AML Policy

International Recommendations & Authorities
– FATF Recommendations (February 2012)
– UN Security Council Resolutions 1267 (1999), 1373 (2001) and 1390 (2002)

EU Directives
– Fifth Money Laundering Directive 2018/843

EU Regulations
– EC Regulation 2580/2001
– EC Regulation 847/2015 (the Wire Transfer Regulation)

Policy

To achieve these objectives, it is the policy of Clear Strategic Solutions that:

• Every member of Clear Strategic Solutions shall meet their personal obligations as appropriate to their role and responsibilities in Clear Strategic Solutions.
• Commercial considerations shall never be permitted to take precedence over Clear Strategic Solutions’ anti-money laundering commitment.
• Clear Strategic Solutions shall appoint a Money Laundering Reporting Officer (MLRO) and a deputy to cover in their absence, and they shall be afforded every assistance and cooperation by all members of Clear Strategic Solutions in carrying out the duties of their appointments. Additionally, Clear Strategic Solutions ’s Advisory Board has the applicable board level expertise to assist to ensure standards are retained to the highest.

Client Identification

Clear Strategic Solutions customer due diligence measures shall comprise but not be limited to the following:

• identifying the client and verifying their identity based on documents, data or information obtained from a reliable and independent source.
• identifying the beneficial owner and taking reasonable measures to verify that person’s identity so that Clear Strategic Solutions is satisfied by knowledge of the beneficial owner, including, as regards trusts, companies, foundations and similar legal arrangements, taking reasonable measures to understand the ownership and control structure of the client.
• assessing and, as appropriate, obtaining information on the purpose and intended nature of the business relationship.
• conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the Clear Strategic Solutions ‘s knowledge of the client, the business and risk profile, including where necessary the source of funds and ensuring that the documents, data or information held are kept up to date.

However, Clear Strategic Solutions may determine the extent of such measures on a risk-sensitive basis.

Clear Strategic Solutions shall be able to demonstrate to competent authorities that the measures are appropriate in view of the risks of ML/TF that have been identified.

KYC Process

Before a user can make cryptocurrency purchases using fiat, Clear Strategic Solutions will attempt to fully identify the user with several workflows based on the user’s country of residence that will allow it to:

• identify the User and verify the User’s identity based on documents, data or other information based on a reliable and independent source.
• Verify that the User is not a Sanctioned Individual from or operating from a sanctioned country.
• Verify that the User is not a PEP.
• Verify the user is not the subject of relevant adverse media that would make them an unacceptable risk.
• Obtain information on the user’s intended use for the platform.
• Obtain information on the users predicted spend on the platform.

Clear Strategic Solutions will use Sum Sub for the collection of user KYC data and Comply Advantage for checks on PEP / Sanctions / Adverse media.

Risk Scoring

1. Country Risk

Parameters: Based on the FATF list, Transparency International Corruption Perceptions Index, and OFAC sanctions.
Scoring: Countries are categorized into low, medium, and high risk. High-risk countries are assigned a score of 10, medium-risk countries a score of 5, and low-risk countries a score of 1

2. Age Risk

Parameters: Age is considered a risk factor due to different susceptibility to financial crime.
Scoring:
Below 25 years: High risk (Score = 10)
Between 25 and 60 years: Medium risk (Score = 5)
Above 60 years: Low risk (Score = 3)

3. Planned Spend

Parameters: Estimated transaction volume and frequency.
Scoring:
High volume/frequency (transactions above EUR 10,000 per month): High risk (Score = 10)
Medium volume/frequency (transactions between EUR 2,000 and EUR 10,000 per month): Medium risk (Score = 5)
Low volume/frequency (transactions up to EUR 2,000 per month): Low risk (Score = 1)

Calculation of Overall Risk Score

The overall risk score for a customer is calculated by summing the scores from each category. The total score determines the customer’s risk classification:

High Risk: Scores above 20

Medium Risk: Scores between 10 and 20

Low Risk: Scores below 10

Risk Mitigation Strategies

Based on the risk score, the following mitigation strategies are applied:

High Risk: Enhanced Due Diligence (EDD), more frequent transactions monitoring, and mandatory senior management approval for any high-value transactions. High risk users will be reviewed and updated every 6 months.

