Anti-Money Laundering (AML) & Countering Financing of Terrorism (CFT) Policy

Date: 01.12.2024

1. Policy Statement

Finrate AG is committed to the highest standards of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance. Operating as a non-custodial staking platform through stakingrewards.com, we facilitate staking services without directly accepting or holding customer funds. We are committed to preventing misuse of our platform for illegal activities, ensuring that only compliant customers access our institutional products and services.

2. Purpose and Scope

This AML/CFT Policy sets out the minimum standards that must be adhered to by Finrate AG, its employees, and its customers. The policy applies specifically to certain products and services offered through stakingrewards.com that require KYC/AML checks due to their nature. For other products, KYC/AML checks may be conducted if irregular user behavior is noticed. It is designed to prevent the misuse of our platform for money laundering or terrorist financing activities.

3. Governance and Responsibility

AML Program Components
Finrate AG's AML Program encompasses various elements, including:
- Written policies, procedures, and internal controls designed to ensure compliance with applicable AML requirements as outlined in our enterprise-wide risk assessment framework (EWRA)
- Designation of a Money Laundering Reporting Officer (MLRO), who is accountable for the AML Program.
Board of Directors and Senior Management
The Board of Directors and Senior Management of Finrate AG are responsible for establishing and maintaining effective AML/CFT controls and ensuring compliance with applicable laws and regulations. They provide sufficient resources and support for the AML/CFT program and receive regular reports on its effectiveness.
Money Laundering Reporting Officer (MLRO)
An MLRO is designated to oversee the AML/CFT compliance program. The MLRO possesses appropriate qualifications, experience, and training, and has the authority and independence to perform their duties without undue influence. Responsibilities include reporting suspicious activities to the relevant authorities, ensuring the effective implementation of the AML/CFT policy, and providing guidance and training to staff.

4. Applicability of KYC/AML Checks

Finrate AG conducts KYC/AML checks under the following circumstances:

Products Requiring KYC/AML Checks
For specific products and services that require KYC/AML checks due to their nature, customers must undergo the KYC/AML process as outlined in this policy.
Irregular or Suspicious User Behavior
For products that do not inherently require KYC/AML checks, Finrate AG may conduct such checks if irregular or suspicious user behavior is noticed. This includes activities that deviate from normal usage patterns or may indicate potential misuse of the platform.

5. Products and Services Requiring KYC/AML Checks

The following products and services offered by Finrate AG require customers to undergo KYC/AML checks:

Institutional Staking Solutions
Specific staking solutions for institutional clients and large token holders require comprehensive KYC/AML checks. Customers wishing to use these products must complete the KYC/AML process as outlined in this policy.

6. Customer Due Diligence (CDD)

Customer Identification and Verification
For products requiring KYC/AML checks and in cases of irregular user behavior, Finrate AG implements robust Know Your Customer (KYC) procedures to verify the identity of customers, including beneficial owners for institutional clients.
- For Individual Customers:
  - Valid government-issued identification documents (e.g., passport, national ID card).
  - Proof of address (e.g., recent utility bill, bank statement).
- For Institutional Clients:
  - Certificate of incorporation or equivalent.
  - Articles of association or similar governing documents.
  - Proof of registered address.
  - Identification documents of directors and beneficial owners holding 25% or more of shares or voting rights.
Verification Methods
Finrate AG verifies documents through independent sources, official registries, or electronic verification tools to ensure authenticity.
Beneficial Ownership Identification
We identify and verify beneficial owners to ensure transparency and compliance with regulatory requirements.
Regular Monitoring
Annual reviews and updates of customer information are conducted, especially for high-risk clients, to maintain accurate records.
Monitoring for Irregular Behavior
Finrate AG monitors user activities across all products to detect irregular or suspicious behavior that may warrant KYC/AML checks, even if the product does not typically require them.

7. Prohibited Customers, Activities, and Transactions

Finrate AG is committed to preventing the misuse of its platform for illicit activities. As such, we have established strict guidelines on prohibited customers, activities, assets, and transactions.

