I. General Information

BitFiSwap s.r.o.: Company Overview and Compliance Framework

BitFiSwap s.r.o. is a company that operates within the framework of Czech and EU financial regulations, specializing in providing services primarily to individual clients. Our commitment to compliance with Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations is at the core of our operations. Key aspects of our general information include:

1. Company Registration and Jurisdiction:

   • Registered Office: BitFiSwap s.r.o. is registered in the Czech Republic, with its office located at Korunní 2569/108, Vinohrady, 101 00 Praha 10.

   • Identification Number: The company is identified under the number 199 18 089.

2. Compliance with Czech and EU Regulations:

   • Regulatory Adherence: As a company operating in the Czech Republic, we adhere to Czech national laws as well as EU directives and regulations in the field of financial services. This includes strict compliance with established AML/CFT practices.

3. Focus on Individual Clientele:

   • Primary Customer Base: Our services are tailored primarily towards individual clients. We are currently not targeting business clients, which shapes our approach to AML/CFT compliance and customer due diligence.

4. AML/CFT Compliance Framework:

   • Comprehensive Policies and Procedures: Our AML/CFT compliance framework encompasses customer due diligence, transaction monitoring, reporting procedures, record-keeping, risk assessment, and employee training. These policies are regularly reviewed and updated in line with evolving legal and regulatory requirements.

5. Commitment to High Standards of Practice:

   • Professional and Ethical Conduct: We uphold a policy of zero tolerance towards any involvement in money laundering or terrorist financing. This commitment extends to all our principals, employees, and any subcontractors we may use.

By maintaining this framework and adhering to our policy statement, BitFiSwap s.r.o. ensures that our operations meet the highest standards of compliance and integrity, reflecting our dedication to upholding our responsibilities as a financial services provider in the Czech Republic.

II. General Anti-Money Laundering Practices and Procedures

At BitFiSwap s.r.o., our General Anti-Money Laundering (AML) Practices and Procedures form a crucial part of our compliance framework. This section details the comprehensive measures we have in place to prevent, identify, and address money laundering and terrorist financing activities. Key elements of our AML practices and procedures include:

1.   Regulatory Supervision:

o We operate under the strict supervision of relevant regulatory authorities, ensuring adherence to both Czech and EU AML/CFT regulations.

2.   Compliance with AML/CFT Laws:

o Our practices are in line with key AML/CFT laws, including the Czech AML Act and various EU directives and regulations, ensuring comprehensive compliance.

3.   Designated Compliance Officer:

o While we do not have a dedicated Compliance Officer, our directors collectively undertake the responsibilities of overseeing and coordinating our AML/CFT program, bringing in their extensive experience in compliance and risk management.

4.   Written AML/CFT Compliance Program:

o We have a documented AML/CFT compliance program that covers essential areas like customer due diligence, transaction monitoring, and employee training. This program is regularly reviewed and updated.

5.   Regular Program Updates:

o Our AML/CFT program is updated annually or as needed in response to significant regulatory changes or operational shifts.

6.   Reporting Obligations:

o We adhere to strict reporting requirements to regulatory authorities, especially when operating in high-risk countries as identified by the FATF and European Commission.

7.   Ensuring Current Regulation Compliance:

o We conduct regular reviews, compliance testing, and employee training to ensure adherence to the latest AML/CFT regulations.

8.   Prevention of Relationships with High-Risk Entities:

o We avoid establishing business relationships with high-risk entities, including PEPs, their family members, and close associates.

9.   Transaction Monitoring System:

o We have a robust manual monitoring process in place for transactions, with ongoing plans to develop an automated system for enhanced efficiency.

10.   Ongoing Risk Assessment:

1.   Continuous risk assessment and customer due diligence are integral parts of our practices, ensuring proactive management of potential AML/CFT risks.

Through these practices and procedures, BitFiSwap s.r.o. demonstrates a strong commitment to upholding the highest standards of AML/CFT compliance, ensuring the integrity and security of our operations.

Regulatory Oversight and Compliance

1. Supervisory Authorities: BitFiSwap s.r.o. falls under the direct regulatory purview of the Czech National Bank (Česká národní banka) and the Financial Analytical Unit (FAU) of the Czech Republic. These bodies are responsible for supervising and ensuring our strict adherence to the standards and practices related to Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) as mandated by both Czech and European Union (EU) financial regulations.

2. Scope of Supervision:

   • Czech National Bank: Our activities are subject to the prudential oversight of the Czech National Bank. This oversight is integral to ensuring that we operate within the bounds of financial soundness and regulatory compliance.

   • Financial Analytical Unit (FAU): The FAU's role in our regulatory framework is to analyze and investigate our financial operations, especially those aspects that pertain to AML and CFT. This specialized oversight is crucial in identifying and mitigating risks associated with money laundering and terrorist financing.

3. Compliance Mandate:

   • We are committed to upholding all regulatory requirements set forth by these authorities. This includes but is not limited to, the implementation of comprehensive AML/CFT policies, conducting regular risk assessments, and maintaining rigorous standards of customer due diligence.

   • Regular audits and reviews are conducted to ensure continued compliance with the evolving landscape of AML/CFT regulations.

4. Organizational Responsibility:

   • It is the collective responsibility of all members of BitFiSwap s.r.o., from the executive level to operational staff, to adhere to these regulatory requirements. Continuous training and awareness programs are integral parts of our operational ethos to ensure that all employees are well-versed in AML/CFT practices.

AML/CFT Legal Compliance Framework

1. Primary Czech Legislation:

   • Act No. 253/2008 Coll., the Czech AML Act: This Act constitutes the cornerstone of our AML/CFT legal framework. It outlines the requisite procedures for customer identification, record-keeping, and the reporting of suspicious transactions in the Czech Republic. Compliance with this Act is fundamental to our operational integrity and regulatory adherence.

2. EU AML Directives:

   • EU Fourth and Fifth Anti-Money Laundering Directives: These directives establish a comprehensive set of AML/CFT standards across the EU. They encompass stringent requirements for due diligence, customer identification, transaction monitoring, and reporting obligations. As a Czech entity operating within the EU, adherence to these directives is mandatory and integral to our cross-border operations.

3. Additional EU Regulations:

   • Regulation (EU) 2015/847 on Information Accompanying Transfers of Funds: This regulation mandates the provision of specific information for fund transfers, enhancing the transparency of financial transactions.

   • Directive (EU) 2017/541 on Combating Terrorism: Addresses the prevention of the use of the financial system for terrorist financing.

   • Regulation (EU) 2018/1672 on Controls on Cash Entering or Leaving the Union: Governs the movement of large sums of cash across EU borders.

   • Directive 2009/110/EC on Electronic Money: Regulates the issuance and operation of electronic money institutions.

   • Directive 2006/70/EC: Focuses on the measures for defining politically exposed persons (PEPs) and establishing technical criteria for customer due diligence.

   • Various EU Financial Sanctions Regulations: These regulations are critical in combatting money laundering and terrorist financing, providing guidelines for financial sanctions against identified risks.

4. Organizational Commitment to Legal Compliance:

   • We maintain a proactive stance in aligning our operations with these laws and directives. This includes regular updates to our policies and procedures in response to legislative changes and evolving AML/CFT practices.

   • Our compliance team is dedicated to monitoring these legal frameworks, ensuring that BitFiSwap s.r.o. not only meets but exceeds the required standards of legal compliance in all jurisdictions of operation.

AML/CFT Program Leadership and Oversight

1. Compliance Oversight Structure:

   • Current Arrangement: Presently, BitFiSwap s.r.o. does not designate a singular Compliance Officer for our AML/CFT program. Oversight responsibilities are instead assumed collectively by the company's board of directors. This collective approach ensures a broad and comprehensive perspective on compliance matters.

