What is AML and why is it important?

AML (Anti-Money Laundering, or Anti-money laundering) procedures, which are a set of measures and actions aimed at preventing and detecting illegal financial transactions related to money laundering and terrorist financing.

These procedures are implemented internally in accordance with the laws of the country of business, the laws of the countries of which the clients are citizens, as well as in accordance with generally accepted FATF standards., as well as the requirements of OFAC and other regulatory authorities of different countries. The availability of documentation confirming these standards, as well as their actual practical application, is one of the mandatory aspects used in compliance with compliance.

What requires KYC verification and in what cases is it necessary?

KYC (Know Your Customer) or "Know Your Customer" is a mandatory procedure aimed at identifying and verifying users of an exchange office. The process is necessary in order to verify the legality of the origin of funds and ensure the security of operations, preventing the use of the service for money laundering or other illegal activities.

KYC may be requested in the following cases::

• Identification of an increased or high level of risk (according to the Risk-Score);
• The presence of suspicious transaction characteristics or risk tags;
• The need to confirm the source of funds;
• A request from payment providers or partners.

The procedure

Verification includes the following steps::

1. notifying the user of the need for verification;
2. requesting documents and information;
3. providing data by the user;
4. verification data processing (automatic and/or manual);
5. decision-making on the application.

Terms

• Initial verification — up to 24 hours;
• Additional verification — up to 3 business days.

Verification results

Based on the KYC results, one of the following decisions is made:

• Application completion;
• Refund of funds to the sender (usually within 7-10 business days);
• Official escalation to the competent authorities, if there are grounds.

Refusal to pass KYC

If verification is refused or data is not provided, the request cannot be completed, and one of the options provided is applied: a refund or an official escalation.

Indefinite retention of funds is not carried out.

What is the benefit of checking the address for AML before creating an exchange and what does it give you?

Verifying an AML address helps ensure the security of transactions and prevent the exchange office from being used for illegal activities. This allows you to confirm the accuracy of the information provided and reduce the risks of fraud. This verification also gives the client the opportunity to learn in advance about possible risks or their absence before actually sending funds to our wallets. During the verification process, the client receives an analyzer report on the verification of their address, which gives a complete understanding of the security status of the transaction. This report helps to ensure that the exchange takes place within the framework of the legislation and rules of our service and is not associated with possible risks such as money laundering. The procedure ensures compliance with legal requirements and anti-money laundering standards, protecting both customers and the service itself.

Risk-Score risk assessment models

Our service uses comprehensive AML verification of incoming assets based on the Risk-Score model provided by our payment provider and third-party analytical systems.

The purpose of the check — exclude interaction with assets that may be related to illegal activities.

How the Risk-Score works:

Each transaction is automatically analyzed for the presence of risk tags.

Based on the results of the analysis, a general AML risk is formed.

The total risk should not exceed 80%.

If the acceptable risk level is exceeded, the transaction is automatically rejected, and the client is notified of the need for verification or a refund.

High-risk tags, leading to blocking:

Transactions with certain high-risk tags can be blocked regardless of the total percentage of risk.

These tags include, but are not limited to:

• Sanctions (sanctioned addresses)
• Illegal Services
• Scam / Fraud (fraudulent activity)
• Child Abuse Materials
• Terrorism Financing
• Darknet markets
• Mixers, prohibited jurisdictions and other high-risk categories

When such tags are detected, the transaction is automatically rejected in accordance with the requirements of the provider`s AML policy.

If the risk is below 80%, but there are individual suspicious tags.:

In case of detection of an increased or high level of risk, the service has the right to request the KYC (Know Your Customer) procedure.

The deadline for providing the requested data is set individually and communicated to the user through the application interface or by e-mail.

Procedure for failure to complete verification

If the user does not provide the requested data or the provided data does not allow the verification to be completed., The following options apply for completing the application processing:

1. Refunds to the sender are made within a reasonable time (as a rule, within 7-10 business days) with confirmation of the return;
2. Official escalation, if there are appropriate grounds, information may be transmitted to the competent authorities in accordance with applicable law.
3. Indefinite retention of funds without legal grounds and without an official escalation procedure is not carried out.

Note

The Service reserves the right not to disclose the detailed parameters and internal algorithms of the Risk-Score model in order to prevent circumvention of control mechanisms.

The Service does not provide indefinite retention of funds. Each suspended or rejected application ends with one of the following actions:

1. Refund of funds to the sender within a reasonable period (up to 10 business days) with confirmation of the transaction (TXID).

The service may deduct a processing fee of up to 5% of the refund amount, but not more than $100.

Refunds are only possible for verified users who have successfully completed KYC through a third-party provider, and for whom no reasonable links to money laundering or other illegal activities have been identified.

2. Official escalation is the transfer of information to the competent authorities or to a third—party KYC/AML provider, if there are grounds.; A refund is possible only after the decision of the authority or provider.

Grounds for a refund or escalation:

• User`s refusal to undergo KYC with a third-party provider;
• Failure to provide necessary data to a third-party provider within the prescribed period;
• High AML/Risk-Score risk identified by third-party systems;
• Other situations where the application cannot be completed.

Principle: only one of the outcomes always applies: refund or escalation indefinite retention of funds is not allowed.

Procedure for identifying high-risk transactions (Risk-tags)

If the transaction receives the High Risk status, which belongs to categories with no confirmed illegal activity:

• An internal analysis is being conducted;
• If the connection with high-risk entities is not confirmed, the application is not executed, the funds are returned only to the sender`s banking details;
• KYC is not required for a refund;
• The refund period is 7-10 business days, taking into account the network/payment infrastructure fees;
• It is applied only in the absence of factors of deliberate circumvention of compliance or other circumstances requiring extended verification.