ANTI-MONEY LAUNDERING

General Introduction

All StateTrust Group companies adhere to regulations, standards and laws established to monitor and prevent money laundering and the diversion of resources to fund illegal activities, such as terrorism and drug trafficking.

StateTrust Life & Annuities is an insurance company licensed in the British Virgin Islands. The Company’s Life, Retirement and Education products are not sold to U.S. residents or citizens.

The very nature of StateTrust Life & Annuities’ operations and transactions is not conducive to situations that enable illegal acts, such as money laundering or the use of legal mechanisms to divert funds for terrorist purposes (or other illicit purposes), given the time horizons of our company’s plans and policies, and penalties imposed for early redemption during the first years of a plan.

Nevertheless, at StateTrust Life & Annuities, we carefully monitor the source of our customers’ funds, conducting a thorough background investigation, and regularly updating our customers’ personal and financial data.

Anti-Money Laundering Actions

Anti-Money Laundering Actions (AML) are designed to establish legal control measures for companies operating in the financial sector (among other institutions), in order to prevent asset laundering or report illegal or suspicious activities.

Money laundering refers to operations aimed at filtering or hiding resources obtained from criminal or fraudulent activities, through transactions that make these resources appear to have been obtained or generated in a legitimate manner.

Today, financial institutions around the world are required to report suspicious transactions to authorities in their country or jurisdiction.

U.S. federal laws relating to money laundering were implemented under the Bank Secrecy Act of 1970.

The British Virgin Islands also have regulations in place against money laundering and diversion of resources to fund terrorist activities, spanning the entire financial sector, including the insurance industry.

These standards are mandatory for all firms with licenses issued in the British Virgin Islands, and have the following overall goals, among others:

• To fully identify all customers and businesses operating in the British Virgin Islands.
• To maintain accurate records of transactions, individuals linked to these transactions, and amounts.
• To analyze, monitor and prevent potential risks from foreign transactions, which could potentially fall in the category of money laundering or activities to finance terrorism.

Secret Banking Law

This Law (also known as the Currency and Foreign Transactions Reporting Act) requires financial institutions located in the United States to work with various government agencies in this country in the detection and prevention of money laundering.

This law was approved by the U.S. Congress in 1970. Part of the Act establishes a set of regulations to prevent, monitor and notify competent authorities regarding transactions that may fall within the scope of money laundering.

Patriot Act

The Patriot Act, which serves as an amendment to the Bank Secrecy Act, was implemented in response to the terrorist attacks of September 11, 2001, in the United States. This set of regulations seeks to prevent and punish terrorist acts carried out on U.S. soil or anywhere in the world.

For financial institutions, this law has these objectives:

• To strengthen U.S. legal measures to prevent, detect and bring to justice any acts of international money laundering and financing of terrorist acts.
• To ensure thorough scrutiny of foreign jurisdictions and financial institutions in other countries, as well as certain international transactions and accounts that may be used for criminal purposes.
• To require that the financial sector generate reports regarding potential money laundering activities.
• To strengthen mechanisms to both avoid the use of the U.S. financial system for the personal gain of members of the international banking industry, and to facilitate the repatriation of stolen assets to their rightful owners who are citizens of other countries.

Smart Electronic Monitoring System

Our company has developed software applications to dynamically monitor the nature, origin and purpose of all relationships and transactions that are processed by StateTrust Life & Annuities.

These tools strengthen our compliance area, enable us to identify potential problems, and generate reports for the appropriate international authorities.

Every day, our compliance systems are updated, in order to record and implement all regulatory changes taking place around the world.

Global Databases

In order to comply with various laws regarding money laundering and diversion of resources to fund terrorist activities (and all other illegal activities), financial institutions are required to implement a process to register the names of customers in different global databases.

The most important ones are:

• OFAC
• World Compliance Check
• FBI
• Interpol
• List of all countries

 

Each night, lists are automatically updated and all related websites are reviewed by search engines. If there are any changes to a profile or new information is added to the lists, the database is immediately updated.

For each transaction recorded, the system has the ability to generate a report that may be submitted to a specific regulatory or law enforcement agency.