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AML Policy

Executive Management Statement


ii Corporation  (d/b/a influencer index) (the “Company”) intends to enable and facilitate the secondary trading of certain non-fungible tokens (“NFTs”) linked to celebrities (“Influencer Tokens”) to US and foreign-located users (the “Customers”) through its web-based platform (the “Platform”).   As such activity will involve processing payments from buyers to sellers of Influencer Tokens on the Platform, the Company will in certain instances be subject to the Bank Secrecy Act (“BSA”) as a money services business (MSB).  As an MSB the Company must implement and maintain (and, as a best practice with respect to its trading platform generally, wishes to implement and maintain) an effective risk based anti-money laundering (“AML”) compliance program. 


An effective risk-based AML program is one that is reasonably designed to prevent the Company from being used to facilitate money laundering and the financing of terrorist activities, commensurate with the risks posed by the location and size of, and the nature and volume of, the financial services provided by the MSB.  Each MSB AML program must include the following elements:


  • Policies, procedures, and internal controls
  • BSA compliance officer 
  • BSA training of personnel
  • Independent review of compliance program


The Board of Directors of the Company (the “Board”) acknowledges that the drafting and implementation of this AML Policy (“Policy”) is key to achieving the above outcomes.  


Money laundering is the process by which criminals conceal the existence, nature or source of their illegal funds and disguise them to make them appear legitimate.  Financers of terrorism and other organized illicit activities follow similar processes. The compliance goal of the Company is to protect its business from being used to facilitate money laundering, terrorist financing and related crime to the extent reasonably possible. The Company has assessed the risks posed by money launderers, terrorist financing, and other persons in connection with the Platform.  In consideration of the risks posed, and the size and nature of the Company business associated with the Platform, the Company has implemented this AML program. This Policy is limited to activity conducted on the Platform as described below.  If the activity conducted through the Platform changes, this Policy will be reevaluated. Similarly, if the Company engages in other MSB activity, this Policy will be reevaluated.   


It is the responsibility of every Company employee associated with the Platform to understand and comply with this Policy. Questions about this Policy should be directed to the Company’s Chief Compliance Officer. Failure to comply with the specific provisions of the BSA, federal money laundering statutes, counter-terrorism laws and related criminal statutes can result in substantial civil and criminal penalties to the Company and to individual employees.  Failure to comply with any legal requirements by an employee will also subject the employee to disciplinary action, which may include termination of employment.


The Board has approved this Policy and its implementation effective April 1st 2022. The Board will review and approve this Policy on an annual basis, and in the event of any expansion of the Company’s MSB activities or any material modification to the activity engaged in on the Platform.


All material changes to this statement must be approved by the Board as well.  


While in some limited instances the Company plans to enable Customers to make purchases of Influencer Tokens on the Platform using cryptocurrency, in such cases the acceptance of cryptocurrency from the Customer, and the conversion to fiat currency for settlement to the Company, will be facilitated by a third party processor.  Additionally, the Company will not engage in the following activity on the Platform:


  • Any money order or traveller check services
  • Settlement of transactions that are not connected to the purchase and/or sale of Influencer Tokens on the Platform
  • Any receipt or disbursement of currency (i.e., paper money and coins)
  1. Company Risk Assessment


This section outlines the assessment Company has made of the likelihood the Platform could be used for financial crime and the steps the Company will take to seek to mitigate such risks. Our assessment of the risk takes into consideration the following risk categories:


  • The type of Customer on the Platform;
  • The activity engaged in relating to the Customer; and
  • The delivery channel.

Nature of Platform and Customer


The Platform enables settlement of funds in connection with the purchase and sale of Influencer Tokens by and between Customers, including Customers based in the United States.  Customers may access and pre-fund a virtual account (also known as a digital wallet) on the Platform that can be used to purchase, and receive settlement proceeds from the sale of, Influencer Tokens. In order to establish a virtual account, Customers will need to complete a Know Your Customer (KYC) identify verification process performed by Trulioo.


