Exolo AML Policy

ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM POLICY

INTRODUCTION AND GENERAL INFORMATION

1. Introduction

EXOLO INNOVATIONS LTD (“Company”) is duly incorporated private company limited by shares as per rules and regulations of the Commonwealth of Dominica Companies Act No. 21 of 1994. The Company seeks to register as a CFD/Forex/ Crypto Currency Dealer sub-license with Financial Master Management Ltd, incorporated in the Commonwealth of Dominica, which is a licensed entity under the Financial Dealers License number 2023/C0010 issued by the Financial Service Unit ("FSU") the main financial regulatory authority of Dominica. As part of its license, Financial Dealers holds the authority to act as an intermediary in the execution of Forex, Contracts for Difference (CFD), and digital currency transactions, as well as the exclusive right to issue sublicenses to online trading business companies. Financial Dealers is also an external dispute resolution (DR) body, dedicated to Forex, Contracts for Difference (CFD).

The Company performs alternative trading strategies providing platform for trade contracts for future differences leveraging digital assets (crypto commodities trading) under the laws and regulations of the Commonwealth of Dominica. The AML/CFT Policy (“Policy”) is intended to establish internal rules and procedures to be followed by the Company and every employee in order to help mitigate any potential risks of Money Laundering (ML) and Terrorist Financing (TF) and has been structured to adhere to all relevant international standards and an extensive suite of laws, regulations, and recommendations.

As a financial services provider, the Company is aware of its statutory duty to actively pursue the Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”) obligations. Accordingly, the Company has put in place a set of policies and procedures focusing on all money laundering risks and the following objectives: mitigating adverse movements, avoiding any instability, counteracting money laundering and terrorist financing as part of its daily routine, and raising employee/ representative awareness of the Company’s AML and CTF obligations.

The Manual covers the responsibilities and accountabilities of employees and management in relation to AML procedures, client acceptance policy, the client due diligence policy, reporting requirements, client and transaction monitoring, record keeping and staff awareness and training. This Manual should be read, understood and followed by all officers, staff and representatives of the Company and referred to when necessary. It is not designed to cover every contingency but sets out the broad principles and procedures the Company should comply with during its operation cycle.

Nothing in this Manual is intended to replace the provisions in the various pieces of regulatory and anti-money laundering legislation. Reference to them should be made in cases where greater details or definitions are needed.

The requirements imposed by this Policy are highly considered by the Company, and as a result, all employees are expected to read, understand, and abide by it.

1.2.  Purpose of the Policy

 The Company acknowledges the global nature of the fight against ML and TF and is committed to joining forces with the governmental authorities, in addition to international bodies, to prevent and cease any and all potential opportunities for ML, TF, or any other form(s) of financial crime.

The Company is committed to ensuring that its market is not misused in any way by any individual or entity from any jurisdiction for committing any form of financial crime or any other associated crime.

1.3.  Objective of the Policy

 The key objectives of the Policy include the following:

• Develop a comprehensive and effective AML/CFT framework for its business and modes of operation.
• Assist all related regulatory authorities in identifying any suspicious clients and transactions, and help mitigate any potential risks of ML and TF;
• Outline the risk-based framework to identify, manage, and mitigate all ML/TF risks the Company may face;
• Ensure that it shall not provide any services for and/or on behalf of any individuals or corporate entities targeted as a known or suspected terrorist(s) or sanctioned party by the UN Security Council or on any sanctions list(s);
• Register all individuals as clients, whereby all their identities can be assessed and registered.
• Obtain all necessary documentation and required information from clients and periodically update as necessary;
• Independently conduct internal audit(s) in addition to external audit(s) by cooperating with competent external independent auditor’s firm(s) and compliance experts for the measurement of the effectiveness of the AML/CFT procedures, systems and controls;
• Provide guidance to employees on local legal and regulatory AML/CFT requirements;
• Provide periodic AML/CFT training(s) to all employees of the Company.

1.4.  Policy Implementation and Management

 The Company has appointed a Compliance Officer, acting as a representative in charge of the implementation, development, and oversight of its compliance with the AML/CFT Policy.

