This Anti-Money Laundering and Counter-Terrorist Financing Policy (the "Policy") sets out the framework adopted by Basnet Attorneys and Law (the "Firm") to prevent, detect and report money laundering and terrorist financing in connection with the legal services it provides in the Kingdom of Bhutan. The Policy is adopted in compliance with the Anti-Money Laundering and Countering the Financing of Terrorism Act of Bhutan 2018 (the "AML/CFT Act"), the AML/CFT Rules and Regulations issued thereunder, and the directives and guidance of the Royal Monetary Authority of Bhutan ("RMA") and the Financial Intelligence Department of the RMA ("FID"). It also reflects the FATF Recommendations as adopted in Bhutan.
The Policy applies to the Firm, its founder, its attorneys, its staff and any other person acting on its behalf.
2. Scope
The Firm is a Designated Non-Financial Business or Profession ("DNFBP") for the purposes of the AML/CFT Act and the FATF Recommendations. The Policy applies to all client engagements and to all legal services provided by the Firm, including litigation, corporate and commercial advisory, contract drafting, intellectual property, employment, immigration and regulatory advisory. The Policy applies in addition to, and not in substitution for, the rules of professional conduct administered by the Bar Council of Bhutan and any other applicable law.
3. Risk-Based Approach
The Firm adopts a risk-based approach. The level of due diligence, ongoing monitoring and internal controls applied to any client or matter is proportionate to the assessed risk of money laundering and terrorist financing. Higher-risk clients and matters attract enhanced measures; lower-risk clients and matters attract simplified measures where permitted by the AML/CFT Act and the AML/CFT Rules.
4. Governance and Roles
4.1 Principal Attorney
The Principal Attorney has ultimate responsibility for AML/CFT compliance at the Firm, ensures that adequate resources are made available, approves this Policy and its periodic updates, and reviews the MLRO’s annual report.
4.2 Money Laundering Reporting Officer (MLRO)
The Firm designates a Money Laundering Reporting Officer who is responsible for day-to-day implementation of this Policy, the receipt and assessment of internal reports of suspicious activity, the filing of suspicious transaction reports with the FID, sanctions oversight, staff training, and liaison with the FID, the RMA and other competent authorities. At the date of adoption of this Policy, the Principal Attorney performs the MLRO function. An independent MLRO will be designated as the Firm grows.
4.3 All Staff
Every member of staff has a personal responsibility to comply with this Policy and to escalate any suspicion or concern of money laundering or terrorist financing to the MLRO without delay.
5. Business Risk Assessment
The Firm maintains a documented Business Risk Assessment covering its client base, services, transactions, delivery channels and jurisdictions. The Business Risk Assessment is reviewed at least annually and on the occurrence of any material change. It informs the Firm’s CDD, EDD, ongoing monitoring and training arrangements.
6. Customer Due Diligence
Before engaging any client, the Firm identifies the client and verifies identity using reliable, independent source documents including public domain sides (Bhutanese Citizenship Identity Card or passport for individuals; certificate of incorporation, constitutional documents and registers for entities). For entity clients, the Firm identifies and verifies all natural-person beneficial owners holding 25% or more, or otherwise exercising effective control, including through the Corporate Regulatory Authority of Bhutan (CROB) Registry where applicable, and equivalent registers in other jurisdictions.
The Firm documents the purpose and intended nature of the relationship, captures source of funds and source of wealth where relevant, screens the client and beneficial owners for Politically Exposed Person (PEP) status and against applicable sanctions lists, and risk-rates each client as Low, Medium or High. No service is provided until CDD is satisfactorily completed. The relationship is monitored on a continuing basis and CDD is refreshed periodically based on risk.
7. Enhanced Customer Due Diligence
Enhanced Customer Due Diligence ("EDD") is applied to high-risk clients, including PEPs and their family members and close associates, clients from higher-risk jurisdictions identified by the FATF or comparable authorities, clients with complex or opaque ownership or control structures, clients dealing in virtual assets, clients in cash-intensive businesses, and any other client risk-rated as High. EDD measures include senior management approval before onboarding or continuing the relationship, enhanced verification of identity and beneficial ownership using additional independent sources, detailed source of funds and wealth documentation, more frequent ongoing monitoring with lower scrutiny thresholds, and independent corroboration of information.