2. Directorial Expertise and Responsibilities:

   • Expertise of Directors: Our directors possess a wealth of experience in the financial sector, including significant roles in compliance and risk management. Their backgrounds span working with hedge funds and occupying key positions in compliance risk at major financial institutions in the United Kingdom and Hong Kong. This diverse and extensive experience is instrumental in guiding the effective management of our AML/CFT program.

   • Daily Oversight: The directors are actively involved in the day-to-day coordination and oversight of AML/CFT efforts. Their hands-on approach ensures that compliance is seamlessly integrated into our operational processes and business strategies.

3. Commitment to High Standards of Compliance:

   • While a specific Compliance Officer role is not currently established, our directors' collective vigilance and expertise underpin our unwavering commitment to the highest standards of AML/CFT compliance. This approach aligns with our organizational ethos of maintaining rigorous adherence to AML/CFT regulations and best practices.

4. Future Considerations:

   • Review and Adaptation: The structure of our AML/CFT program oversight is subject to ongoing review. We recognize the dynamic nature of the financial landscape and are prepared to adapt our approach, including the potential appointment of a dedicated Compliance Officer, to align with evolving best practices and regulatory expectations.

AML/CFT Written Compliance Program

1. Existence of a Written Program:

   • Comprehensive Documentation: BitFiSwap s.r.o. has instituted a detailed and comprehensive written Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance program. This program is meticulously documented to ensure clear understanding, consistent application, and strict adherence to the AML/CFT regulatory standards set forth by both Czech and European Union (EU) laws.

2. Policy Coverage:

   • Key Areas of Focus: The AML/CFT compliance program encompasses various critical areas including:

     • Customer Due Diligence (CDD): Procedures for identifying and verifying customer identities, understanding customer behavior, and assessing risk profiles.

     • Transaction Monitoring: Systems and processes to detect and report suspicious transactions.

     • Reporting Procedures: Guidelines for reporting suspicious activities to relevant authorities.

     • Record-Keeping: Methods and practices for maintaining accurate and comprehensive records of financial transactions and customer information.

     • Risk Assessment: Regular analysis of potential AML/CFT risks associated with customers and business activities.

     • Employee Training: Continuous education and training programs for employees to ensure awareness and understanding of AML/CFT regulations and practices.

3. Regular Review and Updates:

   • Dynamic Adaptation: The program is not static but is subject to continuous review and revision. This ensures that our policies and procedures remain up-to-date with evolving legal and regulatory landscapes, as well as emerging risks and best practices in AML/CFT.

4. Organizational Commitment:

   • Ensuring Compliance and Integrity: The establishment and maintenance of this written AML/CFT compliance program demonstrate BitFiSwap s.r.o.'s unwavering commitment to financial integrity and regulatory compliance. It is an essential component of our risk management strategy and reflects our dedication to operating within the bounds of legal and ethical standards.

Updating the AML/CFT Compliance Program

1. Regular Review Schedule:

   • Annual Review: BitFiSwap s.r.o. has instituted a policy of conducting a comprehensive review of its AML/CFT compliance program on an annual basis. This systematic review is critical for ensuring that the program remains aligned with the latest regulatory developments and operational best practices.

2. Responsive Updates:

   • Adaptation to Regulatory Changes: In addition to the annual review, our policy mandates additional updates to the AML/CFT program as necessitated by significant changes in the regulatory landscape. This includes alterations in response to new legal requirements or amendments to existing AML/CFT regulations at both the national and EU levels.

   • Operational Shifts and Sector Developments: We also adapt our AML/CFT program in response to internal operational changes within BitFiSwap s.r.o. or notable shifts in the broader financial sector. These updates ensure that our compliance program remains robust and relevant in a dynamic financial environment.

3. Commitment to Compliance and Effectiveness:

   • Proactive Approach: Our approach to regularly updating the AML/CFT program reflects a proactive stance in maintaining compliance and operational effectiveness. By keeping our program current, we not only adhere to legal requirements but also strengthen our capacity to preemptively identify and mitigate AML/CFT risks.

4. Compliance Oversight:

   • Oversight by Leadership: The responsibility for overseeing these reviews and updates lies with the company's leadership, which includes the board of directors and, where appropriate, consultation with external experts. This oversight ensures that revisions to the program are made judiciously and in accordance with best practices.

Reporting Requirements for Operations in High-Risk Countries

1. Mandatory Reporting Obligation:

   • Regulatory Directive: In compliance with the regulatory framework of the Czech Republic and international AML/CFT standards, BitFiSwap s.r.o. is obligated to report to the Czech National Bank and the Financial Analytical Unit (FAU) regarding any operational activities in countries designated as high-risk. This requirement is in accordance with the lists provided by the Financial Action Task Force (FATF) and the European Commission.

2. Criteria for High-Risk Countries:

   • FATF and European Commission Lists: We adhere to the definitions of high-risk countries as outlined by the FATF and the European Commission. Our compliance team maintains an updated understanding of these lists to ensure accurate identification and reporting.

3. Operational Transparency and Compliance:

   • Ensuring Transparency in High-Risk Jurisdictions: Our commitment to AML/CFT extends to maintaining heightened transparency and vigilance in operations involving high-risk countries. This is integral to mitigating risks associated with money laundering and terrorist financing in these jurisdictions.

   • Robust Monitoring and Reporting Protocols: The company has established stringent procedures for monitoring and reporting any business activities in such high-risk countries. These procedures are integral to our overall AML/CFT compliance framework.

4. Responsibility and Oversight:

   • Compliance Team's Role: The responsibility for identifying, monitoring, and reporting activities in high-risk countries lies with our dedicated compliance team. This team ensures that all such activities are reported in a timely and accurate manner to the relevant regulatory authorities.

   • Continuous Review and Adaptation: The procedures related to operations in high-risk countries are subject to continuous review and adaptation to align with changes in FATF and European Commission guidelines, as well as evolving regulatory requirements.

Ensuring Adherence to Current AML/CFT Regulations

1. Regular Policy Reviews:

   • Continuous Alignment with Legal Requirements: BitFiSwap s.r.o. ensures that our AML/CFT policies are consistently aligned with the most current legal requirements. Regular reviews are conducted to incorporate updates from the Czech National Bank, the Financial Analytical Unit (FAU), the Financial Action Task Force (FATF), and the European Commission. This proactive approach guarantees compliance with evolving legal and regulatory frameworks.

2. Targeted Compliance Testing:

   • Internal Testing Protocols: To verify the effectiveness of our AML/CFT measures, we conduct internal compliance testing. These tests are designed to critically evaluate areas such as transaction monitoring and customer due diligence processes, identifying any areas for improvement or adjustment.

3. Focused Employee Training:

   • Comprehensive Training Program: Given the size of our team, we place a strong emphasis on providing detailed and up-to-date training to all members. This training ensures a profound understanding of AML/CFT regulations and their application within our operational context. It is regularly revised to reflect new regulatory developments and best practices.

4. Active Risk Assessment:

   • Dynamic Risk Management: Our approach to risk management involves continuous assessment of AML/CFT risks. We adapt our policies and procedures to effectively mitigate these risks, ensuring a robust defense against potential financial crimes.

5. Internal Communication and Reporting:

   • Efficient Communication and Reporting Mechanisms: Effective internal communication channels are maintained for all matters related to AML/CFT. This facilitates quick and cohesive adaptation to regulatory changes and ensures that our compliance strategies are implemented seamlessly across the organization.

Prevention of Relationships with Shell Banks/Organizations

1. Policy on Business Clientele:

   • Current Business Focus: As of the current standing, BitFiSwap s.r.o. does not engage in business relations with corporate clients. Our operational focus is directed primarily towards individual clients within the peer-to-peer lending sector. This strategic decision is aligned with our business objectives and risk management framework.