Medium Risk: Standard due diligence, regular monitoring of transactions, and occasional reviews by compliance. Medium risk users will be reviewed and updated annually.

Low Risk: Simplified due diligence and periodic monitoring of transactions. Low Risk users will be reviewed and updated every 3 years.

Continuous monitoring

Clear Strategic Solutions has automated monitoring systems in place for user accounts that check for any change in the status of a user, consisting of but not limited to:

• Identity documents being up to date and current.
• Proof of address being up to date and current
• PEP / Sanctions / adverse media hits that may apply to the user.

Any changes in these statuses will trigger a system action which (depending on its severity) can block the user immediately from accessing their account pending a review of the account by the compliance team.

Clear Strategic Solutions may undertake ongoing monitoring on users to ensure that any transactions shall be subject to enhanced due diligence in relation to the source of funds of the user.

As part of the second line of defence the Money Laundering Reporting Officer will carry out checks to ensure that regular and effective on-going monitoring is being affected and ensure that irregular or suspicious activities are effectively escalated.

Risk scores are reviewed annually or upon significant transactions, changes in customer activity, or geopolitical shifts in country risk.

Documents

Clear Strategic Solutions must be satisfied that any documents offered to verify identity are of an acceptable quality to ensure there is no suspicion of forgery, alteration, or attempted misuse of our product through third party impersonation.

Sanction, PEP and Adverse media

Clear Strategic Solutions will use Comply Advantage data source to perform sanction, PEP and Adverse media check. This is not only because it is swift and reliable but also because it specifically checks sanctions list and PEP lists as required by the Money Laundering Regulations 2017.

Customer Due Diligence

To prevent AML/CTF, Clear Strategic Solutions will implement processes and procedures in its line of businesses to conduct appropriate customer due diligence, identifying the customer and verifying the customer’s identity. Clear Strategic Solutions will apply the required components of CDD as legislated within the ML Regulations.

• at the start of a new business relationship (including a company formation),
• at appropriate points during the lifetime of the relationship, and
• when an occasional transaction is to be undertaken.

The required components are:

• identifying the client and then verifying their identity (demonstrating that they are who they claim to be) by obtaining documents or other information from independent and reliable sources.
• identifying beneficial owner(s) so that the ownership and control structure can be understood and the identities of any individuals who are the ultimate owners or controllers can be known and, on a risk, sensitive basis, reasonable measures should be taken to verify their identity; and
• gathering information on the intended purpose and nature of the business relationship.
• Unusual activity during the customer due diligence process or customer engagement should be reported without delay to the designated Money Laundering Reporting Officer (‘MLRO’) or the Deputy Money Laundering Reporting Officer (‘Deputy MLRO’).
• Clear Strategic Solutions will use different client risk categories such as low, normal, or high for each of its clients.
• It may not be unusual for Clear Strategic Solutions to deal with clients from a high-risk jurisdiction and the procedures will be designed to be address the risks associated with the high-risk jurisdiction. (for example, the client or their close associates have attributes known to be frequently used by money launderers or terrorist financiers)
• Regardless of the risk categorisation, Clear Strategic Solutions will still undertake monitoring of the client relationship on a risk-based approach.
• Risk categories may include a client’s Pep status, the jurisdiction in which they register from and where they intend to use our product.

When determining the degree of CDD to apply, Clear Strategic Solutions will adopt a risk-based approach, considering the type of customer, business relationship, product, or transaction, and ensuring that the appropriate emphasis is given to those areas that pose a higher level of risk.

Any risks deemed to be elevated risks will be mitigated by:

• Conducting enhanced due diligence (for instance the client is identified as a PEP)
• Carrying out periodic client due diligence reviews on a more frequent basis.
• Putting additional controls around load and spend limits.

