Anti-Money Laundering (AML) / Know Your Customer (KYC) Policy of CEX Digital Markets AG

Last update: 25 March 2024

INTRODUCTION

This Anti-Money Laundering (AML) and Know Your Customer (KYC) Policies Framework (“AML/KYC Policy”) is for CEX DIGITAL MARKETS AG (hereinafter, “CENEX”, “the Company”, “we”, “our” or “us”), registration number CHE-297.019.613, with registered address at Gotthardstrasse 3, CH-6300 Zug. The procedures set forth herein are intended to assist CENEX (the company is taking a zero-tolerance approach to being involved in illegal/illicit activity) in complying with its obligations at law by taking all reasonable steps and exercising all customer due diligence actions to prevent and avoid the identity theft, money laundering, financial fraud, terrorism financing and other financial related crimes.

There is a chance that certain crypto assets are used for scams and other criminal activity, as set out in both international and local regulations. To prevent this, it is necessary to implement effective measures to ensure customer verification and security of financial transactions. One of the best measures is AML/KYC procedures, which allow us to confirm that the customer is a law-abiding individual or corporation.

CENEX’s procedure includes gathering customers’ personal information (both natural persons and that of legal entities) by means of application forms, questionnaires followed by live identification. Once authenticated, CENEX will monitor and cross checks for PEP’s and individuals on the sanctions lists via a third-party platform.

The Company’s procedure involves a risk scoring system that can identify suspicious activity. If a transaction is flagged by this system, it is put on hold and the customer is requested to provide additional AML and KYС verification by way of enhanced due diligence (EDD). Should a client still not pass the additional AML/KYC verification then person or business transaction is put on hold and an investigation is submitted to The Money Laundering Reporting Office in Switzerland (MROS). For security reasons, the exact details, and specific criteria of our system cannot be disclosed, however, it has proven to be very effective against money launderers, scammers, terrorist financing, drug and human trafficking, proliferation of weapons of mass destruction, corruption, and bribery etc.

CENEX is in line with the international requirements and has adopted a risk-based approach to combating money laundering and terrorist financing. By adopting a risk-based approach, CENEX canensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate to the identified risks. This will allow resources to be allocated in the most efficient ways. The principle is that resources should be directed in accordance with priorities so that the greatest risks receive the highest attention.
CENEX reserves the right to appoint third-party service providers to fulfil any elements of the AML/KYC procedure on its behalf. While processing the customer’s information, such service providers completely comply with our Privacy Policy in respect of the customer’s personal information.

CENEX can provide the information collected during the AML/KYC procedure to the competent authorities upon legitimate request as all the information is securely stored and systems periodically reviewed. CENEX will not enter a business arrangement with an individual or an entity suspected of, or directly involved in, money laundering, or in which the funds have been the source of any illegal activity.

REGULATION

Our AML policies, procedures and internal controls are designed to ensure compliance with all applicable AML regulations (including but not limited to the Federal Act on Combating Money Laundering and Terrorist Financing (Anti-Money Laundering Act, AMLA) of 10 October 1997; Ordinance on Combating Money Laundering and Terrorist Financing (Anti-Money Laundering Ordinance, AMLO) of 11 November 2015; Ordinance of the Swiss Financial Market Supervisory Authority on the Prevention of Money Laundering and the Financing of Terrorist Activities (FINMA Anti-money Laundering Ordinance, AMLO-FINMA of 3 June 2015) and will be reviewed and updated on a regular basis to ensure appropriate policies, procedures and internal controls are in place to account for both changes in regulations and changes in our business.

SCOPE

All management and employees of CENEX are required to acknowledge and be familiar with the AML/KYC Policy and behave with full responsibility. The duties of employees will include monitoring the company’s compliance with AML/KYC obligations, overseeing communication and training for new employees, apply customer due diligence measures towards our customers, identify the risk of money laundering and terrorist financing.

VERFIFICATION PROCEDURES

The verification procedure will be applied to all CENEX clients by confirming the identity of customers by means of: Account Onboarding and KYC/ KYB Review (Standard Due Diligence); Identification of the customer; PEP and Sanction Checks; Wallet Issuing; Enhanced Due Diligence; Risk Assessment; Continuous Transaction Monitoring etc.

Account Onboarding and KYC/ KYB Review (Standard Due Diligence)

One of the international standards for preventing illegal activity is customer due diligence. Due diligence consists of 2-point check requirements (people and assets) both in 4 different stages (prospect, onboarding, day-to-day operation, and customer review).

CENEX holds an SRO Membership (membership number 100929) that is supervised by FINMA and therefore has an obligation to request certain information and/or documentation from its customers while also adhering to the duties of due diligence according to AMLA.

CENEX takes all possible measures to recognize the deceptive documentation or other false information and reserves the right to investigate certain customers or transactions which have been detected to be risky or suspicious.

If there is any reasonable doubt that any information provided by a customer is incorrect, untruthful, outdated, or incomplete, CENEX has the right to either send the customer a notice demanding that corrections are to be made, request additional information and/or documentation by way of EDD, or to report, investigate and terminate all the services to the customer.

