1. We are, in law, a shopping platform. We are not a financial services company. We are not subject to registration or regulation as a financial services provider under financial regulation or under financial crime law and regulation.
2. We are required to comply with sanctions laws. Such laws apply to all businesses operating in an international environment. Sanctions laws require that we do not conduct transactions in certain circumstances and, in some cases, that reports of attempted transactions must be reported to relevant authorities. Our sanctions compliance is provided by our payment services provider, Stripe. We rely on its decisions. In the case of content creators, this may mean that moneys sent by supporters cannot be sent to you - and because of operation of law may be frozen in the hands of our payment services provider; in the case of supporters, it may mean that your payment is rejected by our payment processor.
3. Our payment services provider is a world leader in financial crime risk and compliance. It checks all transactions against a range of financial crime risk databases and uses a range of policies and techniques to reduce such risk. We rely on it to keep us free of allegations of money laundering and the funding of any offence including but not limited to terrorism. If Stripe says "no," then it's a hard "no" and we do not attempt to go behind its decisions. Ever.
Moreover, if Stripe says "no" to a content creator, we will immediately and permanently terminate the content creator's account with us and will not enter into any discussion. In fact, counter-money laundering, etc. laws, prevent us from doing so. As with sanctions compliance, in the case of content creators, this may mean that moneys sent by supporters cannot be sent to you - and because of operation of law may be frozen in the hands of our payment services provider; in the case of supporters, it may mean that your payment is rejected by our payment processor.
4. Stripe applies risk assessments to jurisdictions. This means that some jurisdictions are not available to make payments from and others are not available to make payments to. In addition to the above, we may elect to reject applications for content creators from certain jurisdictions for any reason we consider, in our absolute discretion, may create any financial crime, sanctions, political or other risk to us even though such jurisdiction may be on the approved list of one or more of our providers.
5. As a financial crime risk limitation tool, the maximum amount that any supporter may pay to any content creator in a single month is GBP25.00.
6. In addition to the excellent financial crime protection provided by Stripe, we have some of our own.
There are certain types of financial crime that are committed via on-line platforms.
The first relates to the product sold: for example, does it exist? Is it genuine? This does is not a concern on HonourPay as the product is a downloadable file, over which we as administrators have control, and which is served from our own servers. No product, no sale.
Secondly, there is "transaction laundering." What is happening is the use of the e-commerce platform as an unlicensed money transmitter. A product is marketed but it is always out of stock except to those with a special code or the link to a fictitious product is not made public. In the money laundering model, this is simply a way of using the platform as an intermediary to transmit money held in one account to another. We reduce this risk by accepting only those forms of payment accepted by Stripe. The immediate effect of this is that HonourPay is not exposed to multiple payment platforms or bank transfer systems where the controls on the amounts that can be transmitted may not be as strictly policed as e.g. credit card limits. Secondly, credit card companies are on the look-out for suspicious transactions, so they are the first line of defence; the second line of defence is that provided by Stripe and its transaction analysis which looks for patterns of activity that are outside expectations; the third line of defence is our limits on transactions.
There is a variation on this theme and this is not "laundering" but is funding a future crime, or paying for illegal products. In this variation, the purpose of the "purchase" is to send money to, for example, a drug dealer. We keep an eye on transaction volumes: the reality is that the vast majority of content providers will receive at most one or two "thanks" each day and most of those are unlikely to be a) for enough to buy even a small packet of drugs and b) unlikely to be from someone in a similar geographical region.
Often, such criminals will try to attach multiple seller accounts to the same bank account. That cannot happen at HonourPay. We ensure that only one receiving Stripe account is attached to a single Content Creator. Of course, content creators may create multiple identities but if they did, they would need a separate Stripe account for each and, if they did that, both we and Stripe would notice because we manually review all new accounts even before any financial information is obtained.
So while abuse of HonourPay is unlikely in any case, even if there is some, we're watching for it.
Third, there is payment system fraud. This is again not money laundering but there are money flows. It can result from so-called "account takeover," from stolen credit card information and from mobile payments which are a lot less secure than people think. We are a very unattractive platform for this type of crime. The object of such fraud is to spend as much as possible, as fast as possible and to get the payment into the "seller's" bank account and transferred out as fast as possible (that's where there is laundering, not in the purchase) and, to make an additional profit, to get the goods delivered to a fake address as soon as possible so they can be sold at a profit. Our maximum transaction limit, which allows a maximum of GBP25 per month to be paid by any supporter to any content creator means that this type of offence would be high risk for little reward; and there is nothing tangible to sell to make a secondary profit.
You might ask why, if we are not required to register under counter-money laundering laws, we would do all of this.
The answer is simple: it's what we do. Vortex Centrum Limited, which is behind HonourPay, is part of a private group of companies that has specialised in counter-money laundering, anti-terrorist financing and other financial crime risk and compliance for more than 25 years. It is led by Nigel Morris-Cotterill, widely regarded as one of the world's leading financial crime risk strategists. One of the things we emphasise is that even businesses that are not required to comply with systems and controls are vulnerable to money laundering and if they launder they are liable to prosecution as money launderers for which the penalties are severe. We even have on-line training for non-financial sector businesses at https://www.financialcrimeriskandcompliancetraining.com . So, it would be strange if we were not alert to the risks and looking for ways to mitigate them within the way we create our business.
1 July 2021