The virtual account of US-based Customers is facilitated through a third-party payment service provider (currently Dwolla).  Financial institution partners of Dwolla receive and hold the underlying funds credited to Customers’ virtual accounts in bank accounts for the benefit of the Company’s Customers. Customers outside the United States will also be able to establish and pre-fund virtual accounts through a non-U.S.-located third-party payment service provider, which will hold such funds for the benefit of the Company’s Customers pursuant to its applicable authorizations. 


Customers may fund purchases of Influencer Tokens on the Platform using cryptocurrency or using a credit card as opposed to their pre-funded virtual accounts. In the case of credit card payments, the Company currently intends to use Stripe as its payment processor. In the case of cryptocurrency payments, the Company currently intends to use a third-party processor that will accept cryptocurrency from Customers and settle fiat currency to the Company. In other words, while the Company will enable Customers to purchaser Influencer Tokens using cryptocurrency, the Company will not actually itself directly receive, nor hold or transmit, cryptocurrency.  

High Risk Business and Unacceptable Risk


The Platform will be used solely to facilitate the purchase and sale of NFTs. While NFT transactions can be seen as not inherently high risk on the basis that an NFT is a digital good, NFTs are still a new technology and asset class subject to regulatory uncertainty.  Additionally, NFTs are also often purchased and sold for significant dollar amounts and there may not necessarily be a traditional market basis for pricing. Further, NFTs are often purchased with, or sold for, cryptocurrency, which entails higher risks of money laundering and other illicit activity. The Company must therefore consider evolving risks relating to NFT transactions and cryptocurrency generally.  In addition, the Company must monitor and comply with any new regulations pertaining to NFTs that could impact how transactions are processed and how Influencer Tokens are treated on the Platform.


As noted, the Company intends to facilitate acceptance of cryptocurrency as payment for Influencer Tokens. Even if facilitated by a third-party processor, cryptocurrency transactions are inherently higher risk due to the anonymity of the blockchain and other features. To minimize such risk, the Company will verify the identity of its Customers (as noted above) and will receive settlement in, and only settle to sellers of Influencer Tokens in, fiat currency. The Company will take appropriate measures to ensure that transactions involving cryptocurrency are facilitated in compliance with applicable cryptocurrency-related regulations by the Company and its third-party processing partners, as applicable.

Services Offered


As described above, Customers will only be able to use the Platform to purchase and sell NFTs. The Company currently believes that higher-risk transactions will be those involving cryptocurrency.  The Company will have in place safeguards designed to subject cryptocurrency transactions to enhanced oversight to mitigate the risk that the Platform will be used to facilitate illicit activity. 


In addition, transactions involving high dollar amounts may also be higher risk of potentially facilitating money laundering. Customers seeking to engage in large transactions are subject to enhanced due diligence including additional identity and address verification check by Trulioo. The Company will monitor activity on the Platform to determine as appropriate transaction thresholds for such enhanced due diligence.

Delivery Channels


Customers may purchase Influencer Tokens using fiat currency funds accessed through virtual accounts/digital wallets.  When the Customer purchases an Influencer Token, funds will be transferred from the digital wallet of the purchaser to the digital wallet of the buyer. (Where buyer and seller hold digital wallets with the same financial institution, the transactions may be processed as ledger transfers that are settled without any movement of underlying funds.)  The Company will not have custody or control of funds associated with fiat currency purchase of Influencer Tokens.  As applicable, transactions between US-based virtual accounts will be settled via the ACH.


As noted above, Customers may also fund purchases of Influencer Tokens via credit card. The Company will verify that the cardholder has sufficient funds to purchase the Influencer Token by obtaining an authorization and hold on the customers funds. For completed transactions, the Company will receive settlement funds from its payment processing partner on behalf of and as agent of the Customer selling the Influencer Token and settle the funds either to the virtual account of the Customer or to the Customer’s designated external bank account. 


Customers can also use cryptocurrency to purchase Influencer Tokens. The Company will facilitate acceptance of cryptocurrency payments from buyers of Influencer Tokens. As noted above, a third-party processing partner of the Company will accept cryptocurrency from buyers and settle to the Company in fiat currency only. Accordingly, the Company will not receive, hold, or transmit cryptocurrency through wallets or other accounts that it owns or controls (and will not, in any event, custody or transmit cryptocurrency on behalf of any other party).  Sellers of Influencer Tokens cannot receive settlement in cryptocurrency at this time, and Customers generally will not have the ability to custody cryptocurrency in their virtual accounts on the Platform.  