2. Shell Bank/Organization Identification and Avoidance Procedures:

   • Even though we do not target business clients at present, we maintain a cautious approach towards any future expansion of our client base to include business entities. In such scenarios, we will implement stringent procedures to identify and prevent relationships with shell banks or organizations. These procedures would include:

     • Customer Due Diligence (CDD): Rigorous verification of the legal status, ownership structure, and operational history of potential business clients.

     • Enhanced Due Diligence (EDD): In cases where there is a higher risk of engagement with shell entities, enhanced scrutiny measures would be employed.

     • Ongoing Monitoring: Continuous observation of client activities to detect any indications of shell bank or organization characteristics.

3. Regulatory Compliance and Risk Mitigation:

   • Alignment with Regulatory Standards: Any future developments in our client base will be approached with full compliance to the relevant AML/CFT regulations. This includes adherence to the guidelines set forth by the Czech National Bank, the Financial Analytical Unit (FAU), and international standards prohibiting relationships with shell banks/organizations.

   • Risk Management Considerations: The decision to avoid engagement with business clients, particularly shell entities, is also a risk mitigation strategy, aligning with our overall AML/CFT compliance framework.

III. Transaction Monitoring

BitFiSwap s.r.o. has established a robust framework for Transaction Monitoring as part of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance. This section outlines the key aspects of our transaction monitoring processes, designed to detect and address suspicious financial activities. The main components include:

1. Automated System for Transaction Monitoring: Currently, we employ a manual process for monitoring transactions, conducted by our skilled compliance team, with plans to develop an automated solution to enhance efficiency and effectiveness.

2. Regular Transaction Log Reviews: Our team conducts consistent reviews of transaction logs to identify irregular patterns or behaviors that could indicate suspicious activities.

3. Analysis of Transactions: We closely analyze transactions that exceed specific thresholds or deviate from a customer's typical transaction profile, as part of our ongoing monitoring strategy.

4. Employee Training and Vigilance: Our employees receive regular training in identifying and reporting unusual or suspicious activities. This training ensures that all staff members are equipped to recognize and escalate potential issues promptly.

5. Escalation Procedures: We have clear procedures in place for escalating suspicious transactions to the appropriate authorities or internal compliance officers.

6. Ongoing Monitoring for Risk Assessment: Our monitoring processes also include continuous assessment of customer transactions to detect any changes in risk profiles or transaction behaviors.

7. Documentation and Record Keeping: All investigations into suspicious activities, including decisions on whether to file reports, are thoroughly documented and retained for a minimum period as required by law.

Through these transaction monitoring practices, BitFiSwap s.r.o. ensures vigilant oversight of customer transactions, contributing to the prevention of money laundering and terrorist financing activities.

Manual Transaction Monitoring System

1. Current Monitoring Approach:

   • Absence of Automated System: Presently, BitFiSwap s.r.o. does not utilize an automated system for transaction monitoring. However, this does not diminish our capacity for effective oversight. We have instituted a rigorous manual monitoring process, executed by our proficient compliance team, to ensure meticulous scrutiny of transactions.

2. Key Components of Manual Monitoring:

   • Regular Transaction Log Reviews: Our team conducts consistent and thorough reviews of transaction logs. This is aimed at identifying any unusual patterns or behaviors that could indicate potential money laundering or financial crimes.

   • Detailed Transaction Analysis: Transactions that exceed predetermined thresholds or deviate from a customer’s typical transaction profile undergo in-depth analysis. This process is crucial in detecting any anomalies that warrant further investigation.

   • Ongoing Training for Employees: Recognizing the importance of staying abreast of evolving financial crime trends, we prioritize continuous education for our team. This ensures our monitoring methods are both effective and current.

   • Staff Vigilance and Reporting: All staff members are extensively trained to recognize and report any unusual or suspicious transactions. Prompt escalation of these incidents to our designated Compliance Officer is an essential aspect of our AML/CFT approach.

3. Future Developments:

   • In-House Transaction Monitoring System: Recognizing the benefits of automation in transaction monitoring, we are in the process of developing an in-house solution. This system will be designed to automatically detect anomalous behaviors, thereby enhancing our ability to identify and address risks associated with AML/CFT.

4. Commitment to Robust AML/CFT Practices:

   • Despite the manual nature of our current system, our vigilant and responsive transaction monitoring process demonstrates our firm commitment to upholding a strong AML/CFT framework. We continuously adapt to the dynamic nature of financial security, ensuring that our practices align with the best standards in the industry.

Processes to Prevent and Detect Unusual/Suspicious Transactions

1. Manual Transaction Monitoring System:

   • Ongoing Transaction Log Review: BitFiSwap s.r.o. employs a manual transaction monitoring process where regular reviews of transaction logs are conducted. This process is designed to identify any irregular patterns or behaviors that may indicate suspicious activities.

   • Detailed Transaction Analysis: Our compliance team conducts an in-depth analysis of transactions that surpass specific thresholds or show deviations from a customer's normal transaction profile. This level of scrutiny is vital for detecting potential anomalies.

2. Employee Training and Awareness:

   • Continuous Education: Recognizing the dynamic nature of financial crimes, we ensure that our team is consistently trained in the latest financial crime typologies. This ongoing training equips our employees with the knowledge and skills necessary for effective and up-to-date monitoring of transactions.

   • Employee Vigilance: Staff members are extensively trained to detect and promptly report any unusual or suspicious transactions. This proactive stance is a key element of our AML/CFT strategy.

3. Director-Led Escalation Process:

   • Immediate Review and Action: In the event of detecting any unusual or suspicious activities, our policy mandates that such matters are escalated directly to our directors. This ensures immediate review and appropriate action, underscoring our commitment to swift and decisive responses to potential AML/CFT risks.

4. Development of Automated Monitoring Solutions:

   • In-House System Development: In line with our commitment to enhance our AML/CFT capabilities, BitFiSwap s.r.o. is in the process of developing an in-house program to automate the detection of unusual behavior. This advancement is expected to significantly bolster our transaction monitoring efficiency and effectiveness.

5. Commitment to AML/CFT Compliance:

   • Proactive Risk Management: The measures in place reflect our unwavering commitment to maintaining a robust AML/CFT compliance framework. Through these procedures, we uphold a proactive approach to managing and mitigating potential financial risks.

Risk-Based Customer Due Diligence

1. Individual Risk Assessment:

   • Risk Evaluation Criteria: At BitFiSwap s.r.o., each individual client undergoes a comprehensive risk assessment. This assessment is based on a variety of factors including transaction frequency, volume, and patterns, as well as geographic location. This personalized evaluation allows us to ascertain the level of risk associated with each client accurately.

2. Enhanced Due Diligence for Higher Risk Clients:

   • Rigorous Examination: Clients identified as posing a higher risk, particularly those from or engaging in transactions with high-risk jurisdictions, are subject to an Enhanced Due Diligence (EDD) process. This entails a more thorough investigation into their backgrounds and transaction activities to better understand and mitigate potential risks.

3. Ongoing Monitoring:

   • Continuous Transaction Surveillance: Our policy includes ongoing monitoring of all client transactions. This is crucial in identifying any changes in their risk profiles or unusual transaction behaviors. Continuous monitoring serves as a dynamic safeguard against evolving financial risks.

4. Regulatory Compliance:

   • Adherence to AML/CFT Standards: Our client due diligence procedures are meticulously aligned with current Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations. By adhering to these standards, we ensure robust and effective identification and management of potential risks associated with individual clients.

Self-Assessment Procedures for AML/CFT Compliance

1. Regular Compliance Reviews:

   • Periodic Evaluation of Practices: BitFiSwap s.r.o. has instituted a policy of conducting regular compliance reviews. These reviews are crucial for ensuring that our AML/CFT practices remain in strict alignment with current laws and regulations. They serve as a proactive measure to identify any areas requiring updates or enhancements in our compliance framework.

2. Internal Testing of AML/CFT Procedures:

   • Effectiveness Assessment: Our compliance team is tasked with regularly testing the effectiveness of our internal AML/CFT policies and procedures. This internal testing helps in identifying the robustness of our existing controls and in pinpointing areas where improvements may be necessary.