8. Simplified Due Diligence
Simplified Due Diligence may be applied to clients risk-rated as Low, where permitted under the AML/CFT Act and the AML/CFT Rules. Identification and verification of the client and its beneficial owners remain mandatory in all cases.
9. Ongoing Monitoring
The Firm monitors each client relationship on a continuing basis. Transactions and instructions are reviewed for consistency with the client's profile and the stated purpose of the relationship. CDD information is updated periodically based on risk and on any material change in the client’s circumstances. Any unusual or apparently unusual activity is escalated to the MLRO.
10. Sanctions Compliance
The Firm screens all clients, beneficial owners (if known) and counterparties against sanctions lists issued or implemented in Bhutan, including the United Nations Security Council Consolidated List and any targeted financial sanctions lists administered by Bhutanese authorities. For international clients and matters with cross-border elements, the Firm also screens against the U.S. OFAC SDN and Sectoral Sanctions Lists, the EU Consolidated List and the UK HMT Consolidated List. Screening is performed at onboarding, on each material transaction or change in client profile, and on a continuing basis. On a positive or potential match, the Firm freezes any client assets in its possession, declines the transaction and reports the matter to the FID and any other relevant authority without delay. The Firm does not provide services to any person designated under any applicable sanctions regime or in any sanctioned jurisdiction. All sanctions screening, decisions and related correspondence are documented and retained.
11. Politically Exposed Persons
PEPs (foreign and domestic), their family members and close associates are subject to EDD. Establishing or continuing a relationship with a PEP requires senior management approval. The Firm documents all PEP determinations and the supporting rationale.
12. Suspicious Transaction Reporting
Staff who identify any activity that gives rise to a suspicion of money laundering or terrorist financing must report the matter to the MLRO without delay. The MLRO assesses each internal report and, where required, files a suspicious transaction report with the Financial Intelligence Department of the Royal Monetary Authority of Bhutan in the form and manner prescribed by the AML/CFT Act and the AML/CFT Rules. Staff must not tip off any client, beneficial owner or third party about an internal report, an external report, or any related investigation. Tipping off is a serious breach of this Policy and may also constitute an offence under the AML/CFT Act.
13. Record Keeping
The Firm retains CDD records, transaction records, and copies of all internal and external reports for a minimum of five years from the end of the business relationship or completion of the transaction, or for such longer period as may be required by law. Records are maintained in a manner that allows the reconstruction of individual transactions on request by the FID, the RMA or any other competent authority.
14. Training
All staff, including the Principal Attorney and the MLRO, receive AML/CFT training on appointment and at least annually thereafter. Training covers the AML/CFT Act and Rules, the Firm's AML/CFT Policy, CDD and EDD procedures, sanctions compliance, identification of suspicious activity, internal and external reporting obligations, the tipping-off prohibition, record keeping, and emerging risks in the legal sector. Training is delivered through in-house sessions led by the MLRO, external courses provided by recognised training providers, and supervised review of regulatory guidance published by the RMA, the FID and the FATF. Records of training, including content, attendance and assessment, are retained for at least five years.
15. Internal Controls and Independent Review
The Firm implements internal controls to ensure compliance with this Policy, including supervision of staff, periodic file reviews and quality assurance processes. The MLRO reviews the AML/CFT programme at least annually and reports to the Principal Attorney on its effectiveness. An independent review by a qualified external party is conducted at least every two years, or more frequently if required by the RMA or the FID.
16. Confidentiality
All AML/CFT matters, including internal reports, suspicious transaction reports, sanctions investigations and related correspondence, are treated as strictly confidential and accessible only to the MLRO, the Principal Attorney and other personnel authorised by the MLRO on a need-to-know basis.
17. Non-Compliance
Breach of this Policy by any member of staff may result in disciplinary action up to and including termination of employment or engagement, and may also constitute an offence under the AML/CFT Act and other applicable laws of the Kingdom of Bhutan.
18. Review of Policy
This Policy is reviewed at least annually by the MLRO and approved by the Principal Attorney. It is updated to reflect changes in law, regulation, RMA and FID guidance, and the Firm's circumstances. The current version of this Policy is available at the Firm’s office and, where appropriate, on the Firm’s website at www.basnetl.com.
Approved and adopted by the Principal Attorney of Basnet Attorneys and Law:
_______________________________________
Tika R. Basnet
Founder and Principal Attorney
Date: 02/ 05/ 2026