Geographic Location

The Company facilitates settlements of funds with respect to US-based and international Customers. Transactions processed on the Platform will involve settlement both within and outside of the United States.  The Company will not send funds to countries covered by sanctions laws administered by the U.S. Office of Foreign Assets Control (OFAC), which generally would prohibit the Company from entering into any business relationship or engaging in any business transaction with a person identified by OFAC as a prohibited person or with any country or representative of a country identified by OFAC. 

  1. BSA Compliance Program Requirements

Overview of BSA AML Program Requirement

The BSA requires each MSB to develop, implement and maintain an effective “risk based” AML program.  Such a program is one that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities, commensurate with the risks posed by, the location and size of, and the nature and volume of, the financial services provided by the MSB. Each MSB AML program must include the following elements:


  • Policies, procedures, and internal controls
  • BSA compliance officer 
  • BSA training of personnel
  • Independent review of compliance program


It is the responsibility of each employee of Company to comply with the BSA, related federal anti-money laundering law, this Policy, and any related implementation of this Policy. The Chief Compliance Officer is responsible for ensuring that there are in place appropriate and effective internal controls and procedures to help prevent the Platform from being used by money launderers, financiers of terrorism and other criminals.

Regulatory Framework


The Bank Secrecy Act (BSA)


The reporting and recordkeeping requirements of the BSA are designed to create a “paper trail” to trace proceeds of crime to their illegal sources and to trace funds that are used for criminal purposes, even where generated from legitimate sources.  The Company believes it may be considered a money transmitter and therefore a Money Services Business (“MSB”) under the BSA regulations because the Company: (1) facilitates cross-border settlement of payments by Customers for payments for Influencer Tokens sold and traded through the Platform; and (2) may enable Customers to make payments for Influencer Tokens in cryptocurrency.


Company, as well as its executives, employees and customers can be prosecuted and subject to civil penalties for structuring, assisting in structuring, or attempting to structure currency and other transactions to evade specific reporting and recordkeeping requirements and for causing or attempting to cause Company to fail to comply with these requirements or for including material omissions or misstatements of fact on a report required to be filed or record required to be maintained under the BSA.


The Money Laundering Statutes


Sections 1986 and 1987 of the U.S. Criminal Code


The federal money laundering statutes make it illegal for any person to knowingly engage in any financial or commercial transaction, or international transportation or transmission of funds, with the proceeds of specified unlawful activity, knowing the funds to be criminally derived and with the intent of promoting criminal activity, concealing or disguising its nature or origin, evading taxes or avoiding a currency transaction reporting requirement.  If an MSB is involved and the transaction exceeds $10,000, and the person that conducts the transaction knows that the funds come from some form of criminal activity, liability may exist.


The primary money laundering statutes, which are contained at 18 U.S.C. §§ 1956 and 1957, relate to:

  • A financial transaction offense occurs when a person knowingly conducts or attempts to conduct a financial transaction involving the proceeds of “specified unlawful activity” with either the:  (1) intent to promote the specified unlawful activity; (2) knowledge that the transaction is designed to conceal or disguise the nature, location, source, ownership or control of the funds or to avoid a transaction reporting requirement; or (3) intent to commit tax fraud or evasions.


  • An international transportation offense occurs whenever a person transports, transmits or transfers funds or monetary instruments into or out of the U.S. with either:  (1) the intent of promoting ‘specified unlawful activity”; or (2) the knowledge that the funds or monetary instruments represent the proceeds of some form of unlawful activity and that the purpose is (a) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds; or (b) to avoid a transaction reporting requirement.


  • A monetary instrument offense occurs when a person knowingly engages in any banking or commercial transaction of more than $10,000 with a financial institution involving property derived from “specified unlawful activity.”


The “knowledge” element in federal money laundering offense can be established by proof of “willful blindness.”  For example, if a Company employee suspects the Platform may be being used to launder “dirty money” but deliberately refuses or otherwise fails to ask questions or report the activity to his/her supervisor because he or she does not want to get involved or wants to remain ignorant, the employee and the Company could be deemed to have acted in willful blindness.  