3. Employee Feedback and Training Assessments:

   • Incorporating Staff Insights: An integral part of our self-assessment involves gathering feedback from employees, particularly during training sessions. This feedback is critical for assessing their understanding and practical implementation of our AML/CFT policies. It also helps in tailoring future training to address any identified gaps or challenges.

4. Continuous Improvement Process:

   • Adaptive Control Systems: The insights and findings garnered from these self-assessments are systematically used to inform and drive continuous improvements in our internal control systems. This process ensures that our compliance measures are not only effective but also dynamic, adapting to evolving AML/CFT regulations and operational necessities.

Reporting Procedures for Suspicious Transactions

1. Identification of Suspicious Transactions:

   • Initial Flagging: In the event that our transaction monitoring process flags a transaction as suspicious, BitFiSwap s.r.o. immediately earmarks it for further investigation. This initial identification is a critical step in our procedure, enabling us to promptly respond to potential risks.

2. Thorough Documentation:

   • Detailed Record-Keeping: Once a transaction is identified as suspicious, our team meticulously documents all relevant details. This includes the nature of the transaction, the parties involved, and the specific reasons why the transaction is deemed suspicious. Such comprehensive documentation is essential for effective reporting and subsequent analysis.

3. Reporting to Financial Analytical Unit (FAU):

   • Formal Reporting Process: Following the documentation phase, BitFiSwap s.r.o. proceeds to report the suspicious transaction to the Financial Analytical Unit (FAU) of the Czech Republic. This reporting is conducted in strict accordance with the format and timelines mandated by Czech AML/CFT regulations, ensuring full regulatory compliance.

4. Post-Reporting Record Maintenance:

   • Retention of Records: Subsequent to the reporting of a suspicious transaction, our policy mandates the retention of all related records and documentation. This retention is in compliance with legal requirements and is crucial for potential future audits or investigations.

5. Commitment to Regulatory Compliance:

   • Upholding Legal Standards: This streamlined reporting process underscores BitFiSwap s.r.o.'s commitment to promptly and efficiently addressing suspicious transactions. Our adherence to this process demonstrates our dedication to maintaining full compliance with all relevant AML/CFT regulatory requirements.

Documentation of Processes for Suspicious Transaction Reporting

At BitFiSwap s.r.o., we have established a comprehensive framework for the documentation of all processes pertaining to the reporting of suspicious transactions. This well-structured documentation is a pivotal element of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance program, fulfilling several critical roles:

1. Standardization of Procedures:

   • Guidelines for Consistent Transaction Handling: The documentation acts as a standardized guideline, detailing the steps for identifying, documenting, reporting, and retaining records of suspicious transactions. This consistency is crucial to ensure uniform handling of such transactions across various levels of our organization.

2. Adherence to Regulatory Compliance:

   • Meeting Legal Obligations: By maintaining comprehensive records and written procedures, BitFiSwap s.r.o. rigorously adheres to the Czech AML/CFT regulations. The presence of such detailed documentation is instrumental in demonstrating our steadfast commitment to regulatory compliance, particularly during audits and regulatory reviews.

3. Training and Reference Resource:

   • Educational and Guidance Tool for Employees: Our documented procedures serve not only as a point of reference but also as vital training material for our staff. By familiarizing our employees with these procedures, we enhance their understanding and capability to effectively handle suspicious transactions, thereby strengthening our overall AML/CFT efforts.

4. Framework for Continual Improvement:

   • Facilitating Updates and Enhancements: The presence of documented processes allows for streamlined review and timely updates. This adaptability is essential to ensure that our transaction monitoring and reporting systems remain relevant and effective in the face of evolving regulations and changes in the operational environment.

In summary, the well-documented procedures for reporting suspicious transactions at BitFiSwap s.r.o. signify our dedication to maintaining a robust, efficient, and compliant AML/CFT operational framework.

Authority for Reporting Suspicious Financial Activities

As part of our commitment to Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance, BitFiSwap s.r.o. has established a clear protocol for reporting suspicious financial activities. The designated authority for such reports in the Czech Republic is:

• Financial Analytical Unit (FAU): BitFiSwap s.r.o. directs all reports of suspicious financial activities to the Financial Analytical Unit of the Czech Republic. The FAU plays a pivotal role in the national framework for combating money laundering and terrorist financing. It is tasked with the vital functions of collecting, analyzing, and disseminating information that pertains to potential money laundering or terrorist financing activities.

Reporting to the FAU aligns with our legal obligations under Czech AML/CFT regulations and demonstrates our proactive approach in contributing to the national and international efforts against financial crimes.

Retention of Records of Investigations into Suspicious Activity

In adherence to the Anti-Money Laundering (AML) regulations of the Czech Republic and EU AML directives, BitFiSwap s.r.o. maintains a stringent policy regarding the retention of relevant records. This policy pertains to all investigations into suspicious activities, including decisions on whether to file or not to file reports with the Financial Analytical Unit (FAU).

·         Retention Period: The records related to these investigations and decisions are retained for a period of five years. This duration is specifically chosen to comply with the standard retention period mandated by both Czech and EU AML regulations.

·         Secure Storage and Accessibility: During this five-year period, all records are securely stored to ensure confidentiality and integrity. The records are accessible as necessary for compliance with legal, regulatory, or audit requirements.

·         Purpose of Retention: The retention of these records serves several critical purposes, including facilitating potential future investigations by regulatory authorities, supporting internal and external audits, and ensuring transparency and accountability in our AML/CFT practices.

The policy of retaining records for a five-year period underscores BitFiSwap s.r.o.'s commitment to upholding the highest standards of regulatory compliance and operational integrity in our AML/CFT efforts.

IV. Know Your Customers & Enhanced Due Diligence

At BitFiSwap s.r.o., our Know Your Customer (KYC) and Enhanced Due Diligence (EDD) procedures are pivotal components of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance strategy. This section highlights the essential aspects of our approach in ensuring thorough customer identification and risk assessment:

1. KYC Form Implementation:

   • Initial Information Gathering: We utilize a detailed KYC form at the outset of customer relationships to gather crucial information, forming the foundation of our due diligence process.

2. Customer Identification and Verification:

   • Documentary Verification Process: We primarily use documentary methods for identity verification, including government-issued identification, to ensure the authenticity of customer identities.

3. Client Risk Assessment:

   • Risk-Based Approach: Each customer undergoes a comprehensive risk assessment based on the information from the KYC process, determining the level of due diligence required.

4. Enhanced Due Diligence for High-Risk Clients:

   • Additional Scrutiny for Elevated Risks: Customers classified as higher risk, such as those with political exposure or from high-risk jurisdictions, are subject to more rigorous EDD.

5. Ongoing Monitoring:

   • Continuous Surveillance: Our approach includes ongoing monitoring of client transactions to promptly identify any changes in risk profiles or behaviors.

6. Non-Engagement with High-Risk Entities:

   • Avoiding Relationships with PEPs: In line with our risk management strategy, we do not establish business relationships with Politically Exposed Persons (PEPs), their families, close associates, or entities they control.

7. Jurisdictional Compliance:

   • Adhering to Regulatory Restrictions: We ensure compliance with jurisdictional restrictions by verifying customer locations and adhering to AML/CFT regulations across various platforms.

Through these KYC and EDD procedures, BitFiSwap s.r.o. maintains a vigilant stance against potential financial crimes, ensuring the integrity and compliance of our customer relationships.

Comprehensive KYC, CDD, and EDD Procedures at BitFiSwap s.r.o.

BitFiSwap s.r.o. has established a set of comprehensive procedures for Know Your Customer (KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD), which are foundational to our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance framework. These procedures are crafted to ensure a high standard of client verification and ongoing monitoring, in accordance with regulatory requirements and industry best practices.