7.1. Prohibited Business Relationships

Finrate AG will not engage in business relationships with customers who are:

Sanctioned Individuals and Entities
Listed by Swiss authorities or under international sanctions lists, including but not limited to:
- United Nations Security Council
- United States Office of Foreign Assets Control (OFAC)
- European Union member states
- His Majesty's Treasury of the United Kingdom
- Swiss Financial Market Supervisory Authority (FINMA)
Involved in Illicit Activities
Business enterprises and persons known or suspected to be involved in terrorist financing, money laundering, or to be part of criminal organizations.
Shell Banks and Companies
Entities with no physical presence at their place of incorporation or without a legitimate business purpose.
Anonymous or Fictitious Entities
Clients operating under fictitious names, pseudonyms, or without verifiable identification.
High-Risk Jurisdictions
Individuals or entities from jurisdictions with severe political instability, economic inequality, high levels of corruption, or those subject to international sanctions.
Unregulated or Unlicensed Entities
Virtual asset service providers without proper licensing, and unregulated charities or non-profit organizations.

7.2. Prohibited Industries

Finrate AG will not engage in business relationships with customers who are:

Weapons and armament manufacturing or trading.
Adult entertainment.
Casinos, gambling, or similar industries.

7.3. Prohibited Assets

Finrate AG shall not allow funds or assets which, through KYT monitoring or KYC checks, are known or suspected to be:

The proceeds of a crime.
Intended for financing terrorism.
Associated with a criminal organization.

This prohibition applies even if the crime or offense was committed abroad.

7.4. Restricted Jurisdictions

Finrate AG will not enter into business relationships with clients from restricted jurisdictions, including but not limited to:

Countries with sanctions nexus.
Jurisdictions identified by credible sources as having significant levels of corruption or criminal activity.
Areas with severe political instability or economic inequality.

7.5. Prohibited Activities and Transactions

Finrate AG prohibits any use of its platform for activities and transactions including, but not limited to:

Sanction Violations
Transactions that may violate, or cause Finrate AG to violate, applicable economic sanctions imposed or enforced by various governmental agencies.
Illicit Activities
Transactions related to fraud, scams, stolen funds, ransomware, malware.
Risky Activities
Transactions involving mixing services, darknet markets, or any activities designed to obfuscate the origin of funds or transactions.
High-Risk Industries Transactions
Transactions related to casinos, gambling, or similar industries.
Irregular Transaction Patterns
Transactions with irregular, unusual, or uncommon patterns and no logical business explanation, such as immediate withdrawal after staking without engaging in normal platform activities.

7.6. Actions Against Violations

Finrate AG reserves the right to take appropriate actions against any user found violating this AML/CFT policy, including but not limited to:

Rejecting transactions or access to the platform.
Issuing requests for additional information or documentation.
Blocking certain accounts and/or wallets from accessing the platform.
Terminating business relationships.
Reporting to appropriate regulatory authorities.

8. Customer Screening and Reporting

Sanctions Compliance
Finrate AG screens customers against relevant sanctions lists.
Handling Matches
In the event of a potential match, customer onboarding are halted, and further investigation is conducted. Confirmed matches are reported to the relevant authorities promptly.

9. Wallet Screening and Reporting

Activity Surveillance
For products requiring KYC/AML checks, Finrate AG monitors user activities on our platform for patterns indicative of money laundering or terrorist financing.
Use of Blockchain Analytics
We employ advanced blockchain analytics tools to monitor cryptocurrency transactions and identify suspicious patterns specific to blockchain activities.
Thresholds and Alerts
Predefined thresholds are set to trigger alerts for further review. Transactions exceeding certain amounts or exhibiting unusual patterns are flagged.
Reporting Suspicious Activities
Any suspected illegal transactions or activities identified through KYT and transaction monitoring are escalated internally and, where required, reported to the relevant regulatory authorities in accordance with Swiss laws.
Actions Against Violations
Finrate AG may take actions against the user, including but not limited to rejecting access, issuing requests for information, suspending accounts, or reporting suspicious activity to appropriate regulatory authorities. Finrate AG reserves all rights under its contractual arrangements with customers and under the laws applicable to it.

10. Reporting Obligations

Internal Reporting Procedures
Employees are required to report any suspicions of money laundering or terrorist financing to the MLRO confidentially and without delay.
Regulatory Reporting
Finrate AG complies with obligations to report suspicious activities to applicable authorities, ensuring legal compliance.
Legal Protections
Employees who report suspicions in good faith are protected from any form of retaliation or liability, promoting a culture of compliance.

