AML Policy

ZX.XYZ is committed to maintaining effective crime prevention and detection measures to assist law enforcement agencies in combating financial crime. The site has adopted a strict set of policies and procedures to fulfil its legal obligations under international anti-money laundering and anti-terrorism legislation.

Background Information

Money laundering is a process in which money and property obtained as a result of criminal activity are disguised as coming from a legitimate source — in which “dirty money” turns into “clean money” whose criminal origin is difficult to trace.

There are three stages in the process of money laundering:

• Placement — the placement of proceeds from crime in the financial system.
• Distribution — transformation of proceeds into another form and creation of complex financial layers to hide the source and ownership of funds.
• Integration — the return of laundered income to the economy under the guise of legitimacy.

The predicate offences underlying money laundering include tax evasion, drug trafficking, bribery, fraud, forgery, murder, robbery, counterfeiting, securities manipulation, and copyright infringement, among others.

Terrorist financing involves knowingly collecting or providing property, such as money, directly or indirectly to terrorists. Many of the techniques used for money laundering are also used in terrorist financing, including concealing the channelling of funds and the use of third parties to obscure the source of funds.

1. Main Objectives

• Clients’ identities are satisfactorily verified in accordance with our risk-based approach before ZX.XYZ does business with them
• ZX.XYZ knows its clients and understands their reasons for doing business both at the client acceptance stage and throughout the business relationship
• Our staff are trained and made aware of both their personal legal obligations and the legal obligations of ZX.XYZ
• Our staff is trained to be vigilant for activities where there are reasonable grounds for suspicion that money laundering could be taking place, and to make reports to the Compliance Officer
• Sufficient records are kept for the required period
• We establish, maintain, and implement appropriate procedures to achieve these objectives

2. General Principles

Anti-Money Laundering Policy

ZX.XYZ has implemented policies, procedures and controls designed to prevent criminals from using the platform to launder the proceeds of crime. These policies and procedures are tailored to the risk posed by individual customers.

Customer Due Diligence (CDD)

ZX.XYZ has established customer due diligence procedures to identify the users of its services and, in respect of higher-risk customers, the primary beneficial owners and origin of funds. These procedures include knowledge of the nature of our customers’ business and vigilance for anomalous transactions.

The CDD policy has been adopted to fulfil the following objectives:

• Identification and verification of the applicant for business
• Identification and verification of the beneficial owner, where applicable
• Identification and verification when the applicant does not act as principal
• Obtaining information on the purpose and intended nature of the business relationship
• Conducting ongoing monitoring of the business relationship
• Establishing the source of wealth and source of funds
• Setting up a customer acceptance policy and ensuring that applicants meet its requirements
• ZX.XYZ is strictly prohibited from keeping anonymous accounts or accounts in fictitious names

Suspicious Transactions

Unexplained or anomalous transactions or activities suspected to be related to criminal activity should be reported immediately in writing to the Compliance Officer, who will determine whether the suspicion should be reported to Law Enforcement.

Training

All personnel must be informed of their individual and collective responsibilities and ZX.XYZ’s anti-money laundering policies. Personnel are provided with training to enable them to understand the vulnerabilities of the platform’s business and to recognize and report suspicious activities.

Record-Keeping

ZX.XYZ keeps records of who has been trained and the time and form of training sessions. We keep all records confirming the identity of our customers for at least 7 years after the end of the business relationship. We also keep records of any internal reports of suspicion made to the Compliance Officer.

3. Our Responsibilities

All money service businesses are required by international law to:

• Develop a programme to ensure compliance with reporting, record keeping, and customer identification requirements
• Comply with customer identification rules and maintain specific records for specific transactions
• Report suspicious transactions, large cash transactions, and information related to terrorist property

4. Risk-Based Approach

Risk can be defined as the likelihood of an event and its consequences — a combination of the chance that something may happen and the degree of damage or loss that may result. In the context of money laundering and terrorist financing (ML/TF), risk includes:

• At the national level: ML/TF threats and vulnerabilities that jeopardise the integrity of the financial system.
• At the Company level: threats and vulnerabilities that put ZX.XYZ at risk of being used to facilitate ML/TF.