• The Compliance Officer will be responsible for ensuring that the strictest AML/CFT protocols and regulations are continuously maintained during the onboarding of clients and throughout their use of the services.
• The Compliance Officer shall have a dual role of onboarding clients while conducting due diligence through a risk-based approach. The Compliance Officer holds a regulatory requirement as per this Policy to report regularly to the Head of Compliance and promptly inform in cases of any suspicions related to prospective clients, or existing clients.
• As per the applicable laws of the Dominica, the Compliance Officer will ensure the quality, strength, and effectiveness of the Company’s AML/CFT program. As such, the Compliance Officer will act as a stakeholder with respect to the Company’s ML/TF business risk assessment and the overarching AML/CFT policies, controls, and client Due Diligence (CDD) measures. The Compliance Officer will be in-charge of reviewing, scrutinizing, and reporting suspicious clients to the senior management.

• The Compliance Officer is responsible for helping to establish and maintain a strong and effective AML/CFT compliance culture within the Company. This duty includes working with senior management and other internal and external stakeholders to ensure that the Company’s employees are well-qualified, well trained, well-equipped, and well-aware of their responsibility to combat the threat posed by ML/TF.
• This AML/CFT Policy shall be reviewed on an annual basis. Any review(s) shall take into account any legislative changes regarding AML and CFT in Dominica and as recommended by the FIU, as well as any additional international legislation or recommendations (i.e., FATF, OFAC). The AML/CFT Policy previous year's implementation shall also be examined and improved if necessary.
• The Compliance Officer shall provide any written recommendations to senior management as to the proposed operational or policy enhancements. If the review identifies that the Company’s approach and implementation of managing the set policies and procedures are inadequate or not compliant with this Policy or with Company’s obligations, the Company shall consider immediate corrective action.

1.5.  Applicable Laws & Legislations

 The AML/CFT framework in Dominica is made up of the following: the NAMLAC, IRD, the AG, the Financial Secretary, DPP, FIU, CDPF, Customs, CIPO, FSU, ECSRC, and the ECCB. The ECCB is the monetary authority having prudential and AML/CFT regulatory oversight for domestic banks in Dominica with the objective of promoting, regulating, and maintaining financial stability.

The AML/CFT/CPF Strategy is predicated on four overarching pillars. These pillars are (i) regular reviews of the jurisdiction’s AML/CFT/CPF framework to maintain compliance with the international standards; (ii) an annual NRA to ensure that Dominica’s risk is thoroughly identified and appropriate countermeasures are implemented;

(iii) effective application of Supervisory Technology (SupTech) tools and processes to ensure that all regulated entities are subjected to effective supervision by the supervisory authority; and (iv) enhanced capacity, collaboration and coordination and appropriate training of key CAs.

This AML/CFT Policy has been developed with reference to the below mentioned legislation, directives, and regulations. In the event of any material change to any of the below regulations following the date of the AML/CFT Policy coming into force, the Company shall make such amendments to the Policy as are necessary.

The act of money laundering is criminalized in Dominica under the Money Laundering Prevention Act of 2000.

1.6   Applicable government authorities and international laws & standards

1. The National AML and Suppression of Terrorist Financing Advisory Committee (NAMLAC) and The Attorney General (AG): is the Central Authority in Dominica for MLAs requests and extradition requests. In addition, the AG is the competent authority for the civil recovery of recoverable property under Part IIIA of POCA as well as the competent authority for proposing persons for classification.
2. The Financial Intelligence Unit (FIU): is responsible for receiving, requesting, analysing, investigating and disseminating information concerning all suspected proceeds of crime and suspicious transactions and information relating to the property of terrorist groups and terrorist financing and related duties.

