Anti-Money Laundering (AML) Policy

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1. INTRODUCTION

ANTHEM BIOSCIENCES LIMITED (hereinafter referred to as “Anthem”/“Company”), incorporated in Bangalore on 13th June 2006 under the provisions of Companies Act, 1956, having CIN: L24233KA2006PTC039703, is a Contract Development & Manufacturing Organization (CDMO) providing discovery biology services, synthetic chemical research and analysis, chemical synthesis, manufacturing of specialty chemical products, analytical method development, and related services. Over the years, the Company has forward integrated into contract manufacturing with a view to benefit from the synergies arising out of its involvement in the development of the product.

Anthem offers a whole gamut of services, independently as well as collaboratively, dedicated to enabling and sustaining global research efforts in the discovery of new compounds by pharmaceutical, biotechnology, specialty chemicals, agriculture chemicals and material science companies worldwide.

2. PURPOSE AND SCOPE

Money Laundering is the process of moving illegally acquired money through financial systems so that it appears to be legally acquired and integrate such money in the economy. The Prevention of Money Laundering Act, 2002 (“PMLA” OR “Act”) was brought into force with effect from July 1, 2005 which prevents the aforementioned activity and  Section 3 of PMLA describes the offence of money laundering as under: 

“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering.”

The purpose of this Anti-Money Laundering Policy (“Policy”) is to prevent any involvement by Anthem in money laundering activity even where the involvement may be unintentional. It requires our directors, officers, other employees and those who work with us to recognize questionable financial transactions, and to take steps to conduct appropriate additional due diligence.

3. OBJECTIVES OF AML POLICY

This Policy is a guidance document that provides direction to the Company to effectively implement the Anti Money Laundering regulations through controls and processes.

  1. To prevent the Company being used as a vehicle for money laundering.
  2. To establish framework for appropriate AML procedures and controls in the operations/business processes of the Company.
  3. To ensure compliance with the laws and regulations in force from time to time and avoid penal action against the Company and its employees.
  4.  To protect the Company’s reputation.
  5. To assist law enforcement agencies in their effort to investigate and track money launderers.
  6. To lay down AML compliance norms (through standard operating procedure) for the effective implementation of the policy throughout the policy tenure starting from solicitation.
  7. To modify and enhance the processes suitably from time to time.

4. APPLICABILITY

This Policy is applicable to all individuals working at all levels and grades, including board of directors, senior managers, officers, other employees (whether permanent, fixed-term or temporary), consultants, contractors, trainees, interns, seconded staff, casual workers and agency staff, agents or any other person acting on behalf of Anthem anywhere in the world.

5. MONEY LAUNDERING

Typically, the money laundering happens in the following three stages: –

  1. Placement: This is the initial stage and during this stage, the money generated from illegal/criminal activity such as sale of prohibited items, illegal gambling, sale of drugs, illegal firearms, sale of expired or fake products etc. is disposed of. Funds are deposited into financial institutions or converted into negotiable instruments such as money orders or traveller’s cheques. For example, cash received by the sale of fake pharmaceutical products through an illegal channel can be taken to a bank and changed into a money order or traveller’s cheque.
  2. Layering: In this stage, funds are moved into other accounts in an effort to hide their origin and separate illegally obtained assets or funds from their original source. This is achieved by creating layers of transactions, by moving the illicit funds between accounts, between businesses, and by buying and selling assets on a local and international basis until the original source of the money is virtually untraceable. Thus, a trail of unusually complex transactions is created to disguise the original source of funds and thereby make it appear legitimate. For example, money can be moved into and out of various offshore bank accounts through electronic funds transfers/wire transfer.
  3. Integration: Once the illegitimate money is successfully integrated into the financial system, these illicit funds are reintroduced into the economy and financial system and often used to purchase legitimate assets, fund legitimate businesses, or conduct other criminal activity. The transactions are made in such a manner so as to appear as being made out of legitimate funds.

This stage ensures achievement of the objective of the money launderer – Conversion of illegal money to legal money and taking it back from the system.

6. POTENTIAL MONEY LAUNDERING ACTIVITIES

While an exhaustive list cannot be provided, set out below are indicative activities or actions or situations or parties that Company should be careful about:

  1. Customers or suppliers who are reluctant to provide complete information and/or provide insufficient, false, or suspicious information or who are unwilling to comply with Anthem’s KYC norms as may be in force from time to time;
  2. Customers or suppliers who appear to be acting as an agent for another company or individual, but decline or are reluctant to provide information regarding that company or individual;
  3. Customers or suppliers who express concern about, or want to avoid, reporting or record- keeping requirements;
  4. The purchase of products, or a larger volume purchase, that appears to be inconsistent with a customer’s normal ordering pattern, and in the absence of any legitimate business reason such as a special price promotion;
  5. Complex deal structures or payment patterns that reflect no real business purpose or economic sense;
  6. Requests for payment to be made through an unrelated country or to an unrelated third party;
  7. Multiple partial payments from various parties on behalf of a single customer and/or multiple partial payments from various locations. Also included are “double endorsed” or “third party” cheques, where a customer endorses over to a company as payment for their invoice a cheque that was originally made out to the customer;
  8. Customers or suppliers whose address is not a physical site;
  9. Customers making a funds deposit followed by an immediate request that the money be wired out or transferred to a third party, or to another firm, without any apparent business purpose;
  10. Customers paying in one form of payment and then requesting a refund of the payment in another form

