Financial Crime Risk Appetite Statement
Combating financial crime and unethical business activities belongs to the corporate mission and identity of BENDURA Funds Inc. (BFLI). BFLI is committed to caring that investment products being managed by BFLI are not misused for any type of financial crime like money laundering, terrorism financing, fraud, and corruption. As a consequence, adherence to applicable law is fundamental for our business activities. We continuously improve and update our processes to ensure compliance with applicable law. By defining clients and business activities for which we do not have a risk appetite, BFLI goes one step further in combating financial crime. As a result, we have implemented transparent standards and reserve the right to reject any client, payment, or business that is not consistent with our risk appetite.
Monitoring for suspicious activity
Onboarding of promoters
BFLI provides private label funds as tailored solutions designed in accordance with the preferences of a fund promoter. Before setting up a fund to meet the promoter’s needs, the fund promoter is subject to a rigorous customer due diligence. The examination comprises the promoter’s economic interest in the fund, the business activities of the promoter, its clients, and the associated geographical risks. According to our risk based approach, a promoter might be required to provide additional information or documents and BFLI reserves the right to reject the business case.
Onboarding of investors
In compliance with the Liechtenstein Due Diligence Act and Due Diligence Ordinance, investors are screened and monitored in order to prevent investment funds from being misused for criminal purposes. An investor may be requested to provide comprehensive information about the contracting party, the beneficial owner, the source of wealth, the source of funds, and the associated money-laundering and terrorism-financing risks. The scope of the documentation requirements is risk based and depends on the type of fund and the type of client. Any irregularities might lead to a termination of the business relationship and to a report to the Liechtenstein Financial Intelligence Unit (FIU).
Onboarding of fund management servicers
A private label fund being managed by BFLI may delegate duties to external parties. The delegation typically concerns portfolio management, risk management, or marketing activities. Each service provider is subject to a comprehensive due diligence and is requested to provide documentation regarding staff and ownership, licence, corporate governance, internal processes, and profitability in order to prevent financial crime and to foster best practices. Any irregularities or a suspicious behaviour might lead to a termination of the delegation.
Monitoring for suspicious activity
Our framework for combating financial crime does not only include ordinary customer due diligence or enhanced due diligence actions but also monitoring for and reporting of suspicious and prohibited transactions. We may request our clients and service providers to provide information regarding transactions and trades flowing through our investment vehicles. If they cannot respond sufficiently or within a timely manner, we also reserve the right to reject any transaction and might file a report to the FIU.
We have no appetite for
- investors who have their residence, and
- service providers who have their register office
in countries designated by the Financial Action Task Force (FATF) as “High-Risk Jurisdictions subject to a Call for Action” or “Jurisdictions under Increased Monitoring” unless the countries are within the EEA.
Updated as of February, 2021, the following countries are FATF designated “High-Risk Jurisdictions subject to a Call for Action”:
- Democratic People's Republic of Korea (DPRK) [i.e. North Korea]
Updated as of June, 2021, the following countries are FATF designated “Jurisdictions under Increased Monitoring” and are not member of the EEA:
In addition, the following countries do not fit to our risk appetite:
Democratic Republic of the Congo (ISO 3166 code: CF)
Trinidad and Tobago
Republic of the Congo (ISO 3166 code: CG)
BFLI has no appetite for being engaged in one of the following sectors:
a) production, maintenance, repair, or trade in any product or activity
- deemed illegal under the relevant host country law or under international conventions and agreements; or
- subject to international bans, e.g. some pharmaceuticals, pesticides and herbicides, ozone depleting substances, PCB's, or wildlife or products regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
b) production, maintenance, repair, or trade in weapons and ammunitions. Exceptions are possible for such activities operated from the territory of
- a member country of the European Economic Area in compliance with the relevant European law or
- the United States of America;
c) gambling, casinos and equivalent enterprises;
e) currency exchange offices;
f) crypto currencies for which no one acts as issuer;
g) accompanying unregulated methods of crowd investing including initial coin offerings;
h) shell companies (companies without substance) without a distinct economic purpose;
i) shell banks (a bank that has no physical presence in the country in which it is incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject to effective consolidated supervision);
j) nuclear energy; production or trade in radioactive materials; this does not apply to the purchase of medical equipment, quality control (measurement) equipment, and any equipment where the radioactive source is considered to be trivial or adequately shielded;
k) activities prohibited by the relevant host country legislation or international conventions relating to the protection of biodiversity resources or cultural heritage;
l) shipment of oil or other hazardous substances in tankers which do not comply with the International Maritime Organization’s requirements;
m) trade in goods without legally required export, import, or transit authorisations from the relevant countries;
n) products, services, or activities involving adult entertainment, human trafficking, sexual violence, pornography, or prostitution.
As a matter of principle, BFLI has no appetite for investors who fulfil one of the following characteristics:
a) having been sentenced to imprisonment for more than one year;
b) having conducted intentional or wilfully negligent or repeated accidental breaches of law regarding financial crime;
c) being associated with evidence of money laundering (e.g. suspicious behaviour, operating with unnecessary complex structures, suspicious transactions, etc.) which has not been dispelled;
d) showing reluctance to provide sufficient information or documentation to demonstrate compliance with the standards set forth in this statement.
Adherence to international sanctions
International sanction are instruments of public policy that impose restrictions on trade, financial transactions, capital, the ownership of assets, communication, or travel by governments. International sanctions are part of diplomatic efforts to protect national security interests, or to protect international law, and to combat threats to international peace and security. For BFLI, these values are worth protecting and therefore we do not enter into or maintain a sanctioned business relationship with an entity or individual designated on any of the below mentioned sanction lists:
a) the United Nations Security Council Sanctions List (UN);
b) the Consolidated List of European Union Financial Sanctions (EU);
c) Liechtenstein ordinances implementing international sanctions;
d) the sanctions and embargos list of the Swiss State Secretariat for Economic Affairs (SECO);
e) the UK financial sanctions list published by the Office of Financial Sanctions Implementation HM Treasury (OFSI);
f) sanctions lists administered by the United States Office of Foreign Assets Control (OFAC), including the List of Specially Designated Nationals and Blocked Persons;
g) sanction lists administered by Germany, France, Italy, Japan, and Canada.
Restrictions and exemptions
BFLI not only offers widely distributed investment funds with many investors that collectively invest according to an investment policy but also secondary purpose funds being used for wealth structuring of an individual or a small group of individuals, corporate structuring, tax optimisation, succession planning, or anonymity. Secondary purpose funds are considered as high risk. For these fund categories, BFLI reserves the right to ask for additional documents for better understanding the purpose of the business and type of client including the source of wealth and funds of the beneficial owner and to maintain the securities register and to not deliver the fund units via the clearing systems in order to be able to identify the beneficial owners of the fund units at all time.
Subscriptions and redemptions from banks, investment firms, fund trading platforms, central securities depositories, and insurance undertakings, acting as a direct contracting party in their own name for both their own account and on behalf of their clients will not be accepted unless the entities’ domicile is in one of the following countries and the associated risk with reference to money-laundering, organised crime, and terrorist financing is considered to be minor.
Isle of Man
Saint Pierre and Miquelon
Wallis and Futuna
Clients not subscribing or redeeming fund units via banks, investment firms, fund trading platforms, central securities depositories, or insurance undertakings being domiciled in one of the above stated jurisdictions need to be on-boarded directly. In addition, any indication that the risk with reference to money-laundering, organised crime, and terrorist financing is increased implies that the clients need to be onboarded directly. For these cases, BFLI reserves the right to require additional documents to maintain the securities register and to not deliver the fund units via the clearing systems.