All clients default to low risk, unless risk factors are present. Automatic high-risk characteristics include:

• Politically exposed person
• A client where a suspicious transaction or terrorist financing report has been filed
• A client who is an identified terrorist
• A client for whom we are unable to obtain beneficial ownership information
• A client from a high-risk country

Client characteristics, product, service, delivery channel:

• Politically exposed person, head of international organization, and close associates
• Unknown source of funds
• Large transaction orders from/to high-risk foreign jurisdictions
• Third party involvement without reasonable justification
• High-risk occupations (e.g., cash-intensive businesses, offshore business, online gambling)
• Client’s business structure or transactions seem unusually complex
• Non face-to-face client identification without justifiable reason

Geography:

• Client resides outside the local or normal client area
• Client resides in a known crime area
• Client has offshore business activities or connections to high-risk countries

5. Indicators of Suspicious Transactions or Potential High-Risk Clients

The following are examples of general and industry-specific indicators that may give reasonable grounds to suspect that a transaction involves money laundering or terrorist financing. The presence of one or more factors does not automatically mean the transaction is suspicious, but it does indicate that a more in-depth examination is required.

General indicators:

• Client admits to or makes statements about involvement in criminal activities
• Client refuses or tries to avoid providing required information, or provides misleading, vague, or difficult-to-verify information
• Client produces seemingly false documentation that appears counterfeited, altered, or inaccurate
• Client appears to have accounts with several financial institutions for no apparent reason
• Client repeatedly uses an address but frequently changes the name involved
• Client shows uncommon curiosity about internal controls and systems
• Client makes inquiries that indicate a desire to avoid reporting
• Client refuses to produce personal identification documents
• Client frequently travels to a high-risk country

Industry-specific examples:

• Client requests a transaction at a foreign exchange rate that exceeds the posted rate
• Client wants to pay transaction fees that exceed the posted fees
• Client exchanges currency and requests the largest possible denomination bills in a foreign currency
• Client knows little about address and contact details for the payee or requests a bearer instrument
• Client wants to exchange cash for numerous postal money orders in small amounts for numerous other parties
• Client enters into transactions with counter parties in locations that are unusual for the client
• Client makes large purchases of traveler’s cheques not consistent with known travel plans
• Client makes purchases of money orders in large volumes

6. Data Request

To mitigate the risks associated with money laundering and terrorist financing, we strictly do not accept or send payments to third parties (unidentified). Each customer may only send and receive payments through their own accounts, including electronic payment system accounts, bank accounts, and credit and debit cards.

Our employees are authorised to carry out customer verification. In this case, the customer may be required to provide:

• Information about the services for which the funds were received
• A screenshot confirming the receipt and withdrawal of funds
• Additional information that may be requested

We reserve the right to refuse to process a transaction at any stage if it is suspected to involve money laundering or other criminal activity.

7. Restricted Activities and Clients

To mitigate and control ML risk, ZX.XYZ does not provide services and refuses account opening for the following clients with unacceptable risk levels.

Private individuals with the following personal and/or business activity:

• Information of a negative nature is available about the client indicating possible relation to proceeds of crime, laundering, or terrorism (from trusted sources such as World Check or public authority websites)
• Client funds have previously been frozen or arrested in connection with suspected criminal activity
• The client is trying to avoid providing information or is trying to hide their economic activity
• Trafficking in arms and ammunition
• Unlicensed foreign currency exchange intermediary services (such as forex dealers or binary options) and other unlicensed investment services
• Transactions or payments that are complex, unusually large, or unclear in terms of their legal and economic objective
• Escort services or distribution of erotic/pornographic content and related services
• Cash collection services
• Debt recovery services
• Drugs, vitamins and nutritional supplements distribution
• Pyramid schemes
• Telemarketing
• Tobacco and alcohol products distribution