Criminal violations can result in fines of up to $500,000 or twice the value of the property laundered, whichever is greater and/or imprisonment up to twenty (20) years.  Civil penalties are limited to violations of the financial transaction and international transportation offenses and can be assessed up to the greater of the value of the property, funds or monetary instruments involved or $10,000.  In addition, any property involved in the money laundering violation, including bank accounts that contain funds involved in transactions, computers and computer systems, real estate, personal property and other property, can be forfeited to the U.S. government.


Section 1960 Offenses


  • Transfer or Transport of Funds.  There is no monetary threshold for a § 1960 offense.  Under § 1960, the government need only show that any person transferred or transported funds knowing that the funds were criminally derived (proceeds of any crime), or were intended to “promote or support unlawful activity.”


  • Failure to be Licensed under State Law.  §1960 also makes it a federal crime for any person to engage in a money transmitting business without a state license when the money transmitting business is required to be licensed under relevant state law.


  • Failure to be Registered as a Money Services Business.  §1960 also makes it a federal crime for any MSB, which is required to be registered as a money service business under federal law, to fail to be registered.

BSA Reporting Requirements 


Suspicious Activity Reports (“SAR”)


The BSA requires MSBs to file SARs.  Reporting is required if a transaction is conducted or attempted, at or through the MSB, that involves or aggregates funds or assets of at least $2,000 and the MSB knows, suspects or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part) is suspicious.  Each MSB must file a suspicious activity report (SAR) on the MSB SAR form.  The SAR must be filed no later than thirty (30) days after the date of the initial detection of the facts that constitute the basis for filing a SAR.  Company may file SARs electronically. 

  

Examples of activities that may be “suspicious” include, but are by no means limited to, transactions:


  • Involving funds derived from illegal activity or intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the ownership, nature, source, location or control of such funds or assets) as part of a plan to violate or evade any federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation;
  • Designed to evade the requirements of the BSA, whether through structuring or other means; 
  • That serves no business or apparent lawful purpose, while the reporting business (i.e., the Company) knows of no reasonable explanation for the transaction after examining all available facts, including the background and possible purpose or the transaction; or 
  • Involving the use of the MSB to facilitate criminal activity.


A transaction may be voluntarily reported by an MSB if it meets any of the regulatory criteria for a “suspicious” transaction even if the transaction falls below the mandatory reporting threshold.


Transactions designed to evade the BSA, such as by structuring, are also suspicious.  


Structuring


A person engages in structuring if that person, acting alone, or in conjunction with, or on behalf of, other persons conducts or attempts to conduct one or more transactions, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading a BSA reporting or recordkeeping requirement.


The phrase “in any manner” includes, but is not limited to, the breaking down of a single sum or sums below the recordkeeping or reporting threshold (e.g., more than $10,000 for CTRs, $3,000 or more for the “Wire Transfer Rule” under 31 CFR 1010.410(e)) or conducting a series of transactions below the relevant threshold ($10,000 or $3,000).  The transaction or transactions do not have to exceed the relevant threshold at any single financial institution (or single MSB or MSB location) on any one date to constitute structuring.


There are three components commonly associated with Money Laundering that criminals use to mask their illegal money:


  1. Placement:  Physically placing criminal proceeds into the financial system.  Often times, this is the most difficult aspect of money laundering for criminals. 


  1. Layering:  Separating the proceeds of criminal activity from their origins through “layers” of financial transactions.  


  1. Integration:  Moving the proceeds of crime into a “final” form that provides an apparently legitimate explanation for the illegally obtained funds.


Evasion Other Than Structuring


Persons intent on evading the BSA often use methods other than or in addition to structuring.  A common method is to assume a false identity. To effectively operate under a false identity, legitimate identification may be altered or counterfeit identification used when conducting financial transactions.


No Business or Apparent Lawful Purpose (Unusual Activity)


An unusual transaction is a transaction that does not fit a norm of expected behavior.  A transaction may be unusual because it is inconsistent with what is known about a particular customer or it is inconsistent with a pattern of behavior previously established by a particular customer.  A transaction may be unusual because it varies from the norm of behavior for a particular group of customers or because it varies from transactions conducted in a particular geographic area or region.  It may be unusual because it varies from a normal business practice locally or generally.


