Anti-Money Laundering and Know Your Client Manual
The fight against crime demands that criminals are prevented from legitimizing the proceeds of their crime by the process of “money laundering”. It is a process which can involve banks, financial institutions, professionals, cryptocurrency in general and ICOs specifically.
Money laundering is the process by which criminals attempt to conceal the true origin and
ownership of the proceeds of their criminal activities. If undertaken successfully, it also allows them to maintain control over those proceeds and, ultimately, to provide a legitimate cover for their source of funds.
Stages of Money Laundering
There is no one method of money laundering. money laundering methods can range from the purchase and resale of a luxury item, to passing money through a complex international web of legitimate businesses and “shell” companies. In case of money-based crimes, the proceeds usually take the form of cash which needs to enter the financial system by some means. One of the ways to launder money is to use cryptocurrency. The conversion of money to cryptocurrency or to blockchain digital assets in general, is one way to launder cash, in the meaning of doing a transaction by using “forbidden” money. Money then
transforms into anonymously secured asset.
Policies and Procedures to Prevent Money Laundering
As we conduct our day to day operations, particularly those related to the sale of cryptocurrencies which are considered commodities at law, we are not brokers or dealers of securities, nor are we “administrators”, a “money transmitting” business, or an foreign exchange business. Therefore, to our understanding standard AML and KYC requirements apply to us and should suffice as due diligence. In essence, these procedures are designed to achieve two purposes: First, to facilitate the recognition and reporting of suspicious transactions, and secondly, to ensure through the strict implementation of the “know-your-client” principle and the maintenance of adequate record keeping procedures, should a client come under investigation.
- All clients need to disclose their name and surname
- All clients need to disclose their nationality and country of residence
- We require all clients to submit a current form of government issued identity such as a passport or ID, together with a selfie of the client holding up their ID
- AML screening via NameScan. This utilises Refinitiv’s (Formely known as Thomson Reuters) World-Check Database, this database consists of over 1.1 Million detailed PEP profiles as well as their Relatives and Close Associates (RCAs) worldwide. The World-Check database also provides an extensive coverage of sanction profiles, regulatory enforcement, law enforcement and other official lists. This database is also updated on a daily basis.
In addition, we implement extended client identification procedures for the following thresholds:
Trades of over €10,000
- Proof of address such as a copy of a utility bill (as verification of residential address not more than 3 months old) (hereinafter: “Proof of Address”)
Trades of over €20,000
- Source of funds, PEP/sanction and Non-US citizen or resident declaration
Trades over €50,000
- Executed purchase order/sale contract
For every legal-entity token purchaser we shall request certified true copies of the full legal
- Copies of the constitutional documents (certificates of incorporation, shareholders, directors & secretary registers – where applicable, memorandum & articles of association, operating agreement – if applicable);
- Copy of the corporate structure identifying the ultimate beneficial owner(s);
- Copy of any trust deed/s duly signed by both related parties (nominee shareholder/s and ultimate beneficial owner/s);
For each corporate officer related to the company (in addition to the documents mentioned
hereinabove, and where mandated) the below are applicable:
- Valid original ID or passport;
- Proof of Address;
- Signatory rights Protocol duly signed by the board, stating that the corporate officer holds right to bind the legal entity with its signature.
For any legal entity holding more than 25% interests in the legal entity aforementioned legal
entity, or legal entity which is a director in such legal entity:
- All of the above documents for the legal entity.
For any physical person holding more than 25% shares of any involved legal entity as
- Valid original ID or passport;
- Proof of Address;
If we have assessed that the purchase transaction poses a high risk, we will apply the following additional measures:
- Obtaining the information relating to the source of the funds or the wealth of the purchaser (will be done via e-mail or phone); When obtaining information to verify the purchaser’s statements about source of funds or wealth, we will most often ask for, and scrutinize, details of the person’s employment status or business. We will ask for additional data or proof of that employment/occupation as we may deem as necessary, particularly confirming documents (employment agreements, bank statements, letter from employer or business, etc.).