1. KYC Form Implementation:

   • Initial Information Gathering: Our CDD process commences with a detailed KYC form. This form is meticulously designed to collect essential information about our clients, serving as the foundational step in our due diligence process.

2. Customer Identification and Verification:

   • Accuracy and Validation: Through our KYC procedures, we conduct thorough identification and verification of our clients. This step ensures that the information provided by clients is both accurate and current, forming a crucial part of our risk management strategy.

3. Client Risk Assessment:

   • Determining Due Diligence Level: Each client undergoes a comprehensive risk assessment based on the information acquired through the KYC process. This assessment is pivotal in determining the appropriate level of due diligence and monitoring required for each client.

4. Enhanced Due Diligence for Higher-Risk Clients:

   • In-Depth Analysis for Elevated Risks: Clients identified as higher risk are subject to Enhanced Due Diligence (EDD). This involves a more rigorous examination of the client's background, business relationships, and transactional nature, to adequately manage and mitigate the associated risks.

5. Ongoing Monitoring:

   • Continuous Surveillance of Client Activities: Our policy includes a system of continual monitoring of client transactions and relationships. This ongoing scrutiny is essential to detect any changes in the client’s risk profile or transactional behavior, enabling timely and effective responses to potential risks.

By adhering to these structured KYC, CDD, and EDD procedures, BitFiSwap s.r.o. maintains a robust framework for client verification and risk management, reinforcing our commitment to compliance and the integrity of financial transactions.

Customer Identity Documentation and Verification

BitFiSwap s.r.o. adheres to a stringent process for the documentation and verification of our customers' identities, which is a crucial aspect of our Know Your Customer (KYC) procedures. This process is designed to align with our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance framework. The key focus of our identity verification includes:

1. Personal Identification Verification:

   • Government-Issued ID Requirements: The cornerstone of our KYC process is the requirement for official government-issued identification. This typically includes documents such as a passport or national ID card. These documents are utilized to verify critical information like the customer’s name, date of birth, and photograph.

   • ID Location Verification: Instead of requiring proof of residence, BitFiSwap s.r.o. focuses on verifying the location details as provided in the customer's ID. This approach ensures that we accurately ascertain and confirm the customer’s geographical location, which is pivotal in our risk assessment process.

2. Risk-Based Approach for Additional Information:

   • Assessing Additional Details: Depending on the initial risk assessment derived from the ID verification, we may require further information to fully understand the customer’s profile. This could include verifying the source of funds or the purpose of the intended business relationship.

3. Example of Verification Process:

   • Practical Application: When a new customer registers with BitFiSwap, they are required to provide their government-issued ID. The details on this ID, such as the customer's full name, date of birth, and photograph, are cross-referenced with official databases for authenticity. Additionally, the location information on the ID is carefully verified to ensure it aligns with the customer’s stated geographical location.

By employing these detailed verification procedures, BitFiSwap s.r.o. ensures that each customer's identity is thoroughly verified, forming a fundamental part of our commitment to maintaining the integrity and security of our financial services.

Verification of Customer Location

BitFiSwap s.r.o. employs a robust method for determining and verifying the locations of our customers, an essential part of our Know Your Customer (KYC) process and compliance with Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations. Our location verification process involves:

1. ID Card Verification:

   • Primary Method for Location Confirmation: Customers are mandated to provide a government-issued ID card, which typically includes details such as their residential address. This ID card is scrutinized not only to verify the customer's identity but also to confirm their initial location details.

2. Bank Location Corroboration:

   • Secondary Validation Method: In addition to ID card verification, we consider the location of the customer's bank as a supplementary means to corroborate their location. Consistency between the location indicated on the ID card and the customer’s bank location serves as additional validation of their stated location.

This two-tiered approach to location verification forms a critical aspect of our customer due diligence. While it does not involve direct verification of bank statements, it enables us to make informed assumptions about the customer's location, thus aligning with our overall KYC procedures. This method is instrumental in ensuring compliance with AML/CFT requirements and in mitigating risks associated with geographical discrepancies.

Through these procedures, BitFiSwap s.r.o. maintains an effective system for location verification, reinforcing the integrity and compliance of our customer onboarding and ongoing monitoring processes.

Jurisdictional Compliance Procedures

At BitFiSwap s.r.o., we have implemented a comprehensive set of procedures to ensure that our services align with jurisdictional compliance requirements. These procedures are designed to prevent the use of our services by customers located in prohibited jurisdictions, in accordance with various regulatory standards and platform terms of use. Our approach includes:

1. KYC Form Data Utilization:

   • Gathering Vital Customer Information: Our Know Your Customer (KYC) form is structured to collect essential information from our customers, such as their full name, address, and government-issued identification. This data forms the primary basis for determining each customer’s location and residency status.

2. Manual Verification Process:

   • Ensuring Compliance with Jurisdictional Restrictions: The information provided by customers, including addresses and ID details, is subject to a thorough manual verification process. This critical step ensures that customers are not based in any jurisdictions that are prohibited or restricted under prevailing laws and regulations.

3. Customer Declarations:

   • Residency Confirmation: As a key part of the KYC process, customers are required to declare their country of residence. This declaration is cross-referenced with the identification documents provided to verify compliance with jurisdictional constraints.

By following this methodical process, BitFiSwap s.r.o. ensures adherence to jurisdictional compliance standards, reinforcing our commitment to legal compliance and operational integrity. This approach is crucial for maintaining a compliant and secure service offering, regardless of the specific platform or regulatory environment.

Documentary Identity Verification and Compliance Protocols

BitFiSwap s.r.o. adopts a stringent approach to identity verification, primarily utilizing documentary methods. This approach is in line with our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance framework and is designed to ascertain customer identity with precision and reliability.

1. Use of Government-Issued Identification:

   • Official Documentation Requirement: The cornerstone of our identity verification process is the requirement for customers to submit official government-issued identification documents. This typically includes passports or national ID cards. These documents provide critical details such as the customer’s name, date of birth, and photograph, which are essential for verifying their identity.

2. Protocol for Inability to Verify Identity:

   • Strict Compliance and Risk Mitigation: In instances where we are unable to verify a customer's identity using the provided documentary methods, BitFiSwap s.r.o. adheres to a policy of declining to establish a business relationship. This decision is aligned with our commitment to preventing identity fraud and upholding the integrity of our financial transactions.

   • Adherence to AML/CFT Regulations: This measure is not only a reflection of our commitment to customer due diligence but also a critical aspect of our compliance with AML/CFT regulations. Ensuring the authenticity of customer identities is paramount to maintaining a secure and compliant financial environment.

By employing these documentary methods for identity verification and adhering to strict protocols when verification cannot be achieved, BitFiSwap s.r.o. ensures the highest standards of due diligence and regulatory compliance are upheld in all our customer relationships.

Documentary Identity Verification and Compliance Approach

BitFiSwap s.r.o. employs a robust system primarily focused on documentary methods for the verification of customer identities, forming a key part of our compliance with Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations. This process is structured as follows:

1. Utilization of Government-Issued Identification:

   • Official Documentation Requirement: For identity verification, we require our customers to provide official identification documents. This typically includes passports or national ID cards, which are scrutinized to verify crucial details such as the customer’s name, date of birth, and photograph.

2. Protocol for Instances of Unverifiable Identity:

   • Adherence to Compliance Protocols: In situations where a customer’s identity cannot be verified using the provided documentary methods, BitFiSwap s.r.o. rigorously follows established compliance protocols. Under these circumstances, we make the decision to decline the establishment of a business relationship.

   • Preventive Measure Against Identity Fraud: This approach is a preventive measure against potential identity fraud. Ensuring the authenticity of identities is crucial in safeguarding our operations and maintaining the trust of our clients and partners.