1. The Commonwealth of Dominica Police Force (CDPF)
2. The Financial Services Unit (FSU): established under the MLPA as the Money Laundering Supervisory Authority (MLSA) for AML/CFT Regulations and supervision for FIs and persons carrying a scheduled business.
3. The Customs and Excise Division (CED): the designated law enforcement authority in relation to customs and excise offences. The CED is charged with collecting and protecting revenue and monitoring cross-border activities, including the illicit drug trade and other proceeds of criminal activities.
4. The Eastern Caribbean Central Bank (ECCB): the ECCB is the central bank for the Eastern Caribbean Currency Union, which includes the Commonwealth of Dominica and is the prudential supervisor for licenced financial institutions) under the Banking Act, 2015 as amended. Section 7(2) of the MLPA establishes the ECCB as the MLSA of licenced financial institutions (FIs- domestic banks).
5. The Eastern Caribbean Securities Regulatory Commission (ECSRC): the ECSRC is an independent, autonomous regional regulatory body established by agreement (The Eastern Caribbean Securities Regulatory Commission Agreement) on 19th October 2001. The ECSRC is the sole regulator of the Eastern Caribbean Securities Market (ECSM). The ECSRC is designated to regulate and supervise securities firms in Dominica.
6. The Integrity in Public Office (IPO): the IPO was established pursuant to the Integrity in Public Office Act, Chapter 23:04. The IPO receives, retains and examines all declarations filed with it, make such enquiries as it considers necessary in order to verify or determine the accuracy of any declaration filed with it; inquiries into any allegation of bribery or act of corruption under the Act; and receives and investigates complaints regarding non-compliance with provisions of the Act.

Dominica has a hybrid-style FIU; meaning that besides its core functions, the FIU has added responsibility for conducting ML and TF investigations and the identification, seizure, freezing and restraint of assets (see IOs 7, 8 and 9).

Dominica’s FIU is the established Central Authority (CA) responsible for the receipt, analysis and dissemination of information and investigation relative to all suspected proceeds of crime and suspicious transactions. The FIU is largely staffed by police officers who are also members of the CDPF and is the main user of financial intelligence and relevant information relative to proceeds of crimes, including ML, and the identification and tracing of assets.

Dominica’s FIU is a key source of financial intelligence as it is the agency that is responsible for the receipt of suspicious transactions reports (STRs) and is responsible for analysing the information it receives in these STRs and other reports it receives. Pursuant to domestic legislation, STRs, cash transportation reports (CTRs) and terrorist property reports (TPRs) are all submitted to the FIU. The FIU’s function is well understood by the other CAs, and its resources and outputs are used by these CAs.

2.  FINANCIAL CRIMES AND AML/CFT FRAMEWORK

1. Money Laundering

 As per the Money Laundering Prevention Act of 2000, Money Laundering is defined as any person, having the knowledge that the funds are the proceeds of a felony or a misdemeanor, and who willfully commits any of the following acts, shall be considered a perpetrator of the crime of ML:

1. Transferring or moving proceeds or conducting any transaction with the aim of concealing or disguising their Illegal source.
2. Concealing or disguising the true nature, source or location of the proceeds as well as the method involving their disposition, movement, ownership of or rights with respect to said proceeds.
3. Acquiring, possessing or using proceeds upon receipt.
4. Assisting the perpetrator of the predicate offense to escape punishment.

The crime of ML is considered as an independent crime. The punishment of the perpetrator for the predicate offense shall not prevent his punishment for the crime of ML.

Proving the illicit source of the proceeds should not constitute a prerequisite to sentencing the perpetrator of the predicate offense.

2.2.  Offenses Related to Money Laundering

An individual or entity that commits any of the following acts shall have committed an offense related to ML:

1. Failure to disclose to the AML Suspicious Cases or any information or suspicion acquired in the course of that person’s trade, business, profession, employment or otherwise regarding the offense of ML to regulatory authorities.

1. Failure to follow any order issued by regulatory authorities in relation to suspicions relating to ML or TF; and/or
2. Disclosure of any information or suspicion acquired in the course of that person’s, trade, business, profession, employment or otherwise regarding the issue of an investigation order or attachment order in a money laundering offense, where such disclosure is likely to prejudice the investigation.

2.3.  Terrorist Financing

 If a person is aware that the proceeds are wholly or partly owned by a terrorist organization or terrorist person or intended to finance a terrorist organization, a terrorist person or a terrorism crime, even if it is without the intention to conceal or disguise their illicit origin.

1. Providing, collecting, preparing or obtaining proceeds or facilitating their obtainment by others with intent to use them, or while knowing that such proceeds will be used in whole or in part for the commitment of a terrorist offense, or if he has committed such acts on behalf of a terrorist organization or a terrorist person while aware of their true background or purpose.