- Seek further information from the purchaser or from our own research and third-party sources in order to clarify the purchaser’s information, obtain any further or additional information, and/or clarify the nature and purpose of the purchaser’s transactions with us.
We reserve the right to add to, change or reduce these anti-money laundering procedures.
Confidentiality of Personal Identifiable Information
In general, courts may, on application by a competent authority, make an order for the disclosure of information by a person, who appears to the Court to be in possession of the information to which the application relates. Such an order applies irrespective of any legal or other provision which creates an obligation for the maintenance of secrecy or imposes any constrains on the disclosure of information.
Sharing Information with Other Financial Institutions
The company maintains a policy of open cooperation with partners in its financial ecosystem, such as banks, EMIs, liquidity providers and the such by sharing client due diligence information in order to enhance the effectiveness of the combined efforts to combat financial crime.
Internal Reporting Procedures and Records
A competent person (a Money Laundering Compliance Officer) shall be appointed to receive and consider information that give rise to knowledge or suspicion that a client is engaged in money laundering activities.
The Compliance Officer’s contact details will be published from time to time to our staff.
The Compliance Officer’s responsibilities shall be as follows:
- Ensuring that we shall be compliant with this AML policy as well as any other law or regulation.
- Testing our anti-money laundering procedures and systems;
- Training of the employees per this AML policy;
- Receiving and investigating internal suspicious activity and transaction reports from employees, and making reports to the appropriate authorities;
We will make reasonable arrangements in order to introduce measures designed to assist the functions of the Money Laundering Compliance Officer, and to encourage
reporting of suspicious transactions by employees. These measures will make employees aware of the above procedures in order to prevent money laundering and of the relevant legislation;
We will provide training to employees in the recognition and handling of transactions suspected to be associated with money laundering. One of the first steps in order to implement the above measures by us, is the distribution of information and details pertaining to money laundering, in order to enhance the awareness of our employees.
The content of employee training shall include:
- Our commitment to the prevention, detection and reporting of money laundering and terror financing crimes;
- Examples of money laundering and terror financing that have been detected in similar organizations;
- Well known or recognized cases that are made available by the FATF;
- Our potential legal liability in case of money laundering and terror financing;
- The responsibilities of the Company regarding money laundering;
- The responsibilities of our employees per this AML Policy;
- How to identify and report suspicious activities per this AML policy.
We oblige to ensure:
- That all our employees know to whom they should be reporting money laundering knowledge or suspicion; and
- That there is a clear reporting chain under which money laundering knowledge or suspicion is passed without delay to the Money Laundering Compliance Officer.
Suspicious Activity Report Procedure
In any act or suspicion which may arise regardless of the time it arose, and with the initial
acknowledgment of the manner:
1) The company employee shall report the manner in an acceptable time period to the
2) The Compliance Office will be in charge of the reporting duty to the relevant authorities.
Recognition of Suspicious Transactions
Purchase transactions fall under one of two categories, one in amount lesser than €10,000, and one is greater than €10,000, we address all transactions unanimously per the policy
in the case we ask a user for information and the user simply does not disclose such information, we simply do not allow the transaction. In other words, our solution is easy – if the client is unwilling to be identified, as per this policy they will not be allowed to consummate the transaction.
Additionally, for any suspicious transactions, such as transactions where the information
provided to us seems not to be in order, and when the documents do not “add-up”, we will report the transaction to the proper authorities.
Compliance Officer Nominee Validation
The Compliance Office’s appointment will be valid until a new nominee will be appointed and an updated nomination letter will be issued.
Disclaimer: Notwithstanding the afore mentioned, it is hereby clarified that we, the Compliance Officer, or any other person on our behalf, shall not be liable in connection with any money laundering activities of clients, nor in connection with any information provided or withheld by clients.