Note: Willful Blindness


In the context of detection and reporting of suspicious activity, if Company knows that two transactions appear to have been completed in a manner designed to avoid a BSA requirement, yet Company deliberately refuses to ask questions or inquire further because it wants to remain ignorant, and thus fails to report the transactions as suspicious, Company will be deemed to have knowledge of the two or more “suspicious” transactions for purposes for determining that a violation of the SAR requirement has occurred.


Prohibition against SAR Disclosure


If Company files a SAR, it is prohibited from disclosing to any person involved in the reported transaction or transactions that a SAR has been filed.  The prohibition extends to every Company officer and employee, and all employees must be made aware of their regulatory obligations with regard to this prohibition.  If Company receives a subpoena or other request to disclose a SAR or the information contained in a SAR, Company, including any of its officers, employees and agents (if applicable), must decline to produce the SAR or to provide any information contained in a SAR except where such disclosure is requested by the Financial Crimes Enforcement Network (FinCEN) or by an appropriate law enforcement or supervisory agency. Company will notify FinCEN of any request made for a SAR or information contained in a SAR and of any response provided to such request.


Civil Immunity for Filing SAR


As an MSB Company and its officers and employees are protected from civil liability in connection with filing a SAR for any information reported in the SAR.


SAR Filing – Subjective Evaluation


The decision whether to file a SAR is made by the Chief Compliance Officer.  If an employee discovers activity that he or she knows or suspects is involved in a possible violation of law, the information immediately must be referred to the Chief Compliance Officer.  In each case, the Chief Compliance Officer will evaluate the matter and take appropriate action.  A log is maintained by Company of all details and corrections, if any, of the unusual activity.  SAR supporting documentation will be identified as such and maintained by Company. 


It is the policy of the Company to prepare and file accurate and complete SARs.  A copy of each SAR filed, plus originals of all supporting documentation, will be retained by the Company for a period of five (5) years from the date of filing of the SAR.  Extreme caution must be used when dealing with anybody who might ask questions about the SAR requirement or other BSA reporting or recordkeeping requirements.  If the Company, or some other person, asks questions about SARs or about other BSA reporting or recordkeeping requirements, the person will be referred to the  Chief Compliance Officer.


Currency Transaction Reports (“CTRs”)


Because the Company’s services are provided only electronically, the Company does not current accept or handle currency and therefore will not be subject to the filing requirements relating to transactions involving currency in excess of $10,000.  31 CFR § 1010.330.  To the extent that the Company engages in activities involving currency, the Company will reevaluate the requirements relating to currency transaction reporting under the BSA.

BSA Record Keeping Requirements 


Relevant BSA recordkeeping requirements for the Company include: 


  • Funds Transfer Rule Records
  • Miscellaneous Records


All records required by the BSA, including copies of reports filed and registration records, must be maintained for a period of five (5) years.  


The Funds Transfer Rule


Company to consider applicability of wire transfer rule to its activities—if funds in an amount of $3,000 or more can be transmitted from one user to another through the platform, these requirements would likely apply.


The Funds Transfer Rule, 31 CFR 1010.410(e) (also referred to as the “Travel Rule”), requires that an MSB that accepts funds transfer instructions (i.e., a “transmittal order”):  (i) capture certain identifying and other information about the person placing the transmittal order (the “transmitter”), the person to whom the proceeds of the transmittal order are to be paid (the “recipient”), the transfer, and the financial institution(s) processing the transfer; (ii) verify the identity of the transmitter and the recipient; and (iii) send certain information to the next financial institution processing the transfer.  The rule applies to all transfers in the amount of $3,000 or more regardless of the method of payment.  Information required to be obtained and retained includes the Customer’s Social Security number, EIN, or passport number (if the person does not have a Social Security number), in addition to name and address.


Other BSA Record Keeping Requirements


Additional types of records that must be retained under the MSB may include Section 314(a) Requests, Inquiries from Law Enforcement and Other Government Officials and Information Sharing. Company will maintain records for each transaction, including the payment amount as well as the payor and payee digital wallet address, if applicable.