   • Upholding AML/CFT Regulations: Declining to establish relationships in cases of unverifiable identity is also integral to our adherence to AML/CFT regulations. It demonstrates our commitment to upholding the highest standards of due diligence and regulatory compliance.

Through these documentary verification methods and strict adherence to compliance protocols in cases of unverifiable identity, BitFiSwap s.r.o. ensures the integrity and security of our customer onboarding process, aligning with our overarching commitment to AML/CFT compliance.

Ongoing Customer Due Diligence and Risk-Based Information Updates

At BitFiSwap s.r.o., we are committed to conducting ongoing due diligence throughout our relationships with customers, ensuring that their files remain current and reflective of any changes in their risk profile. Our approach, tailored to our scale and operational model, includes the following key components:

1. Risk-Based Regular Updates:

   • Personalized Update Process: Aligning with our risk-based approach, we regularly update customer information. This process is customized and responsive, acknowledging the varied risk levels associated with different customer profiles.

2. Annual Review Schedule:

   • Standardized Update Frequency: Customer files are typically reviewed and updated on an annual basis. This systematic review ensures that all customer information is up-to-date and accurate.

   • Increased Frequency for Higher Risk Customers: For those customers categorized as higher risk, the frequency of these reviews is increased to adequately monitor any changes that might affect their risk categorization.

3. Reviews Triggered by Risk Events:

   • Responsive to Changes in Customer Profile: In addition to scheduled reviews, BitFiSwap s.r.o. conducts additional due diligence reviews in response to specific risk events. Such events may include noticeable changes in a customer's transaction patterns or significant updates in their personal or financial status.

4. Continuous Transaction Monitoring:

   • Ongoing Surveillance for Risk Identification: We maintain a system of continuous transaction monitoring. This helps in promptly identifying any activities that might necessitate a re-evaluation of a customer's risk profile and necessitate updates to their information.

Despite the constraints of being a small team, BitFiSwap s.r.o. upholds diligent and rigorous practices in customer due diligence. We adapt our processes to effectively manage and mitigate risk, ensuring compliance with regulatory obligations and maintaining the integrity of our customer relationships.

Approach to Enhanced Due Diligence for High-Risk Customers

In line with our commitment to stringent risk management and AML/CFT compliance, BitFiSwap s.r.o. has adopted a specific policy regarding Enhanced Due Diligence (EDD) for potential high-risk customers. This policy includes the following key aspects:

1. Risk Assessment During KYC Process:

   • Initial Risk Categorization: As part of our Know Your Customer (KYC) procedures, we perform a thorough risk assessment for each new customer. This assessment is based on various criteria, including geographic location, nature of transactions, and potential political exposure, to determine the risk level associated with each customer.

2. Policy on High-Risk Relationships:

   • Preventive Approach to High-Risk Customers: If a customer is identified as high risk during our risk assessment process, our policy is to avoid establishing a business relationship. This decision is a proactive measure to align with our risk management strategy and adhere to our AML/CFT compliance framework.

3. Ongoing Monitoring of Existing Customer Base:

   • Continual Risk Status Evaluation: For our existing customers, we implement a continuous monitoring system. This system is designed to ensure that the risk status of each customer remains within an acceptable threshold. If a customer’s risk profile escalates to a high-risk category at any point, we undertake a reassessment of the relationship and take appropriate measures in response.

By adhering to this policy, BitFiSwap s.r.o. demonstrates a strong commitment to maintaining a secure and compliant operational environment. Our approach effectively minimizes exposure to potential AML/CFT risks and underscores our dedication to upholding the integrity of our financial services.

Identification and Assessment of High-Risk Customers

At BitFiSwap s.r.o., we have defined clear criteria to identify and assess high-risk customers. Our approach to determining the risk level of customers is based on a set of straightforward yet effective parameters, ensuring compliance with our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) framework:

1. Geographic Location Considerations:

   • Risk Assessment Based on Geography: Customers from, or with significant connections to, countries known for heightened risks of financial crimes are typically considered high risk. These jurisdictions are identified based on international standards and lists published by authoritative bodies such as the Financial Action Task Force (FATF).

2. Transactional Intentions and Patterns:

   • Analysis of Transaction Nature and Volume: During the Know Your Customer (KYC) process, we gather information about the nature and expected volume of the customer’s transactions. Indications of unusually large or frequent transactions, as stated in the KYC form, may lead to a higher risk categorization.

3. Politically Exposed Persons (PEPs):

   • Heightened Scrutiny for Political Exposure: Customers who indicate political exposure or associations with Politically Exposed Persons (PEPs) are classified as higher risk. This classification stems from the increased risks of corruption associated with political exposure.

4. Risk Assessment Approach:

   • Simplified Assessment Process: While BitFiSwap s.r.o. does not utilize a complex risk scoring system, we rely on an efficient assessment of these key indicators from the KYC form. This method enables us to promptly identify customers who meet our criteria for high risk.

5. Engagement Decision Based on Risk Tolerance:

   • Review and Engagement Decision: Customers identified as high risk through our assessment process are subject to further review. Based on our risk tolerance and in adherence to our AML/CFT policies, we may decide not to establish or continue a business relationship with such customers.

Through this process, BitFiSwap s.r.o. ensures a diligent and effective approach to identifying and managing high-risk customer relationships, in line with our commitment to uphold the highest standards of compliance and risk management.

Procedures for Determining Expected Transaction Profiles of Customers

At BitFiSwap s.r.o., we have implemented systematic procedures to determine and understand the expected transaction profiles of our customers. These procedures are integral to our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) framework and assist in effective risk management:

1. Initial Assessment Through KYC Form:

   • Gathering Transaction Intentions: During our Know Your Customer (KYC) process, we collect detailed information regarding the intended nature and volume of the customer's transactions. This initial assessment helps establish a baseline profile for each customer’s transaction activities.

2. Review of Transaction History for Existing Customers:

   • Understanding Typical Transaction Patterns: For our existing customer base, we conduct regular reviews of their transaction history. This review focuses on understanding typical patterns, including the frequency, amount, and types of transactions conducted, which aids in maintaining an accurate and current understanding of each customer's financial activities.

3. Ongoing Transaction Monitoring:

   • Continuous Surveillance and Anomaly Detection: We implement continuous monitoring of customer transactions to identify any significant deviations from their expected transaction profile. Such deviations may trigger additional reviews or necessitate an updated risk assessment to ensure continued compliance and risk mitigation.

4. Direct Customer Communication:

   • Clarification and Update of Transaction Intentions: In instances where there is uncertainty or anticipated changes in transaction patterns, we may engage in direct communication with the customer. This proactive approach allows us to gain a clearer understanding of their transaction activities and intentions, ensuring our records and risk assessments remain accurate and relevant.

Through these meticulous procedures, BitFiSwap s.r.o. ensures a thorough understanding of each customer's expected transaction profile, enhancing our capability to identify and manage potential risks effectively. This commitment to detailed assessment and monitoring is a testament to our dedication to upholding stringent AML/CFT standards and ensuring the integrity of our financial operations.

Policy and Procedures for Politically Exposed Persons (PEPs)

BitFiSwap s.r.o. maintains a clear and strict policy regarding the identification, verification, and monitoring of Politically Exposed Persons (PEPs), their family members, close associates, and entities owned or controlled by them. This policy is a critical component of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance framework and includes the following key procedures:

1. Identification of PEPs During KYC Process:

   • Screening for PEP Status: As part of our Know Your Customer (KYC) process, we conduct thorough screening to determine if a customer is a PEP, or closely associated with a PEP. This screening is based on the information provided in the KYC form, supplemented by checks against reliable external sources.

2. Policy of Non-Engagement with PEPs:

   • Decision to Decline Business Relationships: In line with our risk management strategy and AML/CFT compliance obligations, if a customer is identified as a PEP, a family member or close associate of a PEP, or connected to an entity owned or controlled by a PEP, our policy is to not establish a business relationship. This decision reflects our commitment to mitigating the potential risks associated with PEP-related transactions.