Regulations stipulate that CDD must also be performed where there is either a suspicion of money laundering or terrorist financing, or any doubts about the reliability of the identity verification information or documents obtained previously.

Where there is such knowledge or suspicion Clear Strategic Solutions will consider not only whether the existing CDD information is sufficient and up to date, but also whether a suspicious activity report (SAR) should be made to the National Crime Agency (NCA)

On Going Monitoring of the Client Relationship

All established client relationships will be subject to CDD procedures throughout their duration. This on-going monitoring will include the scrutiny of client activities (including enquiries into sources of funds if necessary) to make sure they are consistent Clear Strategic Solutions ’s knowledge and understanding of the client.

Event-Driven Reviews

Clear Strategic Solutions will ensure that documentation, data and information obtained for CDD purposes is kept up to date. Events prompting a CDD information update will include:

• a change in the client’s identity
• a change in beneficial ownership or control of the client
• a change in the service provided to the client.
• information that is inconsistent with the Clear Strategic Solutions ’s knowledge of the client
• A request by the client to change their name e.g., change of surname due to marriage
• A request by the client to change their residence address.

An event driven review may also be triggered by:

• the participation of a PEP
• a significant change in the client’s activity (this would include transactions in high or prohibited jurisdictions)
• knowledge, suspicion or cause for concern (for example where you doubt the veracity of information provided). If a SAR has been made, care must also be taken to avoid making any disclosures which could constitute tipping off).
• Initiation of a card transaction

Risk Based Approach

Periodic reviews

Businesses should use routine periodic reviews to update their CDD. The frequency of up- dating should be risk-based, reflecting the business’s knowledge of the client and any changes in its circumstances or the services it requires.

On-going procedures

The CDD procedures required for either event-driven or periodic reviews may not be the same as when first establishing a new business relationship. Given how much existing information could already be held, on-going CDD may require the collection of less new information than was required at the very outset.

Risk Based Approach

For Clear Strategic Solutions, the threat of being involved in money laundering and terrorist financing activities depends directly on the type of business that its clients carry out or on the country where they are located.

Clear Strategic Solutions will classify its clients based on a risk level in its applicable line of business processes and procedures. Identifying the potential risk will help to effectively manage these risks, implementing controls to mitigate the identified risk, if any.

Clear Strategic Solutions will not do business with the following segments of clients:

• Persons included in any official lists of sanctions, such as UK, EU, UN or OFAC lists.
• Persons indicating possible involvement in criminal activities, based on available information about them.
• Persons with businesses in which the legitimacy of activity or source of funds can’t be reasonably verified.
• Persons refusing to provide the required information or documentation; or
• Entities whose shareholder/control structure cannot be determined.

Clear Strategic Solutions will conduct a risk assessment at least annually, but with new and changing risks considered as and when they are identified.

Clear Strategic Solutions will use resources like FATF’s mutual evaluations and Transparency International’s corruption perception index, which can be useful when determining the money laundering risk faced by any given business.

Risk Assessment and Management

Clear Strategic Solutions ’s senior management is responsible for managing all the risks it faces including AML risks.

• Senior managers will ensure that AML risks are analysed, and the nature and severity identified and assessed, to produce an accurate risk profile. Clear Strategic Solutions senior management will then act to mitigate those risks in proportion to the severity of the threats they pose.
• Where a risk is identified, Clear Strategic Solutions will design and implement appropriate procedures to manage it.
• The reasons for believing the procedures to be appropriate will be supported by documented evidence and plans for updated or new systems to monitor their effectiveness.

The risk analysis will be conducted by the MLRO and it will be approved by all senior management.

