Know Your Customer (KYC), Anti-Money Laundering (AML) & Surveillance Policy
INTRODUCTION
This Policy sets out how AKJ FX meets and exceeds its obligations under United Kingdom law to combat money laundering and terrorist financing. Within the UK, financial services and related businesses must comply with legislation such as:
• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017(as amended)
• Proceeds of Crime Act 2002
• Terrorism Act 2000
• The Financial Services and Markets Act 2000
• Payment Services Regulations 2017
• And relevant guidance issued by the Financial Conduct Authority (FCA) and other authorities
The primary objectives of these regulations are to protect consumers, preserve the integrity of the financial system, and prevent it from being abused for illicit activities.
In the context of digital assets and cryptocurrency, the UK has steadily developed its regulatory stance through FCA guidance and evolving rules around cryptoasset registration. AKJ FX is committed to full compliance with the relevant UK regulatory framework.
AML-CFT
AML-CFT refers to Anti-Money Laundering and Counter Financing of Terrorism, which are internationally recognized measures designed to deter criminals from abusing the financial system for laundering proceeds of crime or funding terrorism. Given the pseudonymous nature of digital tokens and cryptocurrency transactions, a robust AML-CFT framework is critical.
KYC/AML PHILOSOPHY OF AKJ FX
The AKJ FX Anti-Money Laundering and Know Your Customer Policy (“AML/KYC Policy”) aims to protect AKJ FX from being used—intentionally or unintentionally—for illegal activity.
UK regulators and international bodies require AKJ FX to implement clear internal policies to mitigate money laundering, terrorist financing, corruption, bribery, and other illicit activities. We must also take prompt action when potentially suspicious activity arises.
AKJ FX firmly believes that “money-laundering prevention” and “knowing your customer” are integral components of risk management, not mere statutory obligations. A structured AML/KYC approach helps AKJ FX:
1. Understand its customers and their dealings.
2. Manage risk effectively.
3. Fulfill its obligations under the UK AML/CFT regime.
Objectives of the Policy
1. Establish a comprehensive Customer Due Diligence (CDD) process before client registration.
2. Ensure records of transactions are accurately monitored and maintained.
3. Maintain records of all series of integrally connected transactions in any given period.
4. Monitor suspicious transactions and report them promptly to the National Crime Agency (NCA) or relevant authority.
5. Set guidelines to discourage money laundering or terrorist financing via our platform.
6. Adapt swiftly to new guidelines or changes in UK law or FCA regulations.
WHAT IS ANTI-MONEY LAUNDERING (AML)?
Anti-Money Laundering (AML) refers to laws and regulations designed to prevent criminals from disguising illegally obtained funds as legitimate income. AML rules target a broad spectrum of offenses—from tax evasion and corruption to market manipulation.
Financial institutions often use AML software to detect suspicious activity or high-risk customer profiles. This software typically:
• Checks customer names against official sanctions and watchlists (e.g., HM Treasury’s financial sanctions list, or other UK/international databases).
• Maintains transaction records and generates alerts for compliance staff.
AML is closely tied to Know Your Customer (KYC) obligations, which entail verifying customers’ identities, understanding their source of funds, and continuously monitoring their transactions. These measures help ensure compliance with UK AML regulations.
Cryptocurrency exchanges and digital asset platforms, including AKJ FX, also fall under the FCA’s AML regime if they conduct certain regulated activities, such as providing cryptoasset exchange services or custodian wallet services. Hence, KYC and AML checks play a crucial role in meeting UK compliance standards in the crypto space.
WHY KNOW YOUR CUSTOMER (KYC)?
KYC is the process of collecting identifying information and verifying the identity of customers to prevent fraud, money laundering, terrorist financing, or other illicit activities.
KYC in Practice
• KYC often begins before an individual or entity can open an account. AKJ FX must verify a customer’s identity in accordance with Money Laundering Regulations 2017.
