derived proceeds to appear to constitute legitimate assets. A criminal will typically achieve money laundering in three stages. At the "placement" stage, the criminal converts cash generated by illicit means into monetary instruments or deposits it into accounts maintained by otherwise legitimate businesses at financial institutions. At the "layering" stage, the criminal transfers or moves the funds into other accounts or other financial institutions to put greater distance between the money and its criminal origins. At the "integration" stage, the criminal reintroduces the funds into the economy, using them to purchase legitimate assets or fund other criminal activities or legitimate businesses.
Financial technology firms that process transactions for their customers are uniquely situated in an evolving technological, financial, and regulatory landscape. Such a firm must always anticipate that its customers or their counterparties could be attempting to launder funds obtained elsewhere or generate illicit funds on the financial technology platform itself.
Unlike money laundering, terrorist financing does not necessarily involve the proceeds of criminal conduct. The funding sources of terrorist financiers are often legitimate. Terrorist financing typically involves an attempt to conceal either the origin of the funds or their intended use, which could be for criminal purposes. Legitimate sources of terrorist financing can include charitable donations, foreign government sponsors, business ownership, and personal employment. Although the motivation differs between traditional money launderers and terrorist financiers, the actual methods used to fund terrorist operations can look similar to methods used by other criminals to launder funds. Funding for terrorist attacks does not always require large sums of money and the associated transactions may not be complex.
This Bank Secrecy Act and Anti-Money Laundering Policy (“BSA/AML Policy”) and our procedures and internal controls for implementing the policy are designed to ensure compliance with all applicable laws and regulations. We will review and update this BSA/AML Policy on a regular basis and put in place appropriate procedures and internal controls to account for both regulatory changes and changes in our business.
2. Compliance Officer Designation and Duties
Kanbee has designated a Compliance Officer, who is fully responsible for maintaining a program with procedures and internal controls appropriate to give effect to this BSA/AML Policy.
The Compliance Officer will be responsible for overseeing communication and training for employees and monitoring the firm’s compliance with all obligations, including those directly applicable to this firm under the BSA and indirectly applicable through Sila. The Compliance Officer will also ensure the firm keeps and maintains all necessary transaction records and timely file both: notices of potentially suspicious transactions with Sila and our banking partners and reports of currency received in a trade or business with the Financial Crimes Enforcement Network (FinCEN) when appropriate. The Compliance Officer is vested with full responsibility and authority to implement and enforce this BSA/AML Policy.
Kanbee will provide Sila with the Compliance Officer’s contact information, including their name, title, mailing address, email address, and phone number. Kanbee will promptly notify Sila if there is any change to the Compliance Officer position, their contact information, or the BSA/AML Policy itself.
3. Giving AML Information to Financial Partners
We will respond to any demand made by our financial software provider Sila or our banking partner(s) pursuant to a FinCEN BSA § 314(a) request concerning accounts and transactions by immediately searching our records to determine whether we maintain or have maintained any account for, or have engaged in any transaction with, each individual, entity, or organization named in the demand. We will respond to any such demand unless otherwise specified by Sila or our banking partner(s). Demand should be made to the Compliance Officer at the contact information provided. Unless otherwise stated in the demand, we are required to search those documents outlined in FinCEN’s FAQs. [FinCEN’s FAQs relating to the section 314(a) process may be obtained on the Secure Information Sharing System (“SISS”), by calling the FinCEN resource center at 800-767-2825 or 703-905-3591, or by emailing FCR@fincen.gov.] If we find a match, the Compliance Officer will report the match and all relevant documents to Sila or our banking partner (whomever made the demand).
If our Compliance Officer searches our records and does not find a matching account or transaction, will indicate as such in response to Sila’s or our banking partner’s demand. We will maintain documentation that we have performed the required search by saving electronic copies and printing physical copies in storage. The Compliance Officer will review, maintain, and implement procedures necessary to protect the security and confidentiality of demands for information made by Sila or our banking partner pursuant to a FinCEN BSA § 314(a) request similar to the procedures we use to protect our customers’ nonpublic information.
