HedgrAI

This Anti-Money Laundering (AML) Policy establishes HedgrAI's framework for preventing, detecting, and reporting money laundering, terrorist financing, and other financial crimes. The policy applies to all of HedgrAI's operations, employees, officers, directors, and third-party service providers acting on our behalf.

For the purposes of this policy, money laundering is defined as the process of converting funds obtained from illegal activities into funds with an apparently legal source. This includes:

• The conversion or transfer of property derived from criminal activity
• The concealment or disguise of the nature, source, location, disposition, movement, or ownership of property derived from criminal activity
• The acquisition, possession, or use of property derived from criminal activity

Terrorist financing refers to the provision, collection, or use of funds with the intention or knowledge that they will be used to carry out terrorist acts or support terrorist organizations.

HedgrAI is committed to complying with all applicable AML laws and regulations in the jurisdictions where we operate, including but not limited to the Bank Secrecy Act (BSA), the USA PATRIOT Act, the EU Anti-Money Laundering Directives, and the Financial Action Task Force (FATF) Recommendations.

HedgrAI's AML policy is designed to comply with applicable laws and regulations in the jurisdictions where we operate. These include, but are not limited to:

• Financial Action Task Force (FATF) Recommendations - International standards on combating money laundering and the financing of terrorism and proliferation
• The Fifth EU Anti-Money Laundering Directive (5AMLD) - European Union regulations aimed at preventing the use of the financial system for money laundering or terrorist financing
• The Bank Secrecy Act (BSA) - U.S. legislation requiring financial institutions to assist U.S. government agencies in detecting and preventing money laundering
• The USA PATRIOT Act - U.S. legislation that expanded the regulatory powers to prevent, detect, and prosecute money laundering and terrorist financing
• UK Money Laundering Regulations - UK legislation that sets out the requirements for anti-money laundering controls for certain sectors, businesses and professions
• Financial Conduct Authority (FCA) Regulations - UK financial regulatory body that provides guidance on anti-money laundering procedures

HedgrAI continuously monitors for changes in the regulatory landscape and updates our policies and procedures accordingly to ensure ongoing compliance.

HedgrAI maintains a comprehensive Know Your Customer (KYC) program designed to verify the identity of our users and assess their risk profiles. Our KYC program includes the following components:

• Identity Verification: We require all users to provide valid government-issued identification documents and proof of address. These documents are verified for authenticity using a combination of automated and manual verification processes.
• Face Verification: We may require users to complete a biometric verification process to ensure that the person creating the account matches the identification documents provided.
• Proof of Address: Users must provide recent documentation that proves their residential address, such as utility bills, bank statements, or other official documents.
• Contact Information: We collect and verify contact information, including email addresses and phone numbers, to facilitate secure communication with our users.

The level of KYC required may vary based on the user's risk profile, transaction volumes, and the services they wish to access. HedgrAI reserves the right to request additional information or documentation at any time to maintain compliance with our AML policy.

HedgrAI conducts appropriate Customer Due Diligence (CDD) measures based on a risk-sensitive approach. Our CDD procedures include:

• Basic Due Diligence: Applied to all customers, involving the collection and verification of identity information as outlined in our KYC procedures.
• Enhanced Due Diligence (EDD): Applied to higher-risk customers, including politically exposed persons (PEPs), users from high-risk jurisdictions, users with high transaction volumes, or users exhibiting unusual transaction patterns. EDD may include:
  • More extensive verification of identity and source of funds
  • Additional documentation requirements
  • More frequent and detailed transaction monitoring
  • Senior management approval for establishing or continuing the business relationship
  • Ongoing monitoring of the business relationship
• Simplified Due Diligence (SDD): May be applied in limited circumstances where the risk of money laundering or terrorist financing is determined to be lower. SDD measures are always consistent with applicable regulations and our risk assessment.

Customer Due Diligence is an ongoing process, not a one-time event. We periodically review and update customer information to ensure accuracy and relevance, with the frequency of reviews determined by the customer's risk profile.