One of the international standards for preventing illegal activity is customer due diligence (“CDD”). According to CDD, CENEX establishes its own verification procedures within the standards of antimoney laundering and “Know Your Customer” frameworks, including enhanced due diligence for customers presenting a higher risk, such as Politically Exposed Persons (PEPs).

CENEX is prohibited from transacting with individuals, legal entities and countries that are on prescribed sanctions lists. CENEX will therefore screen against United Nations, European Union, UK Treasury and US Office of Foreign Assets Control (OFAC) sanctions lists in all jurisdictions in which we operate.

CENEX will take steps to confirm the authenticity of documents and information provided by the customers. All legal methods for double-checking information will be used and CENEX reserves the right to investigate certain customers who have been determined to be risky or suspicious.

Identification of the customer

Having finalized the integration with our External AML Partner, CENEX will have its customers identified individually for each business relationship by face-to-face meeting and or live video authentication, and or by way of correspondence.

When identification on opening the business relationship in a face-to-face meeting takes place, the following measures should be followed:

  • Inspection of the original identification document (passport, identity card, Commercial Register extract etc.)
  • Make a copy.
  • Confirmation on copy that the original was inspected, including date / signature (“Original seen”, “Copy of original” or similar)
  • Exception: Company documents which the Member printed from an official database / reliable private database are considered to be originals (e.g., www.zefix.ch)

Live video identification is a part of the company’s steps of onboarding process if face-to-dace meeting cannot be scheduled. Customers’ identification information will be collected, stored, shared, and protected strictly in accordance with the CENEX’s Privacy Policy and related regulations. CENEX reserves the right to verify customers’ identities in an on-going basis, especially when their identification information has been changed or their activity seemed to be suspicious (unusual for the particular customer). In addition, CENEX reserves the right to request up-to-date documents from the customers, even though they have passed identity verification in the past.

For dentification when entering into the business relationship without a personal interview (opening by way of correspondence), the following documents should be received:

  • Certified copy of identification document; such certification can be issued by notary or other public body which usually issues such certifications; Swiss financial intermediary (e.g. bank), Swiss attorney; Foreign financial intermediary who is subject to equivalent AMLA supervision; Subsidiaries, representative offices, group companies of the Member.
  • Confirmation of residential address by way of physical mail delivery or other equivalent means

As part of the identification of the client process, the beneficial owner of the assets and or Company structure described below.

Customer is a natural person:

  • If there is no doubt that the customer is also the BO, the Member may also record this fact in a memorandum.
  • Otherwise, a written declaration on who is the BO must be obtained from the customer.

Establishment of the beneficial owner in operational legal entities (except for listed companies and their subsidiaries) and private companies (controlling person):

  • Identification of the controlling person, directly or indirectly, sole, or jointly with third parties, holding at least 25% of the voting shares or capital of the operational company.
  • Identification of the control mechanisms by other means in case there is no controlling person holding at least 25%.
  • Subsequently, the Managing Director / Executive Officer (CEO) needs to be identified.
  • In any case a written declaration from the customer must be obtained identifying the controlling person.

Customer is a domiciliary company:

  • A domiciliary company is a company (irrespective of legal form), which does not carry out trading, manufacturing, or other commercial activity (no operational activity). In general, financial vehicles are concerned which serve to manage the assets of the company’s beneficial owners.
  • A domiciliary company itself can never be the beneficial owner of the assets.
  • A written declaration of who is the BO must always be obtained from the customer.

Customer is a trust, foundation or similar construct or a life insurance with separate account and deposit management (insurance wrapper):

  • Information must be recorded about the settlors, founders, trustees, protectors, beneficiaries etc. or about the policyholder and effective premium payer.
  • A written declaration by the customer must always be obtained.
    PEP and Sanctions Check

Politically exposed persons are individuals who are or have been entrusted with prominent public functions, senior politicians, senior government, judicial, military officers, senior executives of state- owned companies, important political party officials, etc. For each business relationship each member must clarify whether the customer, the BO / controlling person or the authorized representative is a PEP and check all the information available about the person in the public domain. The Company is also required to subject such accounts to enhanced monitoring on an ongoing basis. The above norms may also be applied to the contracts of the family members or close relatives of PEPs.

CENEX undertakes to strictly comply with all legal and regularity obligations applicable in its country of location but further with the laws and regulations from other countries which claim extraterritorial jurisdiction. Prior to entering a business relationship with a customer, CENEX will check whether the customer or business is named on the Swiss sanctions list, OFAC List (USA) and the EU sanctions list. These checks will be repeated on a continuous basis.

Wallet issuing

CENEX provides crypto wallets to all customers upon registration, allowing customers to hold and trade various cryptocurrencies on our platform. Enhanced due diligence is specifically designed for dealing with high-risk or high-net worth customers and large transactions, as these customers and transactions pose greater risks to the financial sector.