4. Checking OFAC Listings
Before a customer opens an account, and on an ongoing basis, Sila will check to ensure the customer does not appear on the SDN list or is not engaging in transactions that are prohibited by the economic sanctions and embargoes administered and enforced by OFAC. [OFAC regularly updates the SDN list, which is available at https://www.treasury.gov/resource-center/sanctions/sdn-list/pages/default.aspx.] Since the SDN list and listings of economic sanctions and embargoes are updated frequently, Sila will consult them on a regular basis and subscribe to receive any available updates when they occur. With respect to the SDN list, Sila may also access that list through various software programs to ensure speed and accuracy. Sila will also review existing accounts against the SDN list and listings of current sanctions and embargoes when they are updated and document the review.
If Sila determines that a customer is on the SDN list or is engaging in transactions that are prohibited by the economic sanctions and embargoes administered and enforced by OFAC, Sila will reject the transaction and, if necessary, block the customer's assets and file a blocked assets or rejected transaction form with OFAC within 10 days.
5. Customer Identification Program
Kanbee will rely on the performance of Sila’s KYC API, for all elements of our CIP and KYC/KYB procedures. Sila will collect certain minimum customer identification information from every customer who opens an account on our platform. Sila will: apply risk-based measures to verify the identity of each customer who opens an account; record customer identification information and our verification methods and results; provide adequate CIP notice to customers stating why we need identification information to verify their identities; and compare customer identification information with the OFAC SDN List.
- Required Customer Information
Before an individual customer opens an account for access to our platform, the CSS prompts will collect the following information: full name, street address, phone number, and email address. If there is a mismatch involved with verifying the minimal information provided above or before, we may additionally collect the following information as required by law (if not already collected preliminarily) at the direction of Sila:
(1) birthdate (for an individual); and
(2) an identification number or other documentary ID, which—
(a) for a U.S. person, will be a taxpayer identification number (“TIN”); and
(b) for a non-U.S. person, will be one or more of the following: a TIN, passport number and country of issuance, alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or other similar safeguard.
- Customers Who Refuse to Provide Information
If a prospective or existing customer either refuses to provide the information described above when prompted or appears to have intentionally provided misleading information, Kanbee will not open a new account and, after considering the risks involved, consider closing any existing account. In either case, our Compliance Officer will be notified so that we might consider notifying Sila and our banking partner(s).
- Verifying Information
Based on the risk, and to the extent reasonable and practicable, Sila will form a reasonable belief that we know the true identity of our customers by using risk-based procedures to verify and document the accuracy of the information provided. The Sila KYC verification process will analyze the information we obtain to determine whether the information is sufficient to form a reasonable belief as to the true identity of the customer (e.g., whether the information is logical or contains inconsistencies).
Sila will verify customer identity through documentary means, non-documentary means, or both. Sila will use documents to verify customer identity when appropriate documents are available. In light of the increased instances of identity fraud, Sila will supplement the use of documentary evidence by using the non-documentary means described below whenever necessary. Sila may also use non-documentary means if we are still uncertain about whether we know the true identity of the customer.
To verify the identity of our customers by documentary means, Sila may request:
(1) for an individual, an unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a driver’s license or passport; or
While Kanbee may rely on a government-issued ID as verification of a customer’s identity, Sila will consider any clear evidence of fraud in determining whether Kanbee can form a reasonable belief as to the customer’s true identity.
Sila will use non-documentary methods of verification if: the customer is unable to present an unexpired government-issued identification document with a photograph or other similar safeguard; Sila do not have face-to-face contact with the customer; or other circumstances indicate potential increased risks that Sila will be unable to verify the customer’s true identify through documentary means.
To verify the identity of our customers by non-documentary means, Sila may:
(1) independently verify the customer’s identity by comparing the information with information obtained from a consumer reporting agency, public database, or other source
(2) check references with other financial institutions; or
(3) obtain a financial statement.
Sila will verify the information within a reasonable time before or after the account is opened. Depending on the nature of the account and requested transactions, Sila may refuse to complete a transaction before Sila have verified the information, or in some instances when Sila need more time, Kanbee may, pending verification, restrict the types of transactions or dollar amount of transactions. If Kanbee finds suspicious information that indicates possible money laundering, terrorist financing activity, or other suspicious activity, Kanbee will, after internal consultation with our Compliance Officer, notify Sila and our banking partner.
