Hashrift Ltd

AML POLICY

A. ANTI-MONEY LAUNDERING

This policy is to establish guidelines for Hashrift Ltd (“Company” or

“Exchange”), ‘Anti-Money Laundering’ and ‘Know Your Client’ (“KYC”) procedures for new

and existing clients.

All of monetary transactions, to the best knowledge of the Company shall be free from any

form of money laundering and terrorist activities. The Company operates with integrity and is

committed to implementing the measures established. The Client’s failure to comply with the

regulations set by the Company would mean termination of the account. If the Client is proven

of committing money laundering, he is responsible for any damage or loss which may occur,

and the Company is excluded from his fraudulent actions.

In an effort to counter money laundering and other illegal activity, we have decided not to

support any cash transactions, regardless of their stated purpose. Our firm has the right to cancel

or deny a transaction at any point if there are suspicions regarding its legality.

Obligation

The obligation to observe the policy rests with Management Board members and employees of

the Provider of service, including temporary staff, agents of the Provider of service who initiate

or establish Business Relationship (hereinafter all together called the Representative). Every

Representative must confirm awareness of the policy with the signature. The policy is primarily

based on the regulations of Republic of Bulgaria Law on the Prevention of Money Laundering

and Terrorist Financing (hereinafter the “Law”) and International Sanctions Act (hereinafter

ISA).

Definitions

Money Laundering – is a set of activities with the property derived from criminal activity or

property obtained instead of such property with the purpose to:

• conceal or disguise the true nature, source, location, disposition, movement, right of

ownership or other rights related to such property;

• convert, transfer, acquire, possess or use such property for the purpose of concealing or

disguising the illicit origin of property or of assisting a person who is involved in

criminal activity to evade the legal consequences of his or her action;

• participation in, association to commit, attempts to commit and aiding, abetting,

facilitating and counselling the commission of any of the actions previously mentioned.

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Terrorist Financing – shall mean any act which constitutes an offence within the meaning of

Article 2 of the International Convention for the Suppression of the Financing of Terrorism of

9 December 1999.

Compliance Officer or CO – representative appointed by the Management Board responsible

for the effectiveness of the Policy, conducting compliance over the adherence to the Policy and

serving as contact person of the FSC.

FSC - Financial Supervision Commission (FSC)

SANS – State Agency ‘‘National Security’’

Business Relationship – a relationship of the Provider of service established in its economic

and professional activities with the Client.

Transaction – cash flow or payment order or cryptocurrency wiring from a Client to the

Provider of service.

Client – a natural or legal person, who uses services of the Provider of service.

Beneficial Owner – is a natural person, who:

• Taking advantage of his influence, exercises control over a transaction, operation or

another person and in whose interests or favour or on whose account a transaction or

operation is performed taking advantage of his influence, makes a transaction, act,

action, operation or step or otherwise exercises control over a transaction, act, action,

operation or step or over another person and in whose interests or favour or on whose

account a transaction or act, action, operation or step is made.

• Ultimately owns or controls a legal person through direct or indirect ownership of a

sufficient percentage of the shares or voting rights or ownership interest in that person,

including through bearer shareholdings, or through control via other means. Direct

ownership is a manner of exercising control whereby a natural person holds a

shareholding of 25 per cent plus one share or an ownership interest of more than 25 per

cent in a company. Indirect ownership is a manner of exercising control whereby a

company which is under the control of a natural person holds or multiple companies

which are under the control of the same natural person hold a shareholding of 25 per

cent plus one share or an ownership interest of more than 25 per cent in a company.

• Holds the position of a senior managing official, if, after all possible means of

identification have been exhausted, the person specified in clause ii cannot be identified

and there is no doubt that such person exists or where there are doubts as to whether

the identified person is a beneficial owner.