In other words, TF can be described as a crime where an individual(s) or corporate entity by any means, directly or indirectly, unlawfully and willingly, provides or collects funds with the intention that or in the knowledge that they are to be used, in full or in part to carry out any criminal action or inaction criminalized under the present Law and every action or inaction constituting a felony or misdemeanor referred to in any other law, if committed for terrorist purpose and whoever;

• Offers, collects, prepares, obtains or facilitates the obtainment of funds for the purpose of using the same although aware that they will be used, in part or in whole, in the commission of a terrorist offense.
• Offers funds to a terrorist organization or person or collects, prepares, obtains or facilitates the obtainment of funds for such terrorist organization of person, although aware of their or purpose.
• Acquires, takes, manages, invests, possess, transmits, transfers, deposits, keeps, uses or disposes of funds or carries out any commercial or financial bank transaction although aware that all or part of such funds are collected as a result of a terrorist offense, owned by a terrorist organization or intended for the financing of a terrorist organization, person or offense.

And whoever is aware that the funds were, in whole or in part, collected as a result of a terrorist offense, owned by a terrorist organization, person, or offense, and commits any of the following acts:

• Transfers, transmits, deposits, or replaces funds for the purpose of concealing or camouflaging their truth, origin or illegal purpose.
• Conceals or camouflages the truth, origin, place, method of disposition, movement and ownership of the illegal funds or the rights related thereto.
• Acquires, possesses, uses, manages, keeps, invests, replaces or deals in the funds for the purpose of concealing or camouflaging their truth, origin or illegal purpose.

2.4.  International Sanctions

International Sanctions typically include:

1. Country or regime sanctions which are applied specifically against a country, including its nationals, or government regime; group(s).

General punitive or coercive measures may include:

1. Restrictions on trade in goods or services;
2. Restrictions on financial transactions;
3. Restrictions on exports;
4. Travel bans; or
5. Participation bans.

3.  KNOW YOUR CLIENT AND CLIENT DUE DILIGENCE (“CDD”)

Know Your Client (“KYC”) assists the organization in fighting fraudsters by providing client identification and verification. By diligently following the KYC system, the Company is able to set out a detailed risk management policy and procedure geared towards the prevention and detection of any unlawful activities. Client Due Diligence (“CDD”) is the process of obtaining relevant details about the client to ensure that they conduct their business in line with their personal profile and/or business activities, thus ensuring that their source of funds and purpose are legitimate as well as that their business activities are not related to ML and TF.

Therefore, the Company is committed to exercising CDD when dealing with clients during the onboarding process. In the course of conducting business, the Company ensures compliance with regulations that require it to prevent the facilitation of ML and TF. The Company’s policy is to deal only with clients whose source of wealth and funds can be reasonably established to be legitimate and whose remittance transactions carry true economic value.

3.1.  Required Client’s Information & Documents

The Company has developed an initial screening form and a due diligence questionnaire for individual clients to verify the identity of all its clients during the onboarding process [please see Annexures I to IV]. Specifically, the stipulated forms and questionnaire are intended to cover the following information to a) Individual or Entity information

• Individual information

Information	Documents
Full name Nationality Country of Residence Passport Number/ID Number Date of birth Email address IP Address	Passport National Identity Card

• Unincorporated entities or individuals acting as agents of entities in any capacity whatsoever;
• Subject of international sanctions or red-flagged individuals or entities.

4.  RISK BASED APPROACH

The Company is committed to taking appropriate and diligent steps to identify and assess any ML and TF risks to which its business is or may potentially be exposed, while considering the nature, size, and complexity of its clients’ profiles and activities.

In the course of onboarding clients, the Company screens them and determines their status on the relevant AML/CFT sanction lists by using a commercial database to identify their (a) Ultimate Beneficial Owners ("UBO"), (b) Politically Exposed People ("PEP").

The Company engages an external service provider Refinitiv World-Check for KYC and CDD screening in order to find PEPs . Further, the Company verifies the sanction lists provided by OFAC for additional due diligence.

