The Mauritius Trust With a Crypto Source

FICA requires the firm to identify the client and the beneficial owners, understand the ownership and control structure, and conduct enhanced due diligence for higher-risk relationships. For a company, beneficial owners normally include natural persons holding 25% or more of the shares or voting rights, and anyone who exercises effective control. Here the company is wholly owned by a trust, so the firm must look through to the trust: the trustees, settlors, beneficiaries (or class of beneficiaries), protector and any other person with control. The 28-year-old sole director with no experience is a control red flag and should be interviewed. The protector is a former municipal official and may be a PEP; the firm must screen against PEP lists and assess the risk, including the source of wealth. Source of funds described only as 'digital asset gains' is not sufficient: the firm needs the exchange records, wallet provenance, bank statements and a clear source-of-wealth narrative. The missing beneficial ownership register and beneficiary schedule must be obtained. Senior management approval is required before establishing a PEP relationship or any high-risk relationship.

The account should not be activated before the long weekend. A time-sensitive trade is not a reason to bypass CDD; it is a reason to escalate. The firm should tell the relationship manager that no trading can occur until identity, beneficial ownership, PEP status and source of funds are verified. It should run the risk rating tool, obtain the trust deed and beneficiary schedule, identify and verify the beneficial owners, screen all parties against sanctions and PEP lists, and obtain senior management sign-off. The crypto source requires enhanced scrutiny: the firm should trace the R5 million to the exchange wallet and obtain evidence of the underlying gains. If the client cannot provide a credible explanation, or if the structure appears designed to conceal ownership, the firm should consider filing a suspicious transaction report with the FIC and must not tip off the client. It may decline or exit the relationship. Even if the client is ultimately approved, the initial deposit should be held in a client account and not used for trading until verification is complete.

Ongoing monitoring should be risk-based and documented. The firm should set transaction monitoring for the account, including large or unusual trades, rapid movement of funds, trading inconsistent with the stated mandate, and transfers to or from crypto exchanges. It should refresh CDD periodically and on trigger events, such as a change of trustee, protector, director or beneficial owner. The PEP status should be reviewed at least annually and when the person's role changes. The firm should keep the beneficial ownership chain up to date and re-screen sanctions lists. The relationship manager should be required to escalate any request to bypass controls. The compliance function should review the file before activation and afterward, and the firm should record why the risk was accepted. If the client refuses to provide ownership information, the firm should consider termination and a STR. Training should cover trust structures, PEPs and crypto source-of-funds red flags.