- Verification Failure
When we cannot form a reasonable belief as to the true identity of a customer, we will: (1) not open an account; (2) impose terms under which a customer may conduct transactions while we attempt to verify the customer’s identity; (3) close an account after attempts to verify a customer’s identity fail; and (4) determine whether it is necessary to necessary to notify Sila and our banking partner.
In partnership with Sila, we will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancies identified in the verification process. We will keep records containing a description of any document that we relied on to verify a customer’s identity, noting the type of document, any identification number contained in the document, the place of issuance, and if any, the date of issuance and expiration date. With respect to non-documentary verification, we will retain documents that describe the methods and results of any measures we took to verify the identity of a customer. We will also keep records containing a description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained.
- Notice to Customers
We will provide notice to customers that Sila is requesting information from them to verify their identities, as required by federal law. We will use the following method to provide notice to customers:
Important Information About Procedures for Opening a New Account To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
6. Suspicious Transactions and BSA Reporting
- Notifying Financial Partners of Suspicious Transactions
To help usher compliance with Sila and our banking partner’s BSA obligations to file Suspicious Activity Reports (“SARs”) with FinCEN, Sila will notify our banking partner(s) of any transactions (including deposits and transfers) that a customer conducts or attempts on our platform involving $5,000 or more of funds or assets (either individually or in the aggregate) where Sila knows, suspect, or have reason to suspect the transaction:
(1) involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation;
(2) is designed, whether through structuring or otherwise, to evade any requirements of the BSA regulations;
(3) has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and after examining the background, possible purpose of the transaction and other facts, we know of no reasonable explanation for the transaction; or
(4) involves the use of our platform to facilitate criminal activity.
Sila will notify our banking partner(s) in situations involving violations that require immediate attention, such as terrorist financing or ongoing money laundering schemes. Sila will retain copies of any such notices to our banking partner, along with any supporting documentation.
7. BSA/AML Recordkeeping
Our Compliance Officer and his or her designee is fully responsible for ensuring our BSA/AML records are maintained properly. As part of this BSA/AML Policy, Sila will create and maintain notifications of suspicious activities made to their banking partner, reports of currency received in a trade or business, and all relevant documentation on customer identity, verification, and funds transmittals. Sila will maintain suspicious activity notices and accompanying documentation for at least five years. Sila will keep other documents according to existing BSA regulations and other recordkeeping requirements.
8. Training Programs
We will develop ongoing employee training under our Compliance Officer’s leadership and in consultation with senior management. Our training will occur on at least an annual basis. It will be based on our size, customer base, and resources and be updated as necessary to reflect any new developments in the law. Our training will include, at a minimum: (1) how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; (2) what to do once the risk is identified (including how, when and to whom to escalate unusual customer activity or other red flags for analysis and, where appropriate, notifying Sila and our banking partner of suspicious activity); (3) what employees’ roles are in the firm's compliance efforts and how to perform them; (4) the firm's record retention policy; and (5) the disciplinary consequences (including civil and criminal penalties) for non-compliance with the BSA.
We will develop training in our firm, or contract for it. Delivery of the training may include educational pamphlets, videos, intranet systems, in-person lectures and explanatory memos. We will maintain records to show the persons trained, the dates of training and the subject matter of their training. We will review our operations to see if certain employees, such as those in compliance, margin and corporate security, require specialized additional training. Our written procedures will be updated to reflect any such changes.
9. Monitoring Employee Conduct and Accounts
We will subject employee accounts to the same AML procedures as customer accounts under Sila’s KYC API.
10. Confidential Reporting of AML Non-Compliance
Employees will promptly report any potential violations of this BSA/AML Policy and the programs and procedures implemented thereunder to the Compliance Officer. If, however, the alleged violations implicate the Compliance Officer, the employee shall report to the legal counsel. Such reports will be confidential, and the employee will suffer no retaliation for making them.
11. Senior Manager Approval
Senior management has approved this BSA/AML Policy in writing as reasonably designed to achieve and monitor Kanbee’s ongoing compliance with BSA requirements and to satisfy our conditions of partnership with Sila and our banking partner. This approval is indicated by signatures below.