HedgrAI employs a risk-based approach to AML compliance, allocating resources based on the assessment of money laundering and terrorist financing risks. Our risk assessment methodology considers the following factors:

• Customer Risk: Factors include the customer's background, occupation, source of wealth, transaction patterns, and whether they are a PEP or from a high-risk jurisdiction.
• Geographic Risk: We consider the money laundering and terrorist financing risks associated with different countries and regions, with special attention to:
  • Countries identified by the FATF as having strategic AML/CFT deficiencies
  • Countries subject to sanctions, embargoes, or similar measures
  • Countries identified as having significant levels of corruption or organized crime
  • Countries known to provide funding or support for terrorist activities
• Product/Service Risk: Evaluation of the money laundering risks associated with our products and services, such as the ease of transferring funds across borders, anonymity features, and transaction limits.
• Transaction Risk: Assessment of transaction patterns, including frequency, size, complexity, and the involvement of high-risk jurisdictions or counterparties.
• Channel Risk: Consideration of how customers interact with our platform (e.g., online, mobile, through intermediaries) and the associated risks.

Based on these risk factors, we categorize customers into different risk levels (low, medium, high) and apply appropriate due diligence and monitoring measures accordingly. Risk assessments are regularly reviewed and updated to reflect changes in risk factors or business operations.

HedgrAI maintains a comprehensive transaction monitoring system to detect suspicious activities that may indicate money laundering or terrorist financing. Our monitoring system combines automated algorithms with human oversight to identify unusual patterns and high-risk transactions.

The transaction monitoring system is designed to identify the following types of activity:

• Transactions that exceed certain thresholds based on the customer's risk profile and transaction history
• Unusual transaction patterns, such as sudden increases in transaction frequency or value
• Transactions with no apparent economic or lawful purpose
• Transactions involving high-risk jurisdictions or counterparties
• Complex transaction structures or patterns that may indicate layering activities
• Transactions that attempt to circumvent reporting or identification requirements
• Multiple transactions just below reporting thresholds (structuring)
• Transactions that match known money laundering typologies

We continuously refine our transaction monitoring systems to adapt to evolving money laundering and terrorist financing techniques. Alerts generated by the monitoring system are promptly investigated by our compliance team to determine whether suspicious activity reporting is warranted.

HedgrAI is committed to reporting suspicious activities to the appropriate authorities in accordance with applicable laws and regulations. Our suspicious activity reporting procedures include:

• Internal Reporting: All employees are required to promptly report any suspicious activity to the Compliance Officer or designated compliance personnel. HedgrAI maintains a secure internal reporting mechanism to facilitate this process.
• Investigation: Upon receiving a report of suspicious activity, the Compliance Officer or designated personnel will conduct an investigation to gather and analyze relevant information. This may include reviewing transaction records, customer information, and other relevant data.
• Determination: Based on the investigation, the Compliance Officer will determine whether the activity warrants reporting to the appropriate authorities. This determination is made based on the facts and circumstances of each case, considering applicable legal requirements and industry standards.
• External Reporting: If the Compliance Officer determines that a Suspicious Activity Report (SAR) or other regulatory report is required, it will be filed with the appropriate authorities within the timeframes specified by applicable regulations. This may include:
  • Financial Intelligence Units (FIUs)
  • National Crime Agency (NCA) in the UK
  • Financial Crimes Enforcement Network (FinCEN) in the US
  • Other relevant regulatory or law enforcement agencies
• Confidentiality: All information related to suspicious activity reports is treated with strict confidentiality. Employees are prohibited from disclosing ("tipping off") to customers or any other parties that a suspicious activity report has been filed or that an investigation is underway.
• Record Keeping: HedgrAI maintains records of all suspicious activity investigations and reports in accordance with regulatory requirements.

HedgrAI maintains comprehensive records of customer identification, transactions, and AML compliance activities in accordance with applicable laws and regulations. Our record keeping practices include:

• Customer Identification Records: We retain all documents and information obtained during the customer due diligence process, including:
  • Identification documents (e.g., passports, driver's licenses)
  • Proof of address documents
  • Enhanced due diligence documentation
  • Account opening forms and agreements
  • Correspondence with the customer
• Transaction Records: We maintain detailed records of all transactions conducted through our platform, including:
  • Transaction date, amount, and type
  • Source and destination of funds
  • Currency pair for exchanges
  • Transaction hash or reference number
  • IP address and device information
• AML Compliance Records: We document all AML compliance activities, including:
  • Risk assessments and customer risk profiles
  • Transaction monitoring alerts and investigations
  • Suspicious activity reports filed with authorities
  • AML training records
  • Internal compliance reviews and audits

All records are retained for a minimum of five years after the end of the business relationship or the completion of the transaction, or longer if required by applicable law. Records are maintained in a secure, easily retrievable format that allows for prompt response to requests from authorized regulatory authorities.