If a customer is transacting for above CHF 25’000.00 and/or has triggered the PEP sanctions list, and/or triggered the internal high-risk factors list, the customer in question’s process must be paused for EDD. This will result in the process being redirected to the CENEX team for manual intervention. Once the CENEX team intervenes, it will manually conduct an enhanced due diligence process whereby additional information and/or documentation can be requested.

Risk Assessment

CENEX, in line with the international requirements, has adopted a risk-based approach to combating money laundering and terrorist financing. By adopting a risk-based approach, CENEX is able to ensure that measures to prevent or mitigate money laundering and terrorist financing are commensurate to the identified risks. This will allow resources to be allocated in the most efficient ways. The principle is that resources should be directed in accordance with priorities so that the greatest risks receive the highest attention.

CENEX shall ensure that all measures are in place to prevent or mitigate money laundering and terrorist financing are commensurate to the identified risks. The principle is that resources should be directed in accordance with priorities so that the greatest risks receive the highest attention.

The AML/KYC procedure will be applied in respect to those crypto assets, which are determined by our automated risk prevention system as suspicious. In these cases, CENEX will contact the customer by the designated means of communication (email address registered with account).

Continuous Transaction Monitoring

The customers are known not only by verifying their identity (who they are) but, more importantly, by analyzing their transactional patterns (what they do). Therefore, CENEX relies on data analysis as a risk-assessment and suspicion detection tool. CENEX performs a variety of compliance-related tasks, including capturing data, filtering, record-keeping, investigation management, and reporting. System functionalities include:

  • Daily check of customers against recognized “blacklists” (e.g., OFAC), aggregating transfers by multiple data points, placing customers on watch and service denial lists, opening cases for investigation where needed, sending internal communications, and filling out statutory reports, if applicable.
    Case and document management.

With regard to the AML/KYC Policy, CENEX will continuously monitor all transactions and it reserves the right to:

  • Ensure that transactions of suspicious nature are reported to the proper law enforcement through the AML/KYC Compliance Officer.
  • Request the customer to provide any additional information and documents in case of suspicious transactions.
  • Suspend or terminate the customer’s Account when CENEX has reasonable suspicion that such customer engaged in illegal activity.

The above list is not exhaustive, and the AML/KYC Compliance Officer will monitor its customers’ transactions on a day-to-day basis to define whether such transactions are to be reported and treated as suspicious or are to be treated as bona fide.

AML/KYC COMPLIANCE OFFICER

The AML/KYC Compliance Officer is the person, duly authorized by CENEX, whose duty is to ensure the effective implementation and enforcement of the AML/KYC Policy. It is the AML/KYC Compliance Officer’s responsibility to supervise all aspects of CENEX’s anti-money laundering and counter-terrorist financing, including but not limited to:

  • Collecting customers’ identification information.
  • Establishing and updating internal policies and procedures for the completion, review, submission and retention of all reports and records required under the applicable laws and regulations.
  • Monitoring transactions and investigating any significant deviations from normal activity.
  • Implementing a records management system for appropriate storage and retrieval of documents, files, forms, and logs.
  • Updating risk assessment regularly.
  • Providing law enforcement with information as required under the applicable laws and regulations.

The AML/KYC Compliance Officer is entitled to interact with law enforcement and investigating officers which are involved in prevention of money laundering, terrorist financing and other illegal activity. CENEX provides KYC, AML, and Countering the Financing of Terrorism (CFT) training to all Employees who will be dealing with customers or will be involved in any AML checking, verification or monitoring processes.

DATA PROTECTION

The protection and the lawful collection, processing, and use of the personal data of our customers is an important concern for us. As such, CENEX is committed to complying with the GDPR and the national data protection laws. Data protection is a matter of high priority, and we only work with partners who can also demonstrate an appropriate level of data protection. We only process your data if you have given us your express consent if this is based on a contract or pre-contractual measures on a service basis or if the relevant laws permit or require data processing. Our procedures cover both the currently applicable national legal framework and the requirements of the General Data Protection Regulation (GDPR) of 25 May 2018. Under no circumstances will we sell our customer data or pass them on to unauthorized third parties. We understand that our customers own their own data. It is not ours.

CHANGES TO THIS POLICY

The Company may review and modify this Policy from time to time and will post the most current version on the website (https://cexnex.co). This will allow us to take account of changes to our operations or practices and further to make sure it remains appropriate with any developments and/or changes in law, technology, and business environment. We encourage you to view it periodically to be aware of the changes we may have made. Reading it carefully and checking for any modifications is your responsibility. By using the Services, you accept and agree to this Policy and the Terms of Use.

DISCLAIMER

CENEX constantly works on quick and transparent procedure updates that may be delivered to our customers via email and other means as well as on our https://cenex.co.

GET IN CONTACT

If you wish to contact us, please feel free to do so at the following email address: [email protected]

COMMENCEMENT

This AML/KYC Policy has been approved by the board of directors of CEX DIGITAL MARKETS AG.