Standard KYC procedures & compliance

Abbreviations

AML -- Anti-Money Laundering and Counter Terrorism Financing

KYC -- Know Your Customer

Introduction

  1. Policy and definition.

TimaxArt enforces a strict anti-money laundering policy with zero tolerance for money laundering activities. We define money laundering as any activity that is carried out in an attempt to misrepresent the source of funds actually acquired through illegal processes as funds that were acquired through lawful sources/activities.

All TimaxArt affiliates are obligated to comply with TimaxArt’s anti-money laundering policy and with all applicable anti-money laundering laws. Failure to comply can result in severe consequences such as criminal penalties and heavy fines.

TimaxArt ensures complete compliance with laws pertaining to anti money laundering through its related policy. At TimaxArt, fund transfers related to gambling without a duly obtained license from official government, or any kinds of illegal activity are strictly forbidden.

TimaxArt implements a range of filtration operations for swift and accurate identification of any activities that may constitute or are related to money laundering.

The client will comply (a TimaxArt client) with all relevant statutes pertaining to money laundering and proceeds from criminal activities.

TimaxArt operates under certain obligations known as “know-your-client”(KYC below) obligations which grant TimaxArt the right to implement anti money laundering procedures to help detect and prevent money laundering activities where money laundering may mean to handle any funds associated with any illegal activity regardless of the location of such activity.

TimaxArt has the right to use client information for the investigation and/or prevention of fraudulent or otherwise illegal activities.

TimaxArt has the right to share client information with:

(I) Investigative agencies or any authorized officers who are helping TimaxArt comply with applicable law, including anti-money laundering laws and know-your-client obligations;

(II) Organizations that help TimaxArt provide the services it offers its clients;

(III) Government, law enforcement agencies and courts;

(IV) Regulatory bodies and financial institutions.

 

  1. Standard KYC procedures & compliance.

As a responsible Art Market Operator - marketplace and Auction House “TimaxArt” ensures it is in complete compliance with all applicable industry standards. We focus on enduring relationships with our clients and are proud of our ability to serve each client according to their specific needs and goals.

  1. In order to avoid being misused for money laundering, the marketplace and Auction House “TimaxArt” ensure it conducts business relationships only with those clients it can be reasonably sure are engaging in legitimate business.

In order to avoid being misused for money laundering, “TimaxArt” requires original or certified ID and proof of residence for all corporate accounts.

  1. TimaxArt implements a clearly designed risk-based approach to determine the criteria for measuring potential money laundering risks. Determining the risks of money laundering customers, services and transactions allow marketplace and Auction House “TimaxArt” to identify and implement proportionate measures and controls to reduce these risks.
  2. A Risk Based Approach

TimaxArt uses its standardized risk-based model to conduct risk assessment related to the exposure to money laundering across all client relationships. TimaxArt Board of Directors approves this model once every year.

 

The risk-based approach is addressing the following three risk categories:

  1. Identity of the client (“Know Your Customer (KYC));
  2. Provenance of the art object;

and,

  1. Origin of the buyer’s funds involved in the transaction (Provenance of Funds).

 

The application of a risk-based approach to address money laundering in the art market provides the marketplace and Auction House “TimaxArt” to has profile, taking account of the following, which is a no exhaustive list:

  1. Countries where sales are conducted
  2. Jurisdictions of Great Britain, where marketplace and Auction House “TimaxArt” obtains inventory
  3. Markets
  4. Delivery channels
  5. Services offered to clients
  6. Types of transactions
  7. Client profiles
  8. The location of contracting parties
  9. The source of funds
  10. Financing methods
  11. The value of the art objects;

and,

  1. Any other factors that the marketplace and Auction House “TimaxArt” may determine relevant when establishing our own risk profile which it will then use to develop appropriate measures to mitigate the AML risks of its business.

 

Activities that TimaxArt deems «suspicios»:

Activities that TimaxArt considers possible indications of money laundering include:

- The client showing unusual apprehension or reservations about TimaxArt’s anti-money laundering policies.

-The client’s interest in conducting financial transactions which are contrary to good business sense or are inconsistent with the client’s business policy.

-The client failing to provide legitimate sources for their funds.

- The client providing false information regarding the source of their funds.

- The client having a history of being the subject of news that is indicative of civil or criminal violations.

- The client seems to be acting as a ‘front man’ for an unrevealed personality or business and does not satisfactorily respond to requests for identifying this personality or business.

- The client not being able to easily describe the nature of his/her industry.

- The client frequently makes large deposits and demands dealing in cash equivalents only.

- The client maintains multiple accounts and conducts an unusually high number of inter-account or 3rd party transactions.

- The client is a native of, or has accounts in, a country on Financial Action Task Force’s list of Non-Cooperative Countries or Territories.

- The client’s previously usually inactive account starts receiving a surge of wire activity.

 

In implementing a risk-based approach the marketplace and Auction House “TimaxArt” will:

  1. Address the design and implementation of controls to mitigate the assessed risks;
  2. Conduct regular training of staff on money laundering risks including their roles and responsibilities to prevent, detect and report suspicions and to whom they should report internally. Training of new staff members should take place within a reasonable timeframe and refresher training should be conducted as appropriate to make sure staff remain aware of new risks or changes to the risk profile of the marketplace and Auction House “TimaxArt”;
  3. Provide special training to person(s) designated to receive internal reports of money laundering suspicion so that they know how to handle reports and when to report them to the appropriate authorities;
  4. Monitor the effectiveness and implementation of the controls and make improvements where required;
  5. Periodically review and update the policies, procedures and risk profile;
  6. Maintain records that evidence the implementation of the approach; and
  7. Document fully and contemporaneously any deviations from the application of its risk-based approach.