7. COMPLIANCE STEPS

Appointment of Designated Director and Principal Compliance Officer 

As required under the Act and as defined under Rule 2 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005:

  1. Managing Director of the Company will be the “Designated Director”.
  2. Chief Finance Officer of the Company will be the “Principal Compliance Officer (PCO)” to ensure that the Board approved AML policy is being implemented effectively.
  • The PCO should: 
    1.  Monitor compliance by the company’s employees (full time or part time, contract employees and consultants), officers and board of directors (collectively “Employees”) acting on behalf of Anthem anywhere in the world as applicable.
    2. Ensure that Employees acting on behalf of Anthem have appropriate resources and are well trained to address questions regarding the application of the program in light of specific facts.
    3. Be able to act independently and report to the designated director on money laundering issues.
    4. have timely access to customer identification data, other KYC information and records. 
    5. be responsible for AML compliance and regular monitoring of implementation of the AML Policy and Procedures. The PCO shall further have following role and responsibilities:
      • Overseeing and coordinating the implementation, communication, training and ongoing monitoring of the AML Program throughout the operation.
      • Advise the detailed responsibilities of the respective AML Compliance functionaries in consultation with the respective Business Heads from time to time.
      • Review all reports required to be submitted to regulatory/law enforcement authorities and ensure that the reports are submitted on a timely basis.
      • Interacting with the Regulatory/enforcement authorities on AML matters.
  • Further Steps for compliance:
    1. Know your business partners: Where appropriate, Company should conduct integrity assessments and other due diligence exercises and be familiar with business practices of customers and suppliers.
    2. Monitor financial activity: Company is required to observe and record payments and transactions consistent with all established policies and procedures and follow global financial standards for acceptable forms of payment.
    3. Keep complete records: Company should always keep current, complete and accurate records of every business transaction.
    4. Report any suspicious activity: Every Employee shall have an obligation under this AML Policy to immediately and, without delay, report to the PCO any suspicious transaction.
    5. Reporting/action by the PCO: When setting up internal procedures, the PCO may adopt a ‘risk-based approach’ (as elaborated below) to KYC and AML compliances. Consequently, there will be circumstances when it will be both necessary and permissible to apply commercial judgment to a report received by the PCO. Based on the facts and circumstances of an incident covered in a report, the PCO shall take one or more steps, such as (a) probe into the incident himself/herself, (b) set up an internal enquiry into the incident, (c) in case of Aggravated Cases determine and recommend whether a reporting of the incident should be made to the appropriate authority. (Aggravated Cases shall mean incidents of AML that need to be reported to relevant regulatory or enforcement authorities, for example the Financial Intelligence Unit, India. All Aggravated Cases must be escalated, without delay, by the Designated Director to the Board).
    6. Cooperate fully for enforcing anti-money laundering laws: The PCO shall be the Company’s point of contact for coordinating with all law enforcement and regulatory agencies for all compliance reporting and investigations. 
    7. Maintenance of records: Records confirming the identity of customers, suppliers, contractors, investors and other persons should be retained for such number of years as prescribed in the relevant statues or as per Company’s prescribed policy in this regard.

8. RISK BASED APPROACH

  1. The Company would adopt a risk-based approach in implementing its AML framework and would primarily comprise of Know Your Customer (KYC) and Monitoring / Reporting of suspicious transactions.
  2. Detailed processes may be prepared for various KYC procedures at new business stage, claims stage, service stage, process design stage etc.
  3. Higher level of due diligence and monitoring would be specified for business areas prone to higher money laundering risks in line with the regulatory guidelines. 
  4. Based on the risk assessment, Company may apply simplified due diligence measures only in respect of customers/clients that are classified as ‘low risk’.

9. CUSTOMER IDENTIFICATION PROCESS (KYC- KNOW YOUR CUSTOMER)

  1. Company will make reasonable efforts to determine the true identity of all customers/clients/contractors/suppliers requesting for its services especially the person who funds/pays for a business contract, either as beneficial owner or otherwise
  2. A business relationship shall be commenced only after establishing and verifying the identity of the Customer as required under the guidelines and under this Policy, except for cases where KYC is not required or can be completed post receipt of proposal.
  3. A detailed process will be designed for customer acceptance and identification with a risk-based approach to define Customer Acceptance and identification.
  4. No payments should be allowed to third parties except as provided in the contract.
  5. For the purpose of KYC norms, the Company is ultimately responsible for customer due diligence. However, the company may rely on KYC done by a third party subject to the conditions specified under Anthem Rules or guidelines.
  6. Enhanced due diligence shall be conducted for high-risk categories of clients be examining, the background and purpose of all complex or unusual patterns of transactions, which have no apparent economic or lawful purpose.