4.1.  Politically Exposed Persons

Natural persons who are or have been entrusted with prominent public functions in the State or any other foreign country, such as heads of States or governments, senior politicians, senior government officials, judicial or military officials, senior executive managers of state-owned corporations, senior officials of political parties, persons who are, or have previously been, entrusted with the management of an international organization; and the definition also includes the following: (a) Direct family members (who are spouses, children, spouses of children, parents), and (b) Associates known to be close to the PEP, which include individuals having joint ownership rights in a legal person or arrangement or any other close business relationship with the PEP and/or individuals having individual ownership rights in a legal person or arrangement established in favor of the PEP.

In the event of onboarding a foreign or domestic PEP or direct family members as a client, the Compliance Officer shall verify the UBO and conduct enhanced due diligence measures. Accordingly, the Compliance Officer shall obtain the senior management's approval before establishing a business relationship or continuing an existing one with a PEP or direct family members. The senior management shall be responsible for approving such clients, and it is subject to their sole discretion. Once the approval is given, the Compliance Officer shall take responsible measures to establish the source of funds, including the source of wealth, of the PEPs and their direct family members. Generally, all onboarded clients who identify as “PEP” shall be categorized as high-risk clients.

The Company’s risk assessment consists of a risk classification whereby a client is assigned a low/medium/high rating depending on the level of risk they pose. Where a prospective client is assessed as carrying a higher risk, the Company may seek to obtain additional requirements, i.e., information and/or documentation, in order to assess whether to onboard them. The Compliance Officer may, at its sole discretion, reject or terminate any relationship(s) with its clients if any of the risk factors identified cause any concerns or alerts that the Company deems unsuitable for its business.

Risk Parameters	HIGH	MEDIUM	LOW
Country of Citizenship Country of Residency	High Risk Countries identified by Basel and the FATF from time to time. (Annexure V)	Medium Risk Countries listed by Basel and the FATF from time to time.	Other than ‘High’ and ‘Medium’
Submitted Information and Documentations	Submitted documents are not matching with the information provided. Provided email address is not valid, especially if the email provided is an obvious misspelled word which can be a possibility of fraud. Clear signs of forgery. This can be detected by: - Missing letter in a word of official document. Missing letter in an official stamp. No supporting documents provided. Hologram stamp not present in the ID Document submitted (if applicable).	Partial verification of the documents due to incomplete or incorrect information. These errors can be misspelled words or wrong phone numbers (if applicable).	Appropriate documents were provided by the client.
Screening of PEP	All PEP(s) and direct family members will automatically be classified as High-Risk clients

The Company shall periodically review all its existing clients' information and documentation in order to ensure that it is consistent with its knowledge of the client, its business, and its risk rating.

The Compliance Officer shall conduct ongoing monitoring by:

I.          Re-screening all its clients daily against international Sanctions Lists (ANNEXURE II);

• Recording expiry date(s) of all submitted documentation and updating them.

5.1.  Reclassification of the Risk Status of Existing Clients

There are various reasons why clients may be reclassified into different risk categories. It is important for the Company to immediately update a client’s KYC upon any change(s) or addition of additional KYC information to their profile.

All changes to the client’s KYC are subject to manual rescreening by the Compliance Officer in order to materially assess the change in risk scoring, rating, and potential reclassification. The Company may start a re-screening of all its relationships with its clients at any time during an existing relationship for the reasons listed below:

• Change of Country of citizenship
• Change of Country of residency
• Change in occupational status
• Change in client’s net worth
• Change in client’s sanctions or PEP Screening Results
• Change in AML/CFT Laws & Regulations

6.  TRAINING AND AWARENESS

The Compliance Officer shall provide periodic AML/CFT training sessions annually to all employees to raise awareness on the scope of financial crimes and employee duties and responsibilities for AML/CFT in the business. Further, the Compliance Officer shall ensure that new employees are provided with AML/CFT training immediately after joining and that all existing employees are additionally trained at least once a year. The AML/CFT policies, controls, and procedures manual shall be made available to all employees.