 

  1. Know Your Customer (KYC)
  2. The client is the person or entity with whom a contractual relationship is formed and refers to the buyer as well as the seller. Know Your Customer (KYC) requirements however go beyond the basic knowledge of buyer and seller as referred to in any contract between them. KYC should therefore cover any natural person who, as the ultimate beneficial owner, may operate through another natural person or a corporate structure as an intermediary.
  3. Beneficial ownership, for reasons that may be legitimate or not, can be obscured behind multiple layers of such intermediaries (usually so-called shell companies, or offshore companies involving trusts, foundations or bearer share companies, mostly located in offshore jurisdictions).
  4. Our standard KYC requirements foresee that the marketplace and Auction House “TimaxArt” looks through all these layers until one or other of the following is identified: natural person(s); a company that is listed in a publicly accessible register; a company listed on a public stock exchange. The beneficial owner should therefore be seen as the true owner of an art object on whose behalf the marketplace and Auction House “TimaxArt” agrees to sell, or the ultimate buyer of the artworks to whom art objects are sold.
  5. The marketplace and Auction House “TimaxArt” should also clarify to the client whether it is acting in respect of its own stock or as agent. This would include the disclosure of actual or potential conflicts of interest where the marketplace and Auction House “TimaxArt” is not operating in its own name, but through a company of which it is the sole owner or beneficiary or whereof it may be a partner or holder of a material interest.
  6. The marketplace and Auction House “TimaxArt” maintain records of all these checks.

 

  1. Client identification and verification

Identification of the persons involved in artwork transactions

TimaxArt utilizes customer identification procedures to validate the true identity of its clients. Documenting and maintaining these identification procedures enhances TimaxArt’s ability to prevent money laundering activities.

  1. The ‘contracting party’ is the person or entity with which the marketplace and Auction House “TimaxArt” forms a contractual relationship. This contracting party may not necessarily be the owner of the artwork and may be an individual, entity or acting on behalf of a third party.
  2. Client identification must be carried out before entering into a business relationship.
  3. Identification of an individual requires obtaining the name, date of birth, address and such further information that may be appropriate or required by law or regulation.

 

Our standard KYC requirements includes to provide the following:

If the ‘contracting party’ is indicated as a company:

- Certificate of incorporation;

- Mem and Arts;

- Certificate of good standing if the company is older than 1 year;

- Appointment of director and shareholders;

- Register of Directors and Members;

- Power of Attorney and Deed of trust (when applicable);

(All documents must be certified by a notary, lawyer or a bank).

 

For all beneficial owners (or private accounts):

- Passport or ID copy;

- Utility bill less than 3 months (as proof of address);

- OR client’s last bank statement;

- Client’s background;

- Description about source of funds.

 

Client identity verification

Client identity verification involves obtaining supporting evidence that reinforces the claim of identity. Verification of identity will depend on the type of business relationship, as follows:

  • Natural persons: identity will be verified on the basis of official identity papers or other reliable, independent source documents, data, or information as may be appropriate under the circumstances. (This means requesting identity papers along with a proof of residency).
  • Corporations, partnerships, foundations: identity will be verified on the basis of documentary evidence of due organization and existence. (This also means requesting and checking a document proving that such entity is allowed to acquire or sell an art object).
  • Trusts: identity will be verified on the basis of appropriate evidence of formation and existence or similar documentation. The identity of the trustees will be established and verified. (This also means requesting and checking a document to prove that such entity is allowed to acquire or sell an art object).

Identification documents, if used for verification purposes, must be current at the time of establishing the business relationship and copies of such documents must be obtained.

TimaxArt verifies the above information via at least one of the following methods:

- Reviewing the latest audited accounts in case of a corporate entity;

- Utilizing a business information service or attorney to enquire about the entity;

- Leveraging independent information verification services e.g. databases;

- Acquiring previous bank references;

- Visiting the corporate entity;

- Contacting the corporate entity using the contact details provided.

In the context of client identification, the following are categories of persons that may require enhanced due diligence:

  • Persons residing in and/or having funds sourced from countries identified by credible sources as having inadequate AML standards or representing high risk for crime and corruption.
  • Persons engaged in types of economic or business activities or sectors known to be susceptible to money laundering.
  • Certain categories of “Politically Exposed Persons”, referring to individuals holding or, as appropriate, having held, senior, prominent, or important public positions with substantial authority over policy, operations or the use or allocation of government-owned resources, such as senior government officials, senior executives of government corporations, senior politicians, important political party officials, etc., as well as their close family and close associates.

Enhanced due diligence can be costly and time consuming. Depending on an our individual risk exposure, different means for conducting enhanced due diligence may be appropriate, ranging from in-depth background checks possibly using specialized firms to internet searches using appropriate keywords and combinations words.

Non face-to-face transactions

Business relationships that are conducted through the Internet, telephone or similar technology or nare otherwise through non face-to-face interactions will be assessed by the marketplace and Auction House “TimaxArt” prior to transactions taking place, and in some circumstances enhanced due diligence may be appropriate for such relationships.

Recordkeeping

TimaxArt keeps all relevant documents and service records for the minimum time as determined by applicable law.

Administration

An AML Compliance Officer administers the anti-money laundering policy at TimaxArt. The board’s responsibilities include interpreting, revising and implementing TimaxArt’s AML policy.

Any staff identifying an account or transaction as suspicious is required to report the case to the Compliance Officer. The Officer will review the facts and determine whether the suspicion is allayed or whether a report to the regulator is required.

 

 

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