10. RECORD KEEPING

  1. The Company shall maintain all such documents, information/records of type transactions as mentioned in the regulations as well as those relating to the verification of identity of clients for a period of five years.
  2. Records pertaining to all other transactions, are to be retained as provided in the said Legislation /Regulations/ Rules but not less than for a period of five years from the date of end of the business relationship with the customer.

11. SHARING OF INFORMATION

  1. Sharing of information about customers may be permitted between organizations such as Income tax authorities, local government authorities, on request. 
  2. Sharing of information with organizations like banks, other financial institutions is permissible with due consent of the customer.

12. AML PROCEDURE AND OPERATING MANUAL

A detailed standard operating procedure manual will be put in place with the due approval of the PCO and will cover inter alia,

    1. Risk rating of customers based on profile and constitution of entity,
    2. Risk based KYC procedure.
    3. Transaction monitoring including submission of income proof for justification of source of funds.
    4. Identification and reporting of suspicious transactions.
    5. Cash acceptance and third-party payment guidelines
    6. Sanction list screening and obligation under UAPA (Unlawful Activities (Prevention) Act)

13. RECRUITMENT AND TRAINING

  1. When the Employees are hired, adequate screening procedures should be in place.
  2. Every Employee shall be trained on the AML guidelines and necessary refresher training should also be given at regular intervals. Record of training imparted to the Employees to be maintained by the Company. Records and reports together with all supporting documentation must be maintained and readily retrievable for at least five years from the date that the record is created.
  3. The role of employees in implementing any AML framework being critical, such employees may have a different training program that will help them to carry out the stipulated procedures efficiently. Any inefficient or suspicious behavior of Employees shall be dealt with suitably.
  4. All Employees/ agents must report violations of this Policy by another Employee, whatever the level of the Employee’s seniority, to an appropriate manager or the PCO in Anthem. If confidentiality is desired, the violation may be referred to senior management. Reports of possible violations of this Policy will be treated confidentially, to the extent possible, and no person who suspects a violation and reports it in good faith shall be subject to retaliation.
  5. Services of defaulting Employee Client/Customers/Contractor/Suppliers and intermediaries who expose the Company to AML related risks should be terminated and the details should be reported to Authorities as per the Act for further action.

14. RISK MANAGEMENT AND INTERNAL AUDIT

  1. Each Business function head shall be responsible to implement the AML framework, policies and procedures in his/her respective business areas of operations. The PCO shall be responsible for oversight monitoring of adequacy of policy and procedure implementation, specific AML related trainings, risk assessments and regulatory reporting.
  2. Periodic risk management reviews should be conducted to ensure that the AML risks are under control and suitable controls and procedures to be developed to mitigate the risk periodically.
  3. PCO should verify on a regular basis the Company’s compliance with policies, procedures and controls relating to money laundering activities by conducting an audit of the AML program. The audit report will comment on the robustness of internal policies and processes and make constructive suggestions to strengthen the program.

15. CORPORATE GOVERNANCE / REVIEW PERIODICITY

  1. This AML policy document of Anthem will be reviewed annually and if necessary, updated when there are significant changes in the applicable AML regulations. Changes to this policy shall be approved by the Board.
  2.  Changes notified by the regulator from time to time impacting the operational processes aspects would be updated in the respective process documents.

16. CONSEQUENCES OF NON-COMPLIANCE

  1. Failure to comply with this Policy may result in disciplinary action, up to and including termination of employment or in the case of an Anthem affiliated independent representative, termination of the representative’s contract.
  2. Failure to comply with AML and anti-terrorism laws and regulations could also potentially result in severe criminal and civil penalties for Anthem, its associates and representatives, including monetary penalty, imprisonment, fines, forfeiture of the property involved in or traceable to a money laundering transaction, and enforcement actions by regulatory authorities. The Policy is to be read in conjunction with the Act and AML Guidelines issued by Regulatory Authorities.

17. QUERIES

If an employee wants to raise any concerns or has any questions about this Policy or on how the Policy should be followed in a particular case, please write to finance@anthembio.com

18. PUBLICATION OF THE POLICY

This Policy will be posted on Anthem’s Bionet and on Company’s website.

19. DISCLAIMER AND IMPORTANT NOTICE

In case of any ambiguity on the interpretation of any of the provisions contained herein, the interpretation given by such authorized officers of the Company shall be final and binding.

20. EFFECTIVE DATE

This Policy shall come into force from the date of its approval by the board of the Company. This Policy shall revoke and replace any and all previous policies and understandings that are inconsistent with those contained herein.

The Committee shall amend the Policy as necessary or appropriate on the approval of board. Once approved by the Board, the Committee shall thereafter apprise all the major stakeholders and provide them with a copy of the approved new version. The Policy shall be reviewed at least on an annual basis.

VERSION HISTORY

This policy has been approved by the Management of the Company on 23rd May, 2023 and shall be effective from 23rd  May, 2023.