HedgrAI is committed to ensuring that all employees, officers, and directors have the knowledge and skills necessary to comply with AML requirements. Our training and awareness program includes:

• New Employee Training: All new employees receive AML training as part of their onboarding process. This training covers:
  • Legal and regulatory framework
  • HedgrAI's AML policies and procedures
  • Customer due diligence requirements
  • Red flags and indicators of suspicious activity
  • Internal reporting procedures
  • Consequences of non-compliance
• Ongoing Training: Regular refresher training is provided to all employees at least annually, or more frequently if there are significant changes in regulations or internal policies.
• Specialized Training: Employees in high-risk roles or with specific AML responsibilities receive additional specialized training tailored to their functions.
• Awareness Updates: Regular communications are sent to employees to keep them informed about emerging money laundering trends, new regulatory requirements, and updates to internal policies.
• Assessment and Documentation: Training effectiveness is assessed through tests and evaluations. Records of all training activities, including attendance and assessment results, are maintained.

Our training program is regularly reviewed and updated to reflect changes in regulations, industry best practices, and the evolving money laundering and terrorist financing landscape, particularly in the cryptocurrency sector.

HedgrAI has appointed a dedicated Compliance Officer responsible for overseeing the implementation and effectiveness of our AML program. The Compliance Officer has the necessary authority, resources, and expertise to fulfill this role effectively.

The responsibilities of the Compliance Officer include:

• Developing and implementing AML policies, procedures, and controls
• Monitoring and ensuring compliance with applicable AML laws and regulations
• Conducting regular risk assessments and updating the AML program accordingly
• Overseeing the customer due diligence and transaction monitoring processes
• Reviewing and investigating suspicious activity alerts
• Making determinations regarding suspicious activity reporting
• Serving as the primary contact for regulatory authorities on AML matters
• Providing regular reports to senior management and the Board of Directors on AML compliance
• Developing and implementing the AML training program
• Conducting or arranging for independent testing of the AML program

The Compliance Officer reports directly to the Board of Directors, ensuring independence from operational functions and the ability to implement the AML program effectively without undue influence.

In addition to the Compliance Officer, HedgrAI has established a Compliance Committee composed of senior management representatives from various departments. The Compliance Committee meets regularly to review AML matters, address compliance challenges, and ensure a coordinated approach to AML compliance throughout the organization.

HedgrAI strictly prohibits the use of our services for any illegal purpose, including money laundering, terrorist financing, and other financial crimes. The following activities are specifically prohibited:

• Money Laundering: Using our services to conceal or disguise the nature, source, location, disposition, or movement of proceeds of crime.
• Terrorist Financing: Using our services to provide funds or other assets to individuals or organizations involved in terrorist activities.
• Sanctions Violations: Engaging in transactions with individuals, entities, or countries subject to sanctions by relevant authorities.
• Fraud: Using our services to conduct fraudulent activities, including but not limited to investment scams, phishing schemes, or identity theft.
• Illegal Goods and Services: Using our services to pay for or receive payments for illegal goods or services, including drugs, weapons, counterfeit goods, or illicit content.
• Identity Concealment: Providing false or misleading information during the onboarding process or attempting to obscure the true ownership or control of an account.
• Structuring: Breaking down a large transaction into smaller transactions to avoid reporting requirements.
• Third-Party Transfers: Using our services to transfer funds on behalf of third parties without proper disclosure and authorization.

HedgrAI conducts regular reviews of its AML program to ensure effectiveness and compliance with applicable laws and regulations. Our compliance review process includes:

• Internal Audits: Regular internal reviews of AML policies, procedures, and controls to identify and address any deficiencies or areas for improvement.
• Independent Testing: Periodic independent testing of the AML program by qualified third parties to provide an objective assessment of its effectiveness.
• Regulatory Examination Follow-up: Prompt and thorough remediation of any issues identified during regulatory examinations or audits.
• Policy and Procedure Updates: Regular review and updates of AML policies and procedures to reflect changes in regulations, business operations, or risk assessments.
• Technology Assessment: Evaluation of AML technology systems and tools to ensure they remain effective and up-to-date.
• Metrics and Reporting: Development and monitoring of key performance indicators to assess the effectiveness of the AML program, with regular reporting to senior management and the Board of Directors.

The results of compliance reviews are documented and reported to senior management and the Board of Directors. Any identified deficiencies are promptly addressed through corrective action plans with clear responsibilities and timelines.

HedgrAI is committed to a culture of continuous improvement in AML compliance. We actively seek feedback from employees, customers, regulators, and industry peers to enhance our AML program and adapt to the evolving financial crime landscape.