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• In the case of a trust, civil law partnership, community or legal arrangement, the

beneficial owner is the natural person who ultimately controls the association via direct

or indirect ownership or otherwise and is such associations’: settlor or person who has

handed over property to the asset pool, trustee or manager or possessor of the property,

person ensuring and controlling the preservation of property, where such person has

been appointed, or the beneficiary, or where the beneficiary or beneficiaries have yet to

be determined, the class of persons in whose main interest such association is set up or

operates.

Politically Exposed Person or PEP - is a natural person who is or who has been entrusted

with prominent public functions including a head of state, head of government, minister

and deputy or assistant minister; a member of parliament or of a similar legislative body, a

member of a governing body of a political party, a member of a supreme court, a member

of a court of auditors or of the board of a central bank; an ambassador, a chargé d'affaires

and a high-ranking officer in the armed forces; a member of an administrative, management

or supervisory body of a state-owned enterprise; a director, deputy director and member of

the board or equivalent function of an international organisation, except middle-ranking or

more junior officials.

• The provisions set out above also include positions in the European Union and in

other international organizations.

• A family member of a person performing prominent public functions is the spouse,

or a person considered to be equivalent to a spouse, of a politically exposed person;

a child and their spouse, or a person considered to be equivalent to a spouse, of a

politically exposed person; a parent of a politically exposed person.

• A close associate of a person performing prominent public functions is a natural

person who is known to be the beneficial owner or to have joint beneficial

ownership of a legal person or a legal arrangement, or any other close business

relations, with a politically exposed person; and a natural person who has sole

beneficial ownership of a legal entity or legal arrangement which is known to have

been set up for the de facto benefit of a politically exposed person.

• Local Politically Exposed Person or local PEP – a natural person, who performs or

has performed prominent public functions in Lithuania, a contracting state of the

European Economic Area or in an institution of European Union.

Provider of service – Hashrift Ltd, , Ajeltake Island Trust Company Complex, Ajeltake RoadMarshall islands, 96960

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Management Board or MB – management board of the Provider of service. Member of the

MB, as appointed by relevant MB decision, is responsible for implementation of the policy.

Equivalent Third Country – means a country not a Member State of European Economic

Area but applying an equivalent regime to the European Union corresponding (AML)

Virtual currency - a value represented in the digital form, which is digitally transferable,

preservable or tradable and which persons accept Provider of service – as a payment

instrument, but that is not the legal tender of any country or funds for the purposes of Article

4(25) of Directive (EU) 2015/2366 of the European Parliament and of the Council on payment

services in the internal market or a payment transaction for the purposes of points (k) and (l)

of Article 3 of the same directive.

Description of activities of the Provider of service

The Provider of service is the provider of a service of exchanging a virtual currency against

another virtual currency and/or exchanging a virtual currency against a fiat currency, and/or

vice versa and safekeeping crypto funds on behalf of clients.

Compliance Officer

The MB shall appoint a CO whose principal tasks are to:

• monitor the compliance of the Policy with the relevant laws and compliance of the

activity of the Representatives with the procedures established by the Policy;

• compile and keep updated the data regarding countries with low tax risk, high and low

risk of Money Laundering and Terrorist Financing and economical activities with great

exposure to Money Laundering and Terrorist Financing;

• carry out training, instruct and update the Representatives on matters pertaining to

procedures for prevention of Money Laundering and Terrorist Financing;

• report to the MB once a year (or more frequently, if necessary) on compliance with the

Policy, and on Transactions with a suspicion of Money Laundering or Terrorist

Financing;

• collect, process and analyse the data received from the Representatives or Clients

concerning suspicious and unusual activities;

• collaborate with and report to the FSC on events of suspected Money Laundering or

Terrorist Financing, and respond to enquiries of the FSC;

• make proposals on remedying any deficiencies identified in the course of checks.

The CO must meet all the requirements, prescribed by the Law, and appointment of the CO

shall be co-ordinated with the FSC. If, as a result of a background check carried out by the

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FSC, it becomes evident that the CO’s credibility is under suspicion due to their previous acts

or omissions, the Provider of service may extraordinarily terminate the CO’s employment

contract due to the loss of credibility.