Enhanced Due Diligence

Regulations specify that enhanced due diligence must be applied in the following situations:

• where there is a high risk of money laundering or terrorist financing
• in any transaction or business relationship with a person established in a high-risk third country.
• if a business has determined that a customer or potential customer is a PEP, or a family member or known close associate of a PEP.
• in any case where a customer has provided false or stolen identification documentation or information on establishing a relationship.
• in any case where a transaction is complex and unusually large, there is an unusual pattern of transactions which have no apparent economic or legal purpose,
• in any other case which by its nature can present a higher risk of money laundering and terrorist financing

Fifth Money Laundering Directive will also be taken into consideration as it provides useful guidance, containing higher risk indicators, including:

• Client businesses that are cash intensive.
• Client ownership structures that appear unusual or excessively complex given the nature of their businesses.
• Where the business relationship is conducted in unusual circumstances.
• Where clients are resident in geographical areas of higher risk.
• Where the client requests products or services that might favour anonymity.

Politically Exposed Persons (PEP)

For the purposes of this policy, a PEP is a person identified during normal account opening procedures or during the lifetime of the account, to be a “senior political figure,” any member of a senior political figure’s “immediate family,” and any “close associate” of a senior political figure, whether in the UK or abroad.

• If a PEP is identified during the E KYC process, a risk-based approach will be applied to designate the individual as “High” or Low “risk.
• Further searches will be performed to ensure adequate measures are taken to establish the source of wealth and the source of funds which are involved.
• Clear Strategic Solutions will also conduct enhanced ongoing monitoring of the account transactions.

Senior management shall be involved in the decision to accept a PEP account. If management determines that an account is a PEP account, they shall evaluate the risks and take appropriate steps.

Clear Strategic Solutions will continue ongoing monitoring of the PEP accounts to ensure that the accounts are being used as anticipated.

Clear Strategic Solutions will treat individuals as PEPs for at least 12 months after they cease to meet the regulatory criteria.

Although this requirement does not apply to family members or known close associates, for risk management and reputational reasons, Clear Strategic Solutions will, (on a risk sensitive basis), treat individuals as PEPs for more than 12 months after they cease to meet regulatory criteria, and extend the requirements to family members and known close associates.

Sanctions Lists

Financial sanctions orders prohibit a firm from carrying out transactions with a person or organisation (known as the target). In some cases, the order will prohibit a firm from providing any financial services to the identified target.

These measures can vary from comprehensive. Prohibiting the transfer of any funds to a sanctioned country and freezing the assets of a government, the corporate entities and residents of the target country, to targeted asset freezes on individuals/entities.

It is a criminal offence not to comply with a financial sanction unless the firm have an appropriate licence or authorisation from the Office of Financial Sanctions.

The OFAC website contains information about current financial sanctions, including the consolidated list of all those subject to asset freezes or sanctions under UK law.

It is therefore vital for Clear Strategic Solutions to know whether any potential client may be on the list and the only way of easily and clearly establishing this is by an online search being performed during the on boarding process performed by Global, our online identity search provider.

Any identified matches will result in the account being blocked until the MLRO decides otherwise.

Lines of Defence

• First Line: Employee Vigilance

Training programs to educate employees about AML risks and recognition of suspicious activities.

• Second Line: Compliance Department

Oversee AML policies, conduct internal audits, and serve as a liaison with regulatory bodies.

• Third Line: External Audit

Engage independent auditors to review compliance with AML standards and provide feedback on policy effectiveness.

MLRO Duties

Clear Strategic Solutions has set up and operates arrangements, including the imminent appointment of a Money Laundering Reporting Officer (MLRO) to ensure that it and any appointed representatives that act on its behalf, are able to comply with all relevant legislation and regulations.

The main responsibilities of the MLRO include:

• Receiving internal reports, from members of staff or AML investigators, and making external reports regarding any identified suspicious activity.
• Developing an effective AML compliance culture with appropriate policies and procedures which reflect current legislation.
• The establishment and monitoring of key risk indicators and key performance indicators to monitor the effectiveness of AML procedures.
• Providing pro-active and accurate advice on relevant laws, regulations and official guidance and ensuring that information is readily available on AML compliance issues to all relevant staff.
• Maintaining effective, business focused relationships with relevant regulators and enforcement agencies.
• Ensuring that regulatory requests, court orders and other official communications are processed within prescribed timescales.
• Establishing effective and auditable arrangements for AML and KYC training to all staff to meet the requirements of this policy.
• Ensuring that adequate and effective AML monitoring and suspicious activity reporting procedures are in place.