Company Registration Requirements


Registration of an MSB is the responsibility of the owner or controlling person of the MSB.  Registration is accomplished through the filing of the Registration of Money Services Business form (“Registration Form”) and retention of certain information in support of the registration.  The Registration Form is filed biannually beginning with the first FinCEN registration due date and must be renewed every two years. The Company will retain a copy of the filed form and all supporting documentation for a period of five years.  Company will retain:


  1. A copy of the filed Registration Form
  2. The registration number assigned to the filed form by Treasury
  3. Ownership or control information
  4. The Agent List (currently not applicable to the Company)


Company must also re-register, meaning re-file a registration form, at any time prior to renewal if an event triggering re-registration occurs.  Such an event includes, if applicable:


  1. Change in Ownership or Control under State Law. There has been a change in ownership or control of the MSB that requires the MSB to be re-registered under State law; 
  2. Transfer of Voting Power or Equity Interest. More than 10 percent of the voting power or equity interest of the MSB has been transferred; or
  3. Increase in the Number of Agents (currently not applicable to the Company)

Due Diligence:  Customers and Employees


In order to protect the Company and the financial system, the Company must have sufficient knowledge of its Customers. Company must be able to form a reasonable belief that it knows the identity of its customers and anticipate normal business activity to be able to reasonably conclude that Customers do not present unacceptable risks to the Company relating to money laundering, terrorist financing and other illicit activity.


As described herein, Company will obtain and verify identifying information regarding Customers through Trulioo, assess the risk of Customers based on transaction volume and activity, maintain appropriate documentation regarding Customers, assess whether processing transactions on behalf of Customers creates excessive risk, etc. Company will conduct a manual review of Customers or transactions flagged as requiring as much.

Transaction Monitoring and Ongoing Due Diligence

Suspicious Activity


It is the Company’s policy to promptly report known or suspected criminal activity to the proper government agencies, to file SARs and to cooperate with law enforcement in criminal investigations.  


Company will monitor and investigate transactions that appear to be suspicious or unusual (as further described below).  Company will communicate with the Customer to the extent reasonably practicable to investigate potential criminal activity, in accordance with relevant obligations under the BSA.


Company employees must be alert to activity that might be indicative of possible structuring or other violations of the BSA, money laundering, terrorist financing or other criminal activity, or otherwise appear “suspicious.”  If an employee discovers activity that he or she knows or suspects is involved in a possible violation of law, the information immediately must be referred to the Chief Compliance Officer.  In each case, the Chief Compliance Officer will evaluate the matter and take appropriate action.


Unusual Activity


It is Company’s policy to identify unusual transactions, examine all available facts and conduct further research as necessary to reach one of two conclusions:   (1) that the transaction is highly unusual but not suspicious because there is a reasonable explanation for the activity; or (2) that the transaction is suspicious because it is highly “unusual” and Company knows of no reasonable explanation for the transaction after examining all available facts, including the background and possible purpose of the transaction.  In connection with processing transactions on the Platform, the Company will identify “baselines” of expected, normal activity and identify unusual activity such as an increase in the number of transactions involving a particular individual in a given day.  


When reviewing or monitoring transactions and other activity, no single factor is decisive, and no single factor is sufficient to provide a reasonable basis to conclude that money laundering, terrorist financing, structuring or other “suspicious” activity has occurred.  The determination that specific activity is “suspicious” must be based on consideration of all relevant information especially the size, frequency and nature of transactions and the norm for transactions conducted on the Platform or involving a particular Customer. A single factor, however, may signal that a transaction is unusual and possibly “suspicious” and that further inquiry should be made.  


Ongoing Customer Due Diligence


Company will take reasonable steps to prevent the use of the Platform to facilitate money laundering and other illicit activity.  It is the Company’s policy to identify and verify the identity of Customers at onboarding and to re-verify or obtain additional information through an on-going risk-based relationship management process. This process includes reviewing Customers’ activity on the Platform and potential level of risk should any information come to light that suggests the current assessment of the risk associated with the Customer is no longer appropriate. 

Compliance with Legal Process


Government personnel may engage in informal communications with Company.  In addition, Company may receive formal written legal communications such as subpoenas, summonses, and warrants. 