Legal Framework

Bulgarian licensed exchange Companies are required to comply with the Measures Against

Money Laundering Act (MAMLA) as well as the provisions of the European 5

AML

Directive (the “Law” for the purposes of this policy) regarding the prevention of Money

Laundering and Terrorist Financing. The main purpose of the Law is to define and criminalize

the laundering of proceeds generated from all serious criminal offences aiming at depriving

criminals from the profits of their crimes.

1. Legislative Framework

• Measures against Money Laundering Act (MAMLA), last amended 28 February 2020

• Rules of Implementation of the MAMLA, last amended 13 March 2020

• NRA, published by SANS on 9 January 2020

• Measures against Terrorism Financing Act (MATFA), last amended 29 November

2019

2. European Framework

• Directive (EU) 2018/843 - The Fifth Money Laundering Directive of the European

Parliament on the prevention of the use of the financial system for the purposes of

money laundering and terrorist financing.

In accordance with the Law, Exchanges are obliged to set out policies and procedures for

preventing money laundering activities. Those procedures, which are implemented by the

Company, as these are requested by the Law, are the following:

• Identification and due diligence procedures of clients.

• Record keeping procedures in relation to clients’ identity and their transactions.

• Internal reporting procedures to a competent person (e.g. Anti-Money Laundering

Compliance Officer) appointed to receive and consider information that give rise to

knowledge or suspicion that a client is engaged in money laundering activities.

• Appropriate procedures of internal control, risk management, with the purpose of

preventing money laundering activities.

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• The detailed examination of every transaction that due to its nature is considered vulnerable

to money laundering, and especially for complicated or unusually large transactions and

transactions that are taken place without an obvious financial or legal purpose.

• Measures for making employees aware of the above-mentioned procedures to prevent

money laundering and of the legislation relating to money laundering.

• Provision of regular training to their employees in the recognition and handling of

transactions suspected to be associated with money laundering.

Policy

The provisions of the Law have been adopted by the Company, which introduces procedures

and processes that ensure compliance with the Law and Directives and in line with the latest

EU 5

AML Directive on this matter.

Company’s AML Policy sets out the general measures which will apply to all clients such as:

• check the identity of the Client

• Verify the Client

• monitor any suspicious Client activities and/or transactions

• have a record of all the related information and/or documents of the Client’s financial

transactions

Restricted Business and Jurisdictions

Our Company does not provide services to clients that their activities are associated with any

high risk or banned activities.

Furthermore, the Company endorses and complies with the latest FATF recommendations, as

well as the latest, always, classifications of high-risk countries.

In addition, the Company takes into consideration sanctions list of the following bodies:

• EU Sanction List

• United Nations Security Council Consolidated List

B. KYC PROCEDURE

Client Identification and Due Diligence Procedures

No new Business Relationship can be formed, or Transaction executed, if the Client, in spite

of the respective request, has failed to present documents and appropriate information required

to conduct DD, or if based on the presented documents, the Representative suspects Money

Laundering or Terrorist Financing.

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If in spite of the respective request an existing Client has failed to present during the contract

period documents and appropriate information required to conduct DD, such behaviour

constitutes material breach of contract that shall be reported by the Representative to the CO,

and in such case the contract(s) concluded with the Client shall be cancelled and the Business

Relationship shall be terminated as soon as feasible.

The Provider of service shall not enter into Business Relationships with anonymous Clients.

The Company has adopted all requirements of the Law in relation to client identification and

due diligence procedures. The client identification and due diligence are as follows:

• Client Due Diligence Procedure

Client Due Diligence procedure shall comprise the following:

i. Identification of the client and verification of the client’s identity on the basis of

information obtained from a reliable and independent source. This is KYC

procedure, which is explained in detail further below.

ii. Identification of the beneficial owner and taking risk-based and adequate measures

to verify his/her identity on the basis of documents, data or information issued by

or received from a reliable and independent source. As regards to legal persons,

trusts and similar legal entities, taking risk-based and adequate measures to

understand the ownership and control structure of the client.

iii. Obtaining information on the purpose and intended nature of the business

relationship.

iv. Conducting ongoing monitoring of the business relationship including scrutiny of

transactions undertaken throughout the course of the relationship to ensure that the

transactions being conducted are consistent with the data and information held by

the firm in connection with the client.