To meet these responsibilities the MLRO shall have access to all KYC business information, this shall include access to all financial, transactional, and personal information held by Clear Strategic Solutions.

Record Keeping

Clear Strategic Solutions will, in accordance with legislation requirements, keep records of the following data:

• Information and documents on all customers and merchant’s identity for a period of at least ten (10) years after the business relationship with the customer or merchant has been terminated.
• Details of any financial transactions from or to any customer or merchant for a period of at least ten (10) years.

Where applicable, due to local regulation, the time periods listed above may be extended, but under no circumstances reduced.

Records relating to:

• all internal suspicious activity reports (SAR)
• all reports considered by the MLRO
• any investigation undertaken by the MLRO in respect of any SAR.

Will be retained for a period of ten (10) years from the date on which the record is made.

Where it is known that the above records are the subject of a continuing investigation, they will be retained until the investigation officer advises that they are no longer required.

Records of AML and CTF training for staff, all reports provided by the MLRO, and any records of consideration of those reports, or of actions taken because of those reports, will be retained for five (5) years from the date on which they were made.

The name of the deputy MLRO who will fulfil the duties in the absence of the MLRO will be identified in the Governance documents as well as to all members of staff.

Suspicious Activity Reporting

A three (3) stage reporting process is in place to handle suspicious transactions detected.

1. Internal reporting – where staff are suspicious of a transaction or event and make a report to the MLRO.
2. MLRO evaluation and record keeping.
3. External reporting – disclosure by the MLRO to relevant enforcement agencies.

1.   Internal Reporting

Where a member of staff is suspicious of a transaction or event and makes a report to the AML-Investigation team.

• The report must be made as soon as is reasonably practicable and staff must follow the instructions given in the relevant template.
• Any member of staff who fails to comply with this policy may be subject to internal disciplinary action and could also face prosecution (Failure to Report).

The AML-Investigation Team will take a more in-depth look into the transaction, account or merchant being reported before filing a report to the MLRO.

2.   MLRO evaluation and record keeping

The MLRO will evaluate the report to ascertain if there is reasonable suspicion of money laundering evident or not.

• The final decision as to whether to make a report will rest with the MLRO.
• The MLRO will keep a precise register of all reports received and handed over to the relevant Financial Investigation Unit (FIU).
• Prior to making any such report the MLRO will undertake internal enquiries to satisfy themselves that, based on the information in the report and the result of their enquiries, they know or suspect, or have reasonable grounds to know or suspect, an offence of money laundering.

External reports will not be made until all available information has been considered by the MLRO, unless this would render such reports untimely.

3.   External Reporting

The disclosure regime for money laundering and terrorist financing is run by the Polish financial supervision authority (KNB)

A SAR is the name given to the making of a disclosure to the Polish FSA under the relevant legislation.

4.   Requesting a Defence

Where a person suspects, or knows that property is criminal, or suspects or believes that something is terrorist property, and they submit a SAR setting out the relevant details to the Secretariat before carrying out an activity which they anticipate could result in them committing a principal money laundering or terrorist financing offence then they may request a criminal defence from the Secretariat in relation to that activity.

• Where they have submitted an authorised disclosure and have the “appropriate consent” they do not commit one of the principal money laundering offences.
• Where they have submitted a disclosure, and have the “prior consent” they do not commit one of the terrorist financing offences.
• In cases where Clear Strategic Solutions receive a granted letter, Clear Strategic Solutions is afforded a defence. However, this does not mean that other regulatory and legal obligations are discharged.
• It also does not mean that the there is no criminal property or terrorist property or, That the relevant authority agree with the action Clear Strategic Solutions are proposing to take.
• Clear Strategic Solutions will not take the Polish FSA’s granted letter as “permission to proceed”.

