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AML Policy

Introduction

Paytower (“Paytower ” or “the Company”) firmly opposes money laundering, terrorist financing, and any illicit activities. The Company is dedicated to implementing policies, procedures, and controls that adhere to industry best practices and global anti-money laundering standards, in line with the international market. These guidelines are applicable to all individuals associated with the Company, including employees, board members, officers, contractors, and consultants.

The objective of this document is to offer a comprehensive overview of the Company’s AML/CTF (Anti-Money Laundering/Countering the Financing of Terrorism) compliance framework and procedures to partners, clients, vendors, contractors, employees, regulators, law enforcement, and other stakeholders. It is important to note that this document does not encompass all policies, procedures, and controls implemented by the Company to prevent money laundering, terrorist financing, and other illicit activities.

Legal and Regulatory Framework

This document and its underlying policies, processes, and procedures are developed in accordance with the provisions, requirements, and recommendations of:

  • FATF (Financial Action Task Force) Guidance for a Risk-Based Approach to Virtual Assets and Virtual Assets Service Providers.

Paytower recognizes the importance of AML and CTF regulations. As a regulated entity, Paytower is obligated to comply with the Money Laundering and Terrorist Financing Prevention Act and the International Sanctions Act. These regulations mandate Paytowerto identify and verify client identities, conduct ongoing monitoring of client activities including transaction monitoring, maintain records of client activities and related documentation for a minimum of five years, and report certain transactions to the relevant authorities.

Understanding Money Laundering

The Company defines money laundering as:

  • The conversion or transfer of property, knowing that such property is derived from criminal activity, for the purpose of concealing or disguising its illicit origin or assisting any person involved in such activity to evade legal consequences.
  • The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property derived from criminal activity.
  • The acquisition, possession, or use of property known, at the time of receipt, to be derived from criminal activity.
  • Participation in, association with, attempts to commit, and aiding, abetting, facilitating, and counseling the commission of any of the aforementioned actions.

Terrorist financing involves providing funds for terrorist activities. Legally, this refers to the provision or collection of funds, directly or indirectly, with the intention or knowledge that they will be used. Terrorist activities aim to intimidate populations or compel governments to take specific actions by causing harm, disrupting essential services, or damaging property.

Risk-Based Approach and Risk Assessment

Paytower adopts a risk-based approach to due diligence, collecting information and documentation on each prospective client to assess associated risk profiles. The Company’s employees exercise diligence and good judgment in evaluating client character and nature. Paytower conducts business in accordance with the highest ethical standards, avoiding relationships that could tarnish the Company’s reputation or the virtual currency industry.

The Company conducts risk assessments considering:

  • Customer risk
  • Geographical risk
  • Product risk
  • Delivery channel risk

Client risk assessments are periodically reviewed based on evolving client knowledge and activity.

Compliance Officer

The Company’s management board appoints a Compliance Officer responsible for liaising with the FIUE and overseeing AML/CTF obligations. The Compliance Officer reports directly to the management board and possesses the necessary qualifications, experience, and integrity. The appointment is coordinated with the FIUE.

The Compliance Officer’s duties include:

  • Organizing the collection and analysis of information on suspicious transactions related to money laundering or terrorist financing.
  • Reporting suspicious activities to the FIUE.
  • Providing periodic compliance reports to the Company’s management board.
  • Fulfilling other obligations related to compliance with the Act.

Rules of Procedure and Internal Control Rules

The Company has established procedures to mitigate and manage money laundering and terrorist financing risks identified through risk assessments. All Company employees must adhere strictly to these procedures.

Procedures include:

  • Due diligence measures for customers, including simplified and enhanced due diligence.
  • Risk identification and management models.
  • Reporting procedures for suspicious activities.
  • Data retention and availability procedures.
  • Identification methods for politically exposed persons and persons subject to international sanctions.

Due Diligence Measures

The Company conducts due diligence by:

  • Verifying customer identity and submitted information through reliable and independent sources, including electronic identification methods and trust services for electronic transactions.
  • Identifying the beneficial owner and ensuring a thorough understanding of their identity, ownership, and control structure.
  • Assessing business relationships and gathering relevant information.
  • Checking for politically exposed persons, their family members, or close associates.
  • Monitoring ongoing business relationships.

Simplified Due Diligence (SDD)

The Company has the option to employ simplified due diligence (“SDD”) measures when a risk assessment, conducted according to our established procedures, indicates a lower risk of money laundering or terrorist financing in specific economic, professional, or circumstantial contexts.

Before implementing SDD measures for a customer, an employee verifies that the business relationship, transaction, or activity poses a reduced risk. The Company then assigns a lower risk level to the transaction, activity, or customer.

SDD measures are only applied if the Company can ensure adequate monitoring of transactions, activities, and business relationships. This monitoring enables the identification of unusual transactions and facilitates the reporting of suspicious transactions in accordance with our procedures.

Enhanced Due Diligence (EDD)

The Company employs enhanced due diligence (“EDD”) measures to effectively manage and mitigate the heightened risk of money laundering and terrorist financing.