• Common Identifying Documents may include a government-issued photo ID (passport, driver’s license) and proof of address (bank statements, utility bills).
• Once on-boarded, customers may be subject to ongoing checks (Enhanced Due Diligence where warranted) to ensure their activities remain consistent with their risk profile.
• The FCA also expects UK businesses to classify customers by risk level and adjust monitoring accordingly.
In the cryptocurrency space, many exchanges allow account creation without immediate KYC, but unverified accounts typically have limited functionality (e.g., lower deposit/withdrawal limits).
CONTENT OF AML/KYC POLICY
AKJ FX adheres to industry best practices and UK regulations by implementing rigorous controls:
1. Verification Procedures
2. Sanctions and PEP List Screening
3. Appointment of Compliance Officers
4. Transaction Monitoring
5. Risk Assessments
1. Verification Procedures
AKJ FX follows a Customer Due Diligence (CDD) standard to prevent illegal activity. This involves confirming a customer’s identity and evaluating their potential risk.
1.1 Identity Verification
• AKJ FX requires Users to provide reliable, independent source documents (e.g., passport, driver’s license, utility bill, bank statement).
• We store and handle personal data in accordance with UK GDPR and relevant Data Protection Act provisions.
• AKJ FX may use legal methods to validate document authenticity, with further checks for high-risk or suspicious Users.
• We can conduct ongoing identity verification if we suspect illegal activity or if the User’s details change.
• Verified identity helps AKJ FX mitigate legal liability if the platform is used illegally.
2. Sanctions and PEP List Screening
AKJ FX screens all potential and existing customers against:
• UK, EU, and UN sanctions lists
• Politically Exposed Persons (PEPs) registers
This is done at onboarding and on a regular basis, especially if automated alerts flag potential issues. AKJ FX may use third-party solutions (e.g., World-Check or other reputable databases) for these checks.
Regular re-screening ensures that AKJ FX can detect if a previously cleared customer is newly added to a watchlist or PEP list.
3. Compliance Officer
AKJ FX appoints a Compliance Officer (or Officers) with the authority and responsibility to enforce the AML/KYC Policy. Their role includes:
a. Collecting User identification and verifying it.
b. Maintaining and updating internal policies consistent with UK AML laws and FCA guidance.
c. Monitoring transactions for unusual or suspicious patterns.
d. Implementing a record management system for safe retrieval and retention of relevant documents.
e. Regularly updating risk assessments.
f. Coordinating with the National Crime Agency (NCA) and other law enforcement bodies when necessary.
4. Monitoring Transactions
AKJ FX performs continuous monitoring of Users’ transactions to detect patterns of activity that deviate from a customer’s known profile or that exhibit red flags:
1. Daily Checks against sanctions and watchlists.
2. Aggregating Transaction Data to identify suspicious behavior (e.g., structuring transactions, unusual deposit/withdrawal patterns).
3. Case Management to investigate any alerts, escalate suspicious cases, and file necessary reports (e.g., SARs – Suspicious Activity Reports) with the NCA if required.
AKJ FX reserves the right to:
• Request additional documents or explanation from the User.
• Suspend or terminate a User’s account if there are strong indications of illegal activity.
• Report suspicious transactions to the NCA or relevant authorities.
5. Risk Assessment
AKJ FX acknowledges four critical risk domains in digital assets:
1. Dispersed Risk: The decentralized nature of many crypto networks can obscure the true origin of funds.
2. Anonymity: Pseudonymous addresses can facilitate illicit activity if not properly scrutinized.
3. Lack of Control: Digital assets may be stored on external wallets or devices, which can be stolen, hacked, or coerced.
4. High Loss Potential: Large sums can be moved within seconds, complicating theft prevention or recovery.
Under the risk-based approach advocated by the FCA and UK AML regulations, AKJ FX allocates resources proportionately to identified risks. This ensures customers, products, and geographies with higher inherent risk receive enhanced due diligence and monitoring.