Mandala Exchange, Ltd.’s (MEX) Anti-Money Laundering and Know Your Customer Policy (hereinafter – the “AML/KYC Policy”) is designated to prevent and mitigate possible risks of MEX being involved in any kind of illegal activity.
Both international and local regulations require MEX to implement effective internal procedures and mechanisms to prevent money laundering, terrorist financing, drug and human trafficking, proliferation of weapons of mass destruction, corruption and bribery and to take action in case of any form of suspicious activity from its Users.
AML/KYC Policy covers the following matters:
- Verification procedures.
- Sanctions and PEP lists screening.
- Compliance Officer.
- Monitoring Transactions.
- Risk Assessment.
1. Verification procedures
One of the international standards for preventing illegal activity is customer due diligence (“CDD”). According to CDD, MEX has established its own verification procedures within the cryptocurrency industry standards of anti-money laundering and “Know Your Customer” frameworks.
1.1. Identity verification
MEX’s identity verification procedure is provided by Jumio, and requires the User to provide MEX with reliable, independent source documents, data or information (e.g., national ID, international passport, bank statement, utility bill). For such purposes MEX reserves the right to collect User’s identification information for the AML/KYC Policy purposes.
MEX requires all users withdrawing over two Bitcoin (2 $BTC) and up to one hundred Bitcoin (100 $BTC) daily from the exchange to complete comprehensive KYC verification in order to transact on the exchange. Users transacting with under 2 BTC per day shall not be required to KYC at this time, pending global regulatory requirements.
MEX will take steps to confirm the authenticity of documents and information provided by the Users. All legal methods for double-checking identification information will be used and MEX reserves the right to investigate certain Users who have been determined to be risky or suspicious.
MEX reserves the right to verify User’s identity in an on-going basis, especially when their identification information has been changed or their activity seemed to be suspicious (unusual for the particular User). In addition, MEX reserves the right to request up-to-date documents from the Users, even though they have passed identity verification in the past.
User’s identification information will be collected, stored, shared and protected strictly in accordance with the MEX’s Privacy Policy and related regulations.
Once the User’s identity has been verified, MEX is able to remove itself from potential legal liability in a situation where its Services are used to conduct illegal activity.
2. Sanctions and PEP lists screening.
MEX screens applicants against recognized Sanctions and Politically Exposed Persons (PEPs) lists. Individuals and legal entities are screened against mentioned lists:
- on the onboarding stage when the user is submitting the application;
- on each anti-fraud and AML alerts manually by Compliance Officer;
- monthly by running automatically with a script to re-check all DB of customers.
For the screening process performing MEX uses third-party technology provided by B2Broker.
3. Compliance Officer
The Compliance Officer is the person, duly authorized by MEX, whose duty is to ensure the effective implementation and enforcement of the AML/KYC Policy. It is the Compliance Officer’s responsibility to supervise all aspects of MEX’s anti-money laundering and counter-terrorist financing, including but not limited to:
- Collecting Users’ 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 Compliance Officer is entitled to interact with law enforcement, which are involved in prevention of money laundering, terrorist financing and other illegal activity.
4. Monitoring Transactions
The Users are known not only by verifying their identity (who they are) but, more importantly, by analyzing their transactional patterns (what they do). Therefore, MEX relies on data analysis as a risk-assessment and suspicion detection tool. MEX performs a variety of compliance-related tasks, including capturing data, filtering, record-keeping, investigation management, and reporting. System functionalities include:
1) Daily check of Users against recognized “black lists” (e.g. OFAC), aggregating transfers by multiple data points, placing Users on watch and service denial lists, opening cases for investigation where needed, sending internal communications and filling out statutory reports, if applicable;
2) Case and document management.
With regard to the AML/KYC Policy, MEX will monitor all transactions and it reserves the right to:
- ensure that transactions of suspicious nature are reported to the proper law enforcement through the Compliance Officer;
- request the User to provide any additional information and documents in case of suspicious transactions;
- suspend or terminate User’s Account when MEX has reasonably suspicion that such User engaged in illegal activity.
The above list is not exhaustive and the Compliance Officer will monitor Users’ transactions on a day-to-day basis in order to define whether such transactions are to be reported and treated as suspicious or are to be treated as bona fide.
5. Risk Assessment
MEX, 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, MEX 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.