The KYC procedure is a requirement in order to comply with the International law provisions,

including the ones designed to prevent money laundering. The following procedure should be

followed unless an amendment is sent from the Compliance Department stating otherwise.

When a client applies to open an account with us Client will be asked but not limed to provide:

• Natural Persons – (this also applies to natural persons involved in a legal entity such as

Directors, Shareholders or authorized persons)

1. Proof of Identity (POI)

2. Proof of Residence (POR)

3. Proof of Signature

4. Proof of Bank Account Ownership

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• Corporate Accounts

1. Certificate of incorporation or equivalent

2. Certificate of registered office or equivalent

3. Certificate of directors and secretary or equivalent

4. Certificate of shareholders or equivalent

5. Memorandum and articles of association of the legal person

6. Recent copy (up to three months) of a bank statement or utility bill in order to verify

the head office address

7. Identity of Directors and Shareholders with their relevant KYC documents required

of Natural Persons

8. Authorized person resolution signed by the Board of directors (‘BoD’)

The company’s documentation must be recent (maximum 1 year).

The Company reserves the right to request additional documentation until it satisfies its due

diligence.

Our Company does not accept legal clients where the shares are issued in a form of “Bear

Shares”.

Recordkeeping

Assessment of client documents will be made on an annual basis. All client’s documents and

record transactions will be kept safely and back-up for a minimum five (5) year period.

Enhanced Client Due Diligence

The Company should apply enhanced client due diligence measures in situations which by

nature can present high risk of money laundering or terrorist financing. Relevant list, which is

updated whenever is applicable per the relevant publications is listed above.

Also the company applies enhanced due diligence on Politically exposed persons (“PEPs”)

who are individuals that have or been entrusted with prominent public functions in a foreign

country and close associate is someone with a close relationship with the political exposed

persons.

• Client Risk Assessment

Each Client who wishes to receive our services to exchange fiat to digital currency or the

opposite shall be assigned to one out of following three categories:

Low Risk (Level I)

Individuals (other than High Net Worth) and entities whose identities and sources of wealth

can be easily identified and transactions in whose accounts by and large conform to the known

profile may be categorized as low risk.

Medium Risk (Level II)

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Customers that are likely to pose a higher than average risk to the exchange may be categorized

as medium or high risk depending on customer’s background, nature and location of activity,

country of origin, sources of funds and his client profile etc.

High Risk (Level III)

The Company will apply enhanced due diligence measures based on the risk assessment,

thereby requiring intensive ‘due diligence’ for higher risk customers, especially those for whom

the sources of funds are not clear. The examples of customers requiring higher due diligence

may include:

• High Net worth individuals

• Trusts, charities, NGOs and organizations receiving donations,

• Companies having close family shareholding or beneficial ownership

• Firms with ‘sleeping partners’

• Politically Exposed Persons (PEPs) Those with dubious reputation as per public

information available, etc.

The criteria used for risk assessment for this category are:

• Risk from the country of origin

o Can be determine as per the geographical risk, i.e. risk from country of origin.

The evaluation of the risk from country of origin is performed according to the

following:

▪ For natural persons: The residence country

▪ For legal entities: The country in which is the legal entity’s seat.

When referring to high risk countries, it refers to countries with high corruption index, unsecure

economical and political systems, inefficient legal system or small number of requirements for

the documentation needed for opening businesses, countries known for production, processing

and trafficking drugs and weapons.