Law enforcement and other government personnel will often contact an MSB as a courtesy and sometimes to narrow the scope of a subpoena or summons to be issued.  A government representative may ask that records, documents or other information be produced without the benefit of a subpoena, summons, or other legal process.  To protect Company and Customer, Company requires formal legal process such as a subpoena, prior to production or disclosure of records, documents and other specific information.


If Company is served with a subpoena, summons, search warrant, or other legal process, or if a government agent otherwise requests information or documents involving the BSA, money laundering or terrorist activity, the Chief Compliance Officer must be contacted.  Only the Chief Compliance Officer is authorized to respond to legal process, legal notices, or other inquiries received from law enforcement or other government authorities or otherwise communicate with law enforcement officials or with other government authorities with respect to criminal and other legal matters related to the BSA, the money laundering and anti-terrorism statutes, and related criminal matters.

  1. Training and Communication


Training for appropriate personnel is a key component of an effective AML compliance program and is required by the BSA.  Company requires employees involved in the Platform to undertake AML training.  In the event that Company modifies or expands the services offered through the Platform or the types of activity conducted on the Platform, Company will reassess its training policy and revise as appropriate.  The Chief Compliance Officer shall assure that relevant training programs are developed.  


The training sessions should address the purpose and nature of the BSA and a functional approach to money laundering and terrorist financing. 


The Chief Compliance Officer shall maintain a schedule for AML training of appropriate personnel.  Upon delivery of general or training sessions, the Chief Compliance Officer, or other person directly responsible for training, shall prepare a list of signatures of the persons who received training, and a notation of the date and title of the training tool, and the place and during of training.  AML training records shall be maintained for a period of five (5) years from the date of delivery of the training.

  1. Independent Review


It is Company’s policy to provide for independent testing of its compliance program consistent with the BSA compliance program mandate.  Accordingly, an independent review of this compliance policy and program will be conducted at the direction of Company management approximately once per year.  The audit/review will be conducted by a person who is both independent and has the experience and skill to conduct a thorough and effective independent review.  The reviewer may be a Company employee but in no event may the reviewer be an employee who has specific compliance responsibility, such as the Chief Compliance Officer, nor an employee who reports to the Chief Compliance Officer.


The reviewer shall develop an internal control questionnaire and audit work program which describes in detail the testing to be performed to meet each audit objective.  A written report summarizing results of the independent review and management’s corrective action will be issued to Company management.


Set forth below is a description of the points that will be covered in the annual independent review, focusing on all areas that deal with BSA reporting and recordkeeping and OFAC compliance:


  • The overall integrity and effectiveness of the Policy, including policies, procedures, and processes;
  • BSA/AML risk assessment;
  • BSA reporting and recordkeeping requirements;
  • Personnel adherence to the MSB’s BSA/AML policies, procedures, and processes; and
  • Adequacy of training.


Records of all final reports of the independent review of the Policy shall be retained by the Chief Compliance Officer for a period of five (5) years.

  1. OFAC Sanctions Compliance

 

The primary focus of this Policy is BSA/AML compliance. However, Company also takes seriously the sanctions programs administered by the Office of Foreign Asset Control of the United States Department of the Treasury (“OFAC”).  Under OFAC guidelines, although a sanctions compliance program is not required, the existence of a risk-based OFAC compliance program is used by that agency in determining whether to seek civil penalties and/or criminal penalties for even inadvertent lapses of the sanctions program—the statutes administered by OFAC generally impose liability on U.S. persons for conducting prohibited transactions even without specific intent to violate the law.  For this reason, and because it is consistent with Company’s policy of full and complete compliance with all laws and regulations designed to ensure that Company is not utilized as a conduit for illicit activity, Company has instituted an OFAC Compliance Program.


The sanctions laws enforced by OFAC bar engaging in trade or financial transactions with certain specified countries and/or “specially designated nationals” (“SDN”).  As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called “Specially Designated Nationals” or “SDNs.” Their assets are blocked and U.S. persons are generally prohibited from dealing with them.  The SDN list is frequently updated.  There is no predetermined timetable, but names are added or removed as necessary and appropriate.  


Company’s compliance program strategy is based on conducting diligence on screening the names of Customers against the OFAC list of SDNs.