3. Ongoing Monitoring of Existing Customers:

   • Continual Assessment of PEP Status: For our existing customer base, we implement regular monitoring procedures. This continuous oversight is designed to ensure that customers do not subsequently acquire PEP status. If a change in status is identified, we reassess the customer relationship in accordance with our established policy.

By adhering to these procedures, BitFiSwap s.r.o. demonstrates its dedication to upholding high standards of compliance and integrity in financial transactions. Our approach to handling relationships with PEPs is aligned with best practices in risk management and regulatory compliance, reinforcing our commitment to maintaining a secure and compliant operational environment.

V. Watchlist Screenings

BitFiSwap s.r.o. has instituted rigorous watchlist screening procedures as part of its Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance program. This section outlines the key elements of our approach to screening transactions and customers against various watchlists:

1. Automated Sanctions List Screening:

   • Use of Advanced Tools and Databases: We utilize automated systems, including the OpenSanctions database, to screen all transactions against sanctions lists issued by government and international authorities.

2. Comprehensive Scope of Lists:

   • Multiple Sanctions Lists Included: Our screening process encompasses lists from OFAC, the United Nations, the European Union, and Czech national regulations, ensuring broad coverage and compliance.

3. Screening New Customers:

   • Pre-Transaction Checks: All new customers undergo thorough screening against these sanctions lists before any transactions are authorized or processed.

4. Additional Regulatory and Law Enforcement Lists:

   • Beyond Sanctions Lists: In addition to sanctions lists, we also screen new customers against various other regulatory and law enforcement lists as part of our due diligence.

5. Ongoing Monitoring for Restricted List Appearances:

   • Regular Screening Frequency: We conduct quarterly screenings of our existing customer base against current restricted lists to ensure ongoing compliance and risk management.

6. Re-Screening for Corporate Ownership Changes:

   • Specific Focus on Individual Clients: Given our primary focus on individual clients, re-screening due to changes in corporate ownership structure is not typically applicable to our customer base.

Through these watchlist screening practices, BitFiSwap s.r.o. ensures comprehensive and continuous oversight, aligning our operations with global regulatory standards and minimizing exposure to financial risks.

Automated Systems for Sanctions List Screening

BitFiSwap s.r.o. employs an automated system for screening all transactions against sanctions lists, an integral part of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance framework. This system ensures our adherence to both global and local regulatory standards.

• Utilization of OpenSanctions Database: Our screening system leverages the OpenSanctions database (accessible at OpenSanctions). This comprehensive resource compiles various sanctions lists, providing us with a reliable tool for cross-referencing transactions against global and national sanctions.

Components of Our Sanctions Screening Program

Our sanctions screening program includes checks against key sanctions lists as part of our due diligence:

1. OFAC (Office of Foreign Assets Control):

   • Included within the OpenSanctions database.

2. United Nations Sanctions Lists:

   • Also integrated into OpenSanctions.

3. European Union Sanctions Lists:

   • Accessible via OpenSanctions.

4. Czech National Regulations:

   • Czech-specific sanctions lists are part of the OpenSanctions resource, ensuring compliance with local regulations.

The use of the OpenSanctions database in our transaction screening process underscores BitFiSwap s.r.o.'s commitment to maintaining stringent compliance with AML/CFT standards, enhancing our ability to identify and manage potential risks efficiently.

Sanctions List Screening for New Customers

In alignment with our rigorous Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) policies, BitFiSwap s.r.o. implements a stringent process for screening all new customers against sanctions lists. This procedure is a crucial aspect of our customer onboarding process and is conducted before authorizing or processing any transactions.

1.       Pre-Transaction Screening Protocol:

o Our policy mandates that every new customer undergoes a thorough screening against various sanctions lists issued by government and competent authorities. This screening ensures that we do not inadvertently facilitate transactions for individuals, entities, or countries that may be subject to sanctions.

2.       Utilization of Reliable Sanctions Lists:

o The screening process involves checking customer details against up-to-date sanctions lists, including those from OFAC, the United Nations, the European Union, and relevant Czech authorities, among others.

3.       Commitment to Compliance and Security:

o This preemptive screening measure is reflective of BitFiSwap s.r.o.'s unwavering commitment to upholding the highest standards of legal compliance and operational security. By ensuring that all new customers are screened against sanctions lists, we safeguard our operations against involvement in prohibited activities and contribute to global efforts in combating financial crimes.

Through these diligent practices, BitFiSwap s.r.o. maintains a robust and compliant framework for customer onboarding, aligning our operations with international best practices and regulatory requirements.

Screening of New Customers Against Regulatory and Law Enforcement Lists

BitFiSwap s.r.o. extends its customer screening process beyond just sanctions lists, ensuring a comprehensive approach to risk management and compliance. Our procedures include detailed checks against a range of regulatory and law enforcement lists, an essential part of our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) framework.

1.       Broadened Screening Scope:

o In our pursuit to maintain the highest standards of due diligence, we conduct meticulous screenings of all new customers against various other lists issued by regulatory bodies and law enforcement agencies. This expanded screening helps us identify any potential red flags or risks that might not be covered by sanctions lists alone.

2.       Diverse List Sources:

o The lists used for screening purposes include, but are not limited to, those compiled by financial regulatory authorities, international law enforcement agencies, and other relevant governmental entities. These lists are vital in identifying individuals or entities involved in activities like financial fraud, corruption, or other criminal conduct.

3.       Proactive Compliance and Risk Mitigation:

o By integrating these additional screenings into our onboarding process, BitFiSwap s.r.o. demonstrates a proactive stance in compliance and risk mitigation. This thorough screening is integral in safeguarding our operations and upholding our commitment to operating within the bounds of legal and ethical standards.

Our approach to customer screening aligns with our overarching objective of ensuring a secure, compliant, and trustworthy financial environment for all our stakeholders.

Screening of New Customers Against Regulatory and Law Enforcement Lists

At BitFiSwap s.r.o., our commitment to rigorous Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance extends to encompassing an all-encompassing screening process for new customers. Alongside sanctions lists, we employ a thorough screening methodology that includes various regulatory and law enforcement lists.

1.       Incorporation of Diverse Lists:

o Our screening process is not confined to sanctions lists alone; it also involves comprehensive checks against a variety of lists curated by regulatory bodies and law enforcement agencies. These lists are instrumental in identifying individuals or entities that might pose a heightened risk due to regulatory concerns or potential involvement in unlawful activities.

2.       Scope of Screening:

o The screening encompasses lists that may include, but are not limited to, those maintained by financial regulatory authorities, international and national law enforcement organizations, and other relevant governmental bodies. By screening against these lists, we can detect a wider range of potential risks, such as financial fraud, corruption, or other forms of criminal activities.

3.       Stringent Compliance Measures:

o This extensive approach to customer screening underscores BitFiSwap s.r.o.'s dedication to stringent AML/CFT compliance. We recognize the importance of thorough due diligence in preventing the misuse of financial services and maintaining the integrity of our operations.

By integrating these additional layers of screening into our customer onboarding procedures, BitFiSwap s.r.o. ensures a robust defense against various forms of financial risks, aligning with our ethos of maintaining a secure and compliant financial environment.

Re-Screening Policy in Context of Corporate Ownership Changes

Within the operational framework of BitFiSwap s.r.o., our primary focus is on serving individual clients, and as such, we are not currently engaged in business relationships with corporate entities. This focus shapes our approach to re-screening against sanctions lists in the context of changes in corporate ownership structure:

1.       Scope of Customer Base:

o Given that our clientele primarily comprises individual customers, scenarios involving changes in corporate ownership structures are not typically relevant to our customer base. This delineation is a key aspect of our customer profile strategy.

2.       Applicability of Re-Screening Process:

o As a result, the process of re-screening customers against sanctions lists due to changes in corporate ownership does not generally apply within the context of our current business model. Our screening and re-screening procedures are tailored to suit the nature and needs of our individual client relationships.