EDD measures are consistently applied in the following scenarios:

  • When doubts arise regarding the accuracy of submitted data, authenticity of documents, or identification of the beneficial owner during the process of person identification or verification of submitted information.
  • When the customer is identified as a politically exposed person, excluding local politically exposed persons, their family members, or close associates.
  • When the customer originates from a high-risk third country or resides in or is based in such a country.
  • When credible sources, such as mutual evaluations, reports, or published follow-up reports, indicate that the customer’s country or territory lacks effective AML/CTF systems as recommended by the Financial Action Task Force, or is categorized as a low-tax jurisdiction.

Additionally, the Company implements EDD measures when a risk assessment, conducted based on established criteria, indicates a higher-than-usual risk of money laundering or terrorist financing in specific economic, professional, or contextual circumstances.

PEP Definition and Screening

Reporting entities are required to subject Politically Exposed Persons (“PEP”), along with their families and individuals known to be close associates, to heightened scrutiny. This obligation arises from international standards established by the Financial Action Task Force, which acknowledge that PEPs may exploit their public positions for personal gain and may utilize the financial system to launder illicit proceeds.

A PEP is defined as a natural person who currently holds or has held prominent public functions, including but not limited to:

  • Head of State;
  • Head of government;
  • Minister, deputy minister, or assistant minister;
  • Member of parliament or similar legislative body;
  • Member of a governing body of a political party;
  • Member of a supreme court or court of auditors;
  • Ambassador, chargé d’affaires, or high-ranking officer in the armed forces;
  • Member of an administrative, management, or supervisory body of a state-owned enterprise;
  • Director, deputy director, or board member of an international organization.

It’s important to note that PEPs do not encompass middle-ranking or junior officials.

The term “family member of a PEP” refers to:

  • Spouse or equivalent;
  • Child and their spouse or equivalent;
  • Parent.

A “person known to be a close associate of a PEP” is defined as a natural person who:

  • Is identified as the beneficial owner or joint beneficial owner of a legal entity or arrangement with a PEP or local PEP;
  • Has close business relations with a PEP or local PEP;
  • Solely owns a legal entity or arrangement established for the de facto benefit of a PEP or local PEP.

Sanctions Screening

Engaging with individuals subject to imposed international sanctions presents a significant risk to the Company, its directors, officers, and owners.

The Company will conduct screening of its customers for sanctions using the same matching criteria employed for PEP screening.

At a minimum, the Company will screen against the following sanctions lists:

  • United Nations (UN) Sanctions
  • European Union (EU) Sanctions
  • Sanctions administered by the Office of Financial Sanctions Implementation (“OFSI-UK”)
  • Sanctions administered by the Office of Foreign Assets Control (“OFAC-US“)
  • Sanctions imposed under the International Sanction Act

Any matches (true hits) will be promptly escalated to a Compliance Officer for further action and processing.

Suspicious Activity Monitoring and Reporting

In instances where the Company detects an activity or circumstances suggestive of the use of criminal proceeds, terrorist financing, or other criminal offenses, or has reason to suspect or ascertain that such activities constitute money laundering, terrorist financing, or the commission of another criminal offense, the Company’s Compliance Officer is obligated to promptly report it to the Financial Intelligence Unit. This report must be made immediately upon identification of the activity or circumstances, and no later than two working days thereafter.

Furthermore, the Company, along with all its employees, officers, and directors, is strictly prohibited from disclosing to any individual, including the person involved, their beneficial owner, representative, or any third party, the submission of a report to the FIUE, the intention to submit such a report, or the initiation of criminal proceedings.

Data Retention

The Company is required to retain the documents and information used for identifying and verifying clients for a minimum period of five years following the termination of the business relationship.

In adhering to these obligations, the Company establishes necessary rules to safeguard personal data.

The Company is permitted to process personal data collected through the implementation of these rules solely for the purpose of preventing money laundering and terrorist financing. Such data must not be further processed for purposes unrelated to this objective, such as marketing endeavors.

Training

The Compliance Officer is responsible for ensuring that all employees of the Company fully understand their legal obligations under the Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) regulatory framework. This is achieved through the implementation of a comprehensive employee education and training program.

The timing and content of the training sessions are determined based on the specific needs of the Company. The frequency of training may vary in response to changes in legal or regulatory requirements, modifications to employee responsibilities, or alterations to the business model. The objective of the training program is to equip Company employees with up-to-date knowledge of the latest developments in money laundering and terrorist financing prevention, including practical methodologies and emerging trends in this field.

Cooperation and Exchange of Information

The Company collaborates with regulatory and law enforcement agencies to combat money laundering and terrorist financing. In doing so, the Company shares relevant information and responds to inquiries in a timely manner, adhering to the duties, obligations, and restrictions imposed by applicable legislation.

For any pertinent requests, please contact us at sales@paytower.com or partners@paytower.com. It should be noted that if you represent a law enforcement agency outside of the European Union, procedures outlined in the Mutual Legal Assistance Treaty (MLAT) may be applicable.