6.1.  AML/CFT Training Materials

• AML-CTF Overview and definitions
• International AML-CTF Laws, Regulations and Authorities (FATF, OFAC)
• AML-CTF Obliged Entities
• Money Laundering Reporting Officer (MLRO)

• AML Risk Assessment
• Know Your Customer (KYC)
• Customer Due Diligence (CDD)
• AML Identification and Verification Procedures
• UBO and PEPs
• Enhanced Customer Due Diligence
• AML Record Keeping Procedures
• AML-CTF Responsibilities
• AML Sanctions

6.2.  The AML/CFT Training shall be carried out in various means that may include:

• In-person or virtual lectures
• Videos
• Interactive case studies /Explanatory memos.

7.  REPORTING

The Compliance Officer holds a crucial role in ensuring that he/she regularly and diligently keeps records and investigates in any event where he/she encounters a red flag during client onboarding.

The Compliance Officer shall make a record of all internal reporting conducted in the Company and the Compliance Officer shall inform the senior management of any high-risk clients in order to obtain authorization to onboard them to conduct business activities.

8.  RECORD KEEPING

The objective of recordkeeping is to ensure that we can provide necessary information about clients’ details at any given time or as per the request of competent authorities or auditors. The Company is obliged to maintain detailed records and documents obtained through CDD measures to ensure the appropriate KYC verification process undertaken by the Company. The Company shall keep the original or a true copy of all documents, data, and information of the clients in a readily retrievable format for five (5) years.

Initial Screening form (for individual)

Name of the Individual
Nationality
Passport Number (if obtained)
Initial Screenign-Clear (➹) With Comments, if any. (Screening if Individual(s)against the appropriate AML/CFT sanction lists via a reputable commercial database)
Initial Screening – Not Clear (X) With Comments and World Check/OFAC/Web Pages. (Screening of individual(s) against the appropriate AML/CFT sanction lists via a reputable commercial database)

This is the list of countries that are categorized under the FATF & Basel Reports 2023, according to the level of

risk of money laundering and corruption.

HIGH RISK	MEDIUM RISK	LOW RISK
Albania Burkina Faso Cayman Islands Gibraltar Haiti Jamaica Jordan Mozambique Nigeria Philippines Senegal Tanzania Türkiye Uganda United Arab Emirates Madagascar Guinea-Bissau Vietnam Sierra Leone Eswatini Mauritania Cameroon Benin Tonga Nicaragua Niger Solomon Islands Pakistan Bhutan Cape Verde Saint Kitts and Nevis Sri Lanka Zambia Bahamas Kyrgyzstan Mongolia Tajikistan Thailand Bangladesh	Cambodia Morocco Aruba Antigua and Barbuda Hungary Grenada Samoa Tunisia Serbia Egypt Bahrain Malta Colombia Croatia Peru Japan Moldova Fiji Armenia Georgia Liechtenstein Costa Rica Italy Switzerland South Korea Poland Slovakia Saudi Arabia Bulgaria Dominican Republic United States of America	Singapore Canada Germany Taiwan Uruguay Netherlands Chile Austria Belgium Ireland Portugal Latvia Czech Republic Greece Burundi Israel United Kingdom Denmark France Norway Lithuania Slovenia San Marino New Zealand Iceland Sweden Andorra Finland Botswana

HIGH RISK	MEDIUM RISK	LOW RISK
Palau Ghana Belarus Malawi Honduras Turkey Seychelles Saint Lucia Malaysia Guatemala Vanuatu Mexico Uzbekistan Indonesia Ukraine Cyprus Lebanon Trinidad and Tobago Eritrea China Panama Barbados Mali South Africa Zimbabwe Yemen Venezuela South Sudan Libya The Democratic Republic of the Congo Ethiopia Central African Republic Belarus Balkans Liberia Syria Cuba

13.  ANNEXURE III

Restricted by FATF and OFAC [2023]

This is the list of countries that are restricted due to high levels of corruption and/or sanctions. Any acceptance of clients on this restricted list is subject to enhanced due diligence by the Compliance Officer and the senior management of the Company shall be solely responsible for such approval during the onboarding process.

• The Russian Federation
• Democratic People’s Republic of Korea
• Iran
• Ukraine Regions: Donestsk, Crimea and Luhansk
• Myanmar