11. Independent Audit

Audit Frequency and Scope
An independent audit of the AML/CFT program is conducted annually to assess its effectiveness and compliance with regulatory requirements. The audit includes a review of policies, procedures, and testing of controls.
External Auditors
Specialized external firms may be engaged to perform the audits, providing an objective assessment and enhancing credibility.

12. Data Protection and Privacy

Compliance with Data Protection Laws
Finrate AG adheres to the Swiss Federal Act on Data Protection (FADP) and, where applicable, the EU General Data Protection Regulation (GDPR), ensuring the protection of personal data.
Data Security Measures
We implement technical and organizational measures to safeguard personal data, including encryption, secure storage solutions, access controls, and regular security assessments.
Confidentiality and Privacy
All records are kept confidential and are only disclosed to authorized personnel or regulatory authorities as required by law.

13. Employee Training and Awareness

Training Programs
Employees involved in the delivery and management of products requiring KYC/AML checks and those responsible for monitoring irregular behavior undergo mandatory AML/CFT training upon joining and annually thereafter. Training includes:
- Awareness of AML laws and regulations.
- Recognizing suspicious activities.
- Understanding obligations under this policy.
Staking-Specific Risks
Training covers risks specific to staking services and blockchain technologies, enabling employees to identify and mitigate potential AML/CFT risks effectively.

14. Third-Party Relationships

Due Diligence on Partners
Finrate AG conducts due diligence on third-party service providers, partners, or vendors involved in staking services to ensure they comply with AML/CFT regulations.
Contractual Obligations
Agreements with third parties include clauses requiring compliance with AML/CFT regulations and grant Finrate AG the right to audit their compliance efforts.

15. Commitment to Regulatory Cooperation

Finrate AG is committed to cooperating fully with regulatory authorities. This includes timely responses to inquiries, provision of requested information, and proactive communication regarding compliance matters.

16. Policy Review and Updates

Periodic Review
This policy is reviewed at least annually or more frequently if required due to changes in regulations, operations, or the risk environment. Updates are made to ensure the policy remains current and effective.
Continuous Improvement
Finrate AG is dedicated to continuously improving its AML/CFT program by addressing emerging risks, incorporating best practices, and adapting to regulatory developments.

17. Customer Communication

Transparency
We inform customers about our AML/CFT policies and their obligations when using products that require KYC/AML checks or when irregular behavior triggers such checks. Clear communication ensures customers understand the importance of compliance.
Consent and Acknowledgment
Customers are required to acknowledge and agree to comply with this AML/CFT policy during the onboarding process for applicable products or when requested due to irregular behavior. This acknowledgment is documented and retained.

18. Maintenance of Records

Finrate AG maintains all records related to customer identification, due diligence, and transaction monitoring for the period prescribed by Swiss regulations, which is at least ten years after the termination of the business relationship or the completion of the transaction. This ensures that information is available for any future regulatory review or investigation.

19. Contact Information

For any questions regarding this AML/CFT Policy, please contact our Compliance Department at:

Email: [email protected]
Address: Schuetzengasse 7, 9000 St. Gallen, Switzerland
Phone: +351 910840833
Money Laundering Reporting Officer (MLRO): Jannik Schmiedl

20. Acknowledgment

By using Finrate AG's services, customers acknowledge that they have read, understood, and agree to comply with this AML/CFT Policy. This acknowledgment is a prerequisite for accessing our products and services that require compliance.

Approved by:

Name: Mirko Schmiedl
Title: CEO
Date: 02.12.2023

Appendix: Definitions

Money Laundering (ML): The process by which criminals conceal or disguise the origins of their illicit funds to make them appear legitimate.
Terrorist Financing (TF): The act of providing financial support to individuals or organizations involved in terrorism.
Politically Exposed Persons (PEPs): Individuals who are or have been entrusted with prominent public functions, along with their immediate family members and close associates.
Beneficial Owner: The natural person(s) who ultimately owns or controls a customer or the person on whose behalf a transaction is conducted.
Irregular Behavior: User activities that deviate from normal patterns and may indicate potential misuse of the platform, triggering the need for KYC/AML checks.

Note: This policy is subject to change in accordance with amendments in laws, regulations, and internal company procedures. Finrate AG reserves the right to make necessary adjustments to ensure ongoing compliance and effectiveness of its AML/CFT measures.

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