3.       Adherence to AML/CFT Regulations:

o Despite this specific focus, BitFiSwap s.r.o. remains steadfast in its commitment to Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance. We continuously monitor our operational practices and customer profiles to ensure alignment with regulatory requirements and best practices in financial compliance.

Our approach to watchlist screenings and re-screening processes reflects BitFiSwap s.r.o.'s dedication to maintaining a compliant and secure environment for our individual clients, adhering to the principles of thorough due diligence and risk assessment.

Frequency of Monitoring for Restricted List Appearances

At BitFiSwap s.r.o., we have instituted a stringent policy for the continuous monitoring of our existing customer base to ensure compliance with Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations. This policy includes regular screenings against restricted lists, as follows:

1.       Quarterly Screening Schedule:

o Our compliance framework mandates the systematic review of all existing customers against current restricted lists every three months. This quarterly screening is a critical component of our ongoing due diligence and risk management processes.

2.       Comprehensive Restricted List Checks:

o The restricted lists utilized in these screenings encompass a wide range of sanctions lists and watchlists issued by various government bodies and international authorities. This ensures that our screenings are thorough and align with global compliance standards.

3.       Proactive Risk Mitigation:

o This regular screening frequency allows us to proactively identify any instances where existing customers may have been newly added to a restricted list. Prompt identification of such changes is crucial in managing potential risks and ensuring that we do not facilitate transactions that might contravene AML/CFT regulations.

4.       Commitment to Regulatory Adherence:

o By adhering to this quarterly screening schedule, BitFiSwap s.r.o. demonstrates its unwavering commitment to upholding regulatory compliance and maintaining the integrity of our financial services.

Through these diligent monitoring practices, BitFiSwap s.r.o. ensures that our customer base remains compliant with the latest regulatory requirements, reinforcing our dedication to operating within a secure and compliant financial environment.

VI. Training

BitFiSwap s.r.o. places a strong emphasis on Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) training as a key component of its compliance framework. This section outlines the integral aspects of our training program designed to equip employees with the necessary knowledge and skills:

1. CAMS Certification Goal:

   • Professional Training Standards: We aim for all relevant employees to achieve the Certified Anti-Money Laundering Specialist (CAMS) certification from the Association of Certified Anti-Money Laundering Specialists (ACAMS), ensuring a high standard of AML/CFT expertise.

2. Content of Training Sessions:

   • Identification and Reporting of Transactions: The training includes detailed guidelines on identifying and reporting transactions subject to government reporting, focusing on recognizing signs of suspicious activities.

   • Understanding Money Laundering and Terrorist Financing: Training sessions cover examples of different forms of money laundering and terrorist financing that could involve our products and services.

   • Internal Policies and Escalation Procedures: Employees are educated on internal policies to prevent money laundering and terrorist financing. This includes clear procedures for escalating suspicious activities and recognizing red flags.

3. Record Retention and Documentation:

   • Preservation of Training Records: We retain comprehensive records of all training sessions, including attendance records and materials used, to verify compliance and serve as a reference for future training.

4. Communication of Legal and Policy Updates:

   • Ongoing Information Dissemination: New AML/CFT-related laws or changes to existing policies are regularly communicated to relevant employees, ensuring that they are up-to-date with current regulations and practices.

Through these training initiatives, BitFiSwap s.r.o. commits to maintaining a well-informed workforce capable of effectively contributing to our AML/CFT efforts, reinforcing our dedication to regulatory compliance and operational integrity.

AML/CFT Training and Certification for Employees

At BitFiSwap s.r.o., we place a significant emphasis on ensuring that our employees are well-trained and equipped with the necessary knowledge to effectively contribute to our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) efforts. Our training program includes several key components:

1. Certified Anti-Money Laundering Specialist (CAMS) Certification:

   • Professional Training Goal: Our goal is for all relevant employees to achieve the CAMS certification from the Association of Certified Anti-Money Laundering Specialists (ACAMS). This certification represents a high standard of education and expertise in the field of AML/CFT.

2. Identification of Reportable Transactions:

   • Guidelines and Recognition of Suspicious Activities: Employees are provided with comprehensive guidelines on identifying transactions that must be reported to government authorities. The training includes the recognition of signs of suspicious activities and an understanding of the thresholds and criteria for reporting as per AML/CFT regulations.

3. Escalation Procedures:

   • Internal Reporting Protocol: The training program emphasizes clear procedures for escalating suspicious activities within the company. Employees are instructed on the appropriate channels and methods for escalating incidents that necessitate government reporting.

4. Reporting Mechanisms to Authorities:

   • Compliance with Reporting Formats: Training sessions include detailed information on the specific mechanisms and formats for reporting to relevant government authorities. This ensures that our reporting practices are in full compliance with legal and regulatory requirements.

Through this comprehensive training program, BitFiSwap s.r.o. ensures that our employees are not only aware of their responsibilities in identifying and reporting suspicious activities but also possess the professional knowledge and skills to uphold our internal policies against money laundering and terrorist financing. This approach reinforces our commitment to maintaining a secure, compliant, and vigilant operational environment.

Record Retention of AML/CFT Training Sessions

At BitFiSwap s.r.o., we diligently maintain comprehensive records of all our Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) training sessions. This practice is a fundamental component of our commitment to thorough compliance and effective training management. The specifics of our record retention include:

1. Attendance Records:

   • For every training session conducted, we meticulously document attendance records. This ensures that all relevant employees have participated in the training, aligning with our internal compliance policies and regulatory expectations.

2. Preservation of Training Materials:

   • Alongside attendance records, we retain all relevant materials used during these training sessions. This includes presentations, handouts, case studies, and any other resources that contribute to the learning process.

3. Purpose of Record Retention:

   • Verification of Compliance Training: The retention of these records serves as verification that our employees have received the necessary training. This is essential not only for internal auditing purposes but also for demonstrating compliance with regulatory requirements.

   • Resource for Future Training and Reference: The preserved materials also act as a valuable resource for future training sessions, enabling consistent and up-to-date training practices.

Through the systematic retention of training records and materials, BitFiSwap s.r.o. upholds a high standard of AML/CFT training. This approach ensures that our employees are well-equipped with the knowledge and skills necessary to support our anti-money laundering and counter-terrorist financing efforts, reinforcing our commitment to maintaining a secure and compliant financial environment.

Communication of New AML/CFT Laws and Policy Updates to Employees

BitFiSwap s.r.o. recognizes the dynamic nature of Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) regulations and the critical importance of keeping our employees informed about new laws and changes to existing policies and practices. Our approach in this regard includes:

1.       Proactive Information Dissemination:

o We actively communicate any updates or changes in AML/CFT-related laws to our relevant employees. This is particularly crucial during periods of significant regulatory transitions, such as the implementation of the Markets in Crypto-Assets (MiCA) framework.

2.       Integration into Training and Communication Channels:

o Updates on new laws or changes to existing AML/CFT policies are systematically integrated into our ongoing training programs. Additionally, we utilize various internal communication channels to disseminate this information promptly and effectively.

3.       Ensuring Understanding and Compliance:

o Our goal is not only to inform but also to ensure that our employees fully understand these updates and how they impact our operations and practices. This understanding is crucial for maintaining compliance and effectively implementing the changes in our day-to-day activities.

4.       Commitment to Regulatory Alignment:

o This practice of keeping our team updated underscores BitFiSwap s.r.o.'s commitment to remaining aligned with the latest AML/CFT regulatory requirements. It reflects our dedication to fostering a culture of compliance and risk awareness within our organization.

Through these efforts, BitFiSwap s.r.o. ensures that our employees are well-informed and prepared to adapt to the evolving landscape of AML/CFT regulations, reinforcing our ability to uphold the highest standards of legal compliance and operational integrity.