As additional factors that would influence the decision whether some country represents a risk,

could be:

• States under sanctions, embargos or similar measures, issued, for example, from the

United Nations

• States identified, by credibility sources, as states having incompatible regulation for

prevention of money laundering and financing terrorism with the international

regulation from this area,

• States identified, by credibility sources, as states financing and supporting terrorism

Senior Management approval must be sought before establishing a relationship with such a

person. It is also a requirement to establish the high risk client’s source of wealth/source of

funds and the beneficial owners.

• Source of Funds

For High Risk clients, whether these are legal entities or individuals, the Company further to

the enhance due diligence as per the previous section, will apply the request of additional

documentation (whatever applicable) in order to identify the source of funds.

These may include, but not limited to.

Individual clients:

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• Curriculum Vitae (“CV”)

• Bank Statements of last six months

• Previous year/s Tax reports

• Tax payment

• Etc

For Legal Entities

• Audited Financial Statements – for newly formed companies, latest management

accounts

• Bank Statements of last six months

Establishing the purpose and actual substance of a Transaction

For the purpose of preventing movement of illegally obtained funds through the Provider of

service it is essential upon entering into a Business Relationship, in addition to identification

of the Client, to establish the business profile of the Client, which consists of mapping the main

areas of operation and possible payment practices. Notice is to be taken on persons that the

Client has transactional relationships with, and their location.

It is necessary to bear in mind that certain circumstances, which are suspicious or unusual for

one Client, could constitute a part of normal economic activities of another. Establishing the

area of activity, work or profession of a client allows assessing whether or not the Business

Relationship or the Transactions are in conformity with the Client’s normal participation in

commerce, and whether the Business Relationship or the Transaction has an understandable

economic reason for the Client.

Implementation of International Sanctions

The Provider of service is required to implement International Sanctions in force.

Representatives shall draw special attention to all its Clients (present and new), to the activities

of the Clients and to the facts which refer to the possibility that the Client is a subject to

International Sanctions. Control and verification of possibly imposed International Sanctions

shall be conducted by the Representatives as part of DD measures applied to the Clients in

accordance with this policy.

The Representatives who have doubts or who know that a Client is subject to International

Sanctions, shall immediately notify the CO. In case of doubt, if the CO finds it appropriate, the

Representative shall ask the Client to provide additional information that may help to identify

whether he/she is subject to International Sanctions or not.

Transfer of funds

General Practice

When transferring money for purchasing digital currency, the sender’s name and the

information held on file provided by the Client upon the agreement, should match.

Money transfers from another party other than the account holder is strictly prohibited.

Furthermore, we will refuse any third-party transfers towards one of our Clients.

In case there is any discrepancy on a transaction, we reserve the right to automatically cancel

or suspend the transaction. Further to this, third parties are forbidden to conduct the transaction

in replace of the Client.

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Likewise, the information about transferring digital currency for sale, the recipient’s name and

the account holder has to be the same. Transferring through the online payment system is

allowed ONLY at the same account and/or wallet from where it was first used.

1. Credit Card transactions

To ensure that the owner of the account matches the cardholder, we ask that the client sends to

us a clear coloured copy of the card. For security reasons, we ask that the 8 middle digits of the

card number used for the transaction for all amounts are covered. We ask that the credit card

is a valid credit card where the name of the card holder is shown.

Not card will be accepted where it does not bear a name of the owner. Such example is a prepaid

card or internet card. In such cases the money will be rejected and send back to the sender.

2. Wire Transfers

When client is making a wire transfer, he is requested to provide the company with proof of

the wire transfer for 2 reasons:

a. To eliminate any possibility of errors such as wrong client

b. To be alerted for incoming funds

Important Notes

• Have the Senior Management approval prior of opening a “Political Exposed Person”

account.

• When a PEP is a potential client we need to obtain a bank reference letter.

• Where the documents are not in English:

➢ We need translation from a translator (external and/or an employee of the

Company).

➢ If there is no one to translate the documents, we ask the client to send us an official

translation from a notary.

Hashrift Ltd has the right to refuse any client without giving reason.

These guidelines have been implemented to protect Hashrift Ltd and its

clients.