Legal persons with the following personal and/or business activity:

• The client is trying to avoid providing information or is trying to hide their economic activity
• Information of a negative nature is available indicating possible relation to proceeds of crime, laundering, or terrorism
• Client funds have previously been frozen or arrested in connection with suspected criminal activity
• Legal entities recognized as shell companies
• Unlicensed gambling services
• Unlicensed foreign currency exchange intermediary services
• Transactions or payments that are complex, unusually large, or unclear in their legal and economic objective
• Escort services or distribution of erotic/pornographic content and related services
• Cash collection services
• Debt recovery services
• Drugs, vitamins and nutritional supplements distribution
• Pyramid schemes
• Telemarketing
• Tobacco and alcohol products distribution

ZX.XYZ has customers in two risk categories — low-risk and high-risk. For high-risk customers, Enhanced Due Diligence (EDD) is carried out. A high-risk client is someone who is a politically exposed person, a family member, or a close associate, or with whom financial claims exceed $10,000 CAD.

8. Sanctions

ZX.XYZ is prohibited from transacting with individuals, companies, and countries that are on prescribed sanctions lists. ZX.XYZ screens against the relevant sanctions lists in the jurisdictions in which we operate.

ZX.XYZ has no AML Risk Appetite for establishing or maintaining a relationship with any natural person or legal entity designated on any of the following lists:

• Sanction lists administered by the United States Office of Foreign Assets Control (OFAC)
• The United Nations Security Council Sanctions List (UN)
• The Consolidated List of European Union Financial Sanctions (EU)
• The List of Specially Designated Nationals and Blocked Persons
• Any other applicable sanctions list

In addition, ZX.XYZ pays particular attention to entities from countries on the list of non-cooperative countries and territories drawn up by the Financial Action Task Force (FATF).

9. List of Non-Serviced Countries

ZX.XYZ does not open accounts and does not provide services to clients from the following countries:

• Islamic Republic of Afghanistan
• Republic of Angola
• Belarus
• Bosnia and Herzegovina
• Republic of Botswana
• Commonwealth of The Bahamas
• Kingdom of Cambodia
• Republic of Burundi
• Democratic Republic of the Congo
• Central African Republic
• Republic of the Congo
• People’s Democratic Republic of Algeria
• Republic of Ecuador
• State of Eritrea
• Federal Democratic Republic of Ethiopia
• Republic of Ghana
• Republic of Guinea
• Republic of Guinea-Bissau
• Co-operative Republic of Guyana
• Republic of Haiti
• Republic of Iraq
• Islamic Republic of Iran
• Japan
• Republic of Kenya
• Democratic People’s Republic of Korea
• Lebanese Republic
• Republic of Liberia
• Libya
• Republic of the Union of Myanmar
• Federal Republic of Nigeria
• Islamic Republic of Pakistan
• Republic of Serbia
• Russian Federation
• Republic of the Sudan
• Democratic Socialist Republic of Sri Lanka
• Federal Republic of Somalia
• Republic of South Sudan
• Syrian Arab Republic
• Republic of Tunisia
• Republic of Trinidad and Tobago
• Ukraine
• Republic of Uganda
• United States of America
• Republic of Vanuatu
• Bolivarian Republic of Venezuela
• Republic of Yemen
• Republic of Zimbabwe

10. Monitoring for Suspicious Activity

ZX.XYZ’s AML policy includes customer and beneficial owner due diligence, ongoing AML monitoring, and AML reporting policies. At various points in time, ZX.XYZ may request information regarding the transactions carried out through a customer’s account and the parties to the respective payment. If the customer does not respond sufficiently or within a timely manner, ZX.XYZ reserves the right to reject any respective payments subject to the requirements of applicable AML laws and regulations.