International Banking, Wealth & Markets

1. International Banking, Wealth & Markets CUSTOMER SERVICE Alexis Yiallourides, Manager IBU 3 Limassol- 0388 October 2017

2. Contents Know Your Customer – Customer’s Economic Profile A KnoKnow Your Customer – Transaction Monitoring B C Amendment 1 of AML directive Dec 2013 d.d. 07 April 2016

3. KNOW YOUR CUSTOMER – the economic profile A complete economic profile contains detailed information about: • The customer (KYC) • The customer’s business (KYCB) • Due diligence must be performed to the Bank’s satisfaction before engaging in a new client relationship and reviewed/updated periodically in accordance with the risk profile of the client 2

4. KNOW YOUR CUSTOMER – the economic profile • The customer (KYC) • Who is the customer • the UBO / physical person exercising management and control (all related entities, affiliates and closely associated persons including owners, directors, authorised signatories etc) • Identity documents (Physical Persons / Legal Entities) • Physical Persons • Valid Passport, Recent Proof of Residential Address, Bank Reference Letter, CV/Business Background, Contact Details • Legal Entities • All Legal Documents leading to the Ultimate Beneficial Owner ( the type of documents depend on the Jurisdiction). If we have a complicated structures, we require the documents of the first Shareholder and a structure signed by the director leading to the Ultimate Beneficial Owner. 3

5. KNOW YOUR CUSTOMER – the economic profile • The Customer’s Business (KYCB) • Detailed description of Business activities (size and sophistication) • Purpose of the account opening • Expected Annual Turnover • Nature of the expected transactions • Details of counterparties : • Expected destination of outgoing transfers • Expected origin of incoming transfers • Names of business associates/ partners/employer • Annual Income • Source of Income/Funds • Source of Wealth • Address of the main economic activities • No of employees • If customer is part of a group obtain info about the group and understand the role of the customer within the group – level of complexity – why? • Website address of the entity and/or the group that the company is a member of. 4

6. KNOW YOUR CUSTOMER – the Economic Profile • Source of fundsRefers to the immediate source generating the funds which are expected to be transferred in the clients’ accounts that should be legitimate. The information on be provided on these will have to be specific and justified with appropriate supporting documentation (e.g Salaries supported with pay slips, Income from business activities & dividends supported by Audited a/cs, intergroup loans supported by relevant loan agreements and supporting information relating to the financial profile of the group etc.) Additionally and where appropriate the identity of the provider of the funds must be verified . Source of wealth • Source of wealth is distinct from the source of funds and refers to the origins of the customers’ financial standing and total net worth i.e. the activities which have generated the customers’ funds and property. A more detailed investigation on the establishment of the source of funds and wealth needs to be carried out for relationships that are considered “high risk ”. Detailed investigations are also carried out when the type of products or services involved in the transactions are not consistent with the respective information held in the clients’ economic profile.(E.g. How did the customer acquire such wealth? What activities is the client involved in?) 5

7. KNOW YOUR CUSTOMER – the Economic Profile Clarifications on the Quality of KYC & KYCB information that needs to be provided : It is very important to provide : Clear description of the clients’ as well as the counterparties’ sector of business and details of activities (Avoid “short” general descriptions such as “Investments” & “Trading) The below information is a helpful guideline relating to the KYC for both clients and counterparties : - Activities (e.g. If traders which product? what type of service e.g tourist/legal/marketing? ) - Web site address - Physical economic address - Countries of operation - Size (No. of employees) Relationship of counterparties’ with the client Is the counterparty part of the same group ? (avoid general descriptions e.g. “Business Partners”. Use more specific descriptions e.g buyer/seller) 6

8. KNOW YOUR CUSTOMER – Transactions KYC & KYCB information that is required during the processing of Transactions It is very important to provide : Clear description of the transaction & relative supporting documentation (e.g. invoices, agreements, resolutions, shipping documents etc.) In the case of involvement of loan agreements , the below details are additionally required : Financial profile of the entity granting the loan Purpose and commercial reasoning of the loan Total loan amount & Interest rate ( at arm’s length ) Maturity date Details about the repayment schedule Collateral details if applicable Other relevant information Note:Third party Loans are NOT acceptable In the case that the transactions involve Online Services/Online Trading :Obtain details of the websites used by client/counterparties in order to carry out their activities, so as to : - Ensure that the websites operate in line with the declared/expected activities - Establish the way payments are actually made (e.g via payment companies etc.) 7

9. Amendment 1 in AML Directive Dec 2013 of CBC d.d07/04/2016 The amendment refers to the below main areas : • Audited financial or Management accounts should be provided to the Bank for the latest 2 financial years. • The bank should meet individual clients as well as the person(s) who ultimately own and control legal entities, (i.e. The Beneficial owner, senior management etc), within 3 months from the initiation of their banking relationship.. Meetings via Skype are acceptable . • For customers whose banking relationship was already in place at the time of the amendment, the meetings should take place latest by the date of the clients’ next periodic review . • Credit institutions are not allowed to process transactions for clients whose above meetings are not completed in due time. • Credit institutions may rely on third parties only at the outset of establishing new business relationship. Thereafter, any updates of the customers’ economic profile during the operation of their account should be obtained directly from the account holders, and in the case of legal entities from the ultimate beneficial owners or the persons who have the ultimate responsibility of decision making.

10. Contacts: For more information, please visit our website at: www.bankofcyprus.com Alexis Yiallourides, Manager IBU 3 Limassol - 0388, Bank of Cyprus Email : a.yiallourides@bankofcyprus.com

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