Suspicious Activity

All Fraud- and AML Investigators must report any suspicious activity that they identify in the course of their duties to the MLRO. All such reports must be documented by the member of staff making the report.

The reporting of a suspicion does not remove the need to report further suspicions that arise subsequently in respect of the same client or account. Where this does occur, further reports must be made to the MLRO as further suspicions arise.

How to report

All reports must be fully documented and must include at a minimum the following information:

• In the relevant fields include as much detail as possible on the entities involved (individuals, addresses, companies, accounts):
• Subject’s full name, date of birth and addresses (including postcode)
• Subject known details (e.g. National Insurance numbers, vehicle registration, driving license, passport number, phone numbers, email addresses, etc.)
• Subject’s occupation/employer.
• Details of any associated subjects (including, where appropriate, full details of professionals involved in the activities)
• Company details including full legal name, designation (Ltd, LLP, GmbH, SARL), registration number and tax reference/VAT numbers, country of incorporation and details on beneficial ownership where held)
• If known, the subject’s financial details (account numbers) and details of associates.
• The reason for the investigator’s suspicion

The fact that a report has been made and the content of the report must always remain confidential. Employees must not correspond with anybody except the MLRO.

It is a criminal offence for anyone, following a disclosure to a nominated officer or to a relevant enforcement agency, to do or say anything that might either “tip off” another person that a disclosure has been made or prejudice an investigation.

Ongoing Transaction Monitoring Provisions

Every in-system transaction will pass through AML rule checking, these rules will be maintained and updated constantly via a simple UI that allows the creation of new rules in minutes.

Permissioned access to the AML dashboard will allow decisions on held transactions to be made, monitoring for patterns in transactions, and accounts to be placed on hold if suspicious activity is detected.

Suspicion

The concept of suspicion is subjective. Some indications can be found in case law, where the following observations have been made about what suspicion feels like:

• A state of mind more definite than speculation but falling short of evidence-based knowledge.
• More than mere idle wondering.
• A positive feeling of actual apprehension or mistrust.
• A slight opinion, without sufficient evidence.

SAR reporting is also required when there are “reasonable grounds” to know or suspect. This is an objective test, meaning, the standard of behaviour expected of a reasonable person in the same position. Claims of ignorance or naivety are no defence.

Ongoing staff training

Clear Strategic Solutions will take a proactive approach to ensuring that all employees are aware of their responsibilities with regard to:

• monitoring and analysing customer transactions.
• the KYC process in respect of customer accounts
• other financial partners (e.g., banks, acquirers, providers)
• merchants and other partners will receive adequate training.

All employees will be made aware of their and the firm’s obligations under this policy and relevant Money Laundering regulations and legislation and will receive training in internal ML procedures.

All employees will receive training that will make them aware of:

• Clear Strategic Solutions ‘s responsibilities under all relevant Money Laundering regulations and legislations, including Client Identification and Suspicious Transaction Reporting requirements.
• The potential criminal liability of all employees for any offence associated with Money Laundering legislation.
• The identity and responsibilities of the MLROs and their deputies
• The potential effect on the firm, its employees, and clients of any breach of Money Laundering regulations and legislations.

Staff members within the Risk & Compliance department are required to attain accreditation in respect of Money Laundering training.

This will be achieved by the successful completion of a written examination at the end of the training programme. This accreditation will be renewed at least every 24 months.

Failure to Comply

Failure to comply with any requirement of this policy by any employee working under the regulations of AML policy and having received awareness and training, will be considered a very serious matter, and in addition to any criminal or regulatory proceedings which the appropriate authorities may decide to implement, may also result in disciplinary action being taken. Senior management of Clear Strategic Solutions will consider the use of disciplinary action for failure to comply with this Policy if circumstances show negligence or deliberate non-compliance.