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AML/CFT Policy

POLICY ON FACILITATING THE PREVENTION OF MONEY LAUNDERING AND THE FINANCING OF TERRORISM (hereinafter "AML/CFT POLICY")

(BRIEF DESCRIPTION)

The Anti-Money Laundering, Countering Financing of Terrorism and Know Your Customer Policy (hereinafter - the "AML/CFT Policy") of "WhiteBIT Georgia" LLC is designated to prevent and mitigate possible risks of WhiteBIT Georgia being involved in any kind of illegal activity.

International and local laws and regulations require WhiteBIT Georgia to implement effective internal procedures and mechanisms to prevent money laundering, terrorist financing, drug and human trafficking, proliferation of weapons of mass destruction, corruption and bribery and etc and to take action in case of any form of suspicious activity from its Users.

Definitions:

Money laundering shall mean legalization of illegal income, i.e. giving legal form to illegal and/or undocumented property (use of property, purchase, possession, conversion, transfer or other action) in order to cover its illegal and/or undocumented origin and/or to help another person avoid liability, as well as concealing or disguising its true nature, source of origin, location, placement, movement, ownership and/or other rights related to it.

The aforementioned includes, but is not limited to:

  • conversion or transfer of property derived from criminal activity or property obtained instead of such property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an activity to evade the legal consequences of that person's actions;
  • the acquisition, possession or use of property derived from criminal activity or property obtained instead of such property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation therein;
  • the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property derived from criminal activity or property obtained instead of such property, knowing that such property is derived from criminal activity or from an act of participation in such an activity.

Money laundering also means participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counseling the commission of any of the activities referred to above.

Terrorist financing is defined as the financing and supporting of an act of terrorism and commissioning thereof as well as the financing and supporting of travel for the purpose of terrorism.

Money laundering necessitates distinct criminalization apart from predicate offenses. This entails that the acts involving the concealment of the origins of Digital assets derived from illegal activities constitute an independent crime, mandating prosecution regardless of the preceding criminal activity.

AML/CTF Policy outlines three fundamental stages of money laundering:

  • Placement: involves the introduction of unlawfully acquired funds into the financial system;
  • Layering: focuses on distancing illicit funds from their source through intricate financial transactions by blurring the lines of communication, moving money through multiple accounts, financial operations, or jurisdictions to obscure its origin.
  • Integration: reintroduction of laundered funds into the legal economy without being linked to its illegal origin, achieved through investments or purchases that create the appearance of lawfully obtained wealth.

WHITEBIT GEORGIA MAINTAINS A STRICT ZERO-TOLERANCE APPROACH TOWARDS MONEY LAUNDERING, TERRORIST FINANCING, CORRUPTION AND BRIBERY, TAX EVASION, INDEPENDENT OF ANY PREDICATE OFFENSE.

  • WhiteBIT Georgia is obligated to notify the Financial Monitoring Service of Georgia (FMS), which serves as Financial Intelligence Unit of Georgia (FIU) in accordance with its obligations under the Georgian legislation no later than one working day upon becoming aware or harboring concerns. This obligation applies when there is knowledge or concern that assets, regardless of their value, have been acquired directly or indirectly from a criminal act or involvement in such activities. Similarly, it applies if there is knowledge, or we suspect that these assets are linked to the financing of terrorist activities, in adherence to international AML standards.

Terrorist Financing.

Terrorist Financing, refers to the deliberate provision or collection, by any means, directly or indirectly, of funds intended or knowingly used to facilitate terrorist acts. It involves legitimate entities or individuals providing funds to support terrorist activities or organizations for ideological, political, or other motivations.

Terrorist financing is the process of legitimate businesses and individuals that may choose to provide funding to resource terrorist activities or organizations for ideological, political or other reasons.

WhiteBIT Georgia is obliged to ensure that its Users:

  • are not designated as terrorist organizations;
  • not facilitating the funding of terrorist organizations.

Tax evasion, Tax Fraud

Tax evasion and Tax fraud represent intentional efforts to avoid paying the full amount of taxes owed to the government. They encompass deceitful actions aimed at sidestepping tax obligations, whether entirely or partially. Tax fraud involves a purposeful intent to deceive and involves identifiable material components.

The offense of tax fraud can be constituted:

  • voluntary omission or deliberate error in declarations;
  • concealment of taxable amounts;
  • organizing insolvency to evade Tax payment; or
  • employing other tactics to hinder Tax collection.

Bribery and Corruption.

Bribery and Corruption encompass actions wherein an individual improperly offers, promises, or provides an undue advantage to influence another person's conduct of their duties. This undue advantage may be in the form of monetary or non-monetary benefits and is intended to induce the recipient to perform, delay, or neglect their duties, thereby acting in a manner contrary to principles of honesty and integrity. Conversely, it constitutes a corrupt practice for an individual to accept or seek such an advantage in the context of their responsibilities.

Special attention should be directed towards individuals susceptible to engaging in corrupt practices. Notably, those leveraging their influence for personal gain perpetrate acts of money laundering when they Deposit or utilize funds received improperly or convert advantages acquired through their authoritative positions into monetary assets.

AML/CFT and Economic Sanctions Regulations

Local regulations:

  • Law of Georgia on Facilitating the Prevention of Money Laundering and Terrorism Financing

Order of the President of the National Bank of Georgia on Approving the Rules for Registration, Deregistration, and Regulation of Virtual Asset Service Providers

  • Order of the Head of the Financial Monitoring Service of Georgia on Approving the Rules for Recording, Retaining, and Submitting Information on Transactions by Obliged Persons to the Financial Monitoring Service of Georgia
  • Order of the President of the National Bank of Georgia on Approving the Rules for Determining, Imposing, and Enforcing Monetary Fines on Virtual Asset Service Providers and Their Administrators
  • Order of the President of the National Bank of Georgia on Approving the Rule for the Implementation of Sanctions Regimes by Obliged Persons Supervised by the National Bank of Georgia
  • Order of the President of the National Bank of Georgia on the Approval of the List of High-Risk Jurisdictions for the Purposes of the Law of Georgia on Facilitating the Prevention of Money Laundering and Terrorism Financing
  • Order of the President of the National Bank of Georgia on the Approval of the List Defining Offshore Zones
  • Other Normative Acts and Written Instructions of the National Bank of Georgia

International regulations:

  • WhiteBIT Georgia adheres to the sanction’s regimes and regulations of the UN, US, EU, GB, and other relevant authorities, as further reinforced by local legislation.
  • WhiteBIT Georgia strives to follow the best practices set by reputable international organizations.

AML/CFT Policy covers the following matters:

Internal Controls:

We have designed a structured system of internal controls in order to comply with applicable Anti-Money Laundering, Countering Financing of Terrorism (hereinafter - the "AML/CFT") laws and regulations, including, but not limited to:

  • establishing customer's identity and verifying the information provided;
  • establishing special regime for dealing with customers which are politically exposed persons (PEP);
  • the identification of unusual activity and facilitating the reporting of suspicious activity (STR);
  • record keeping of customer documentation and transactional history.

Compliance Officer:

The Compliance Officer is the person, duly authorized by WhiteBIT Georgia, whose duty is to develop and enforce the effective implementation of the AML/CFT. The Compliance Officer is required to report any violations of the AML/CFT procedures and is responsible for collecting and filing STRs.

It is the Compliance Officer's responsibility to supervise all aspects of WhiteBIT Georgia's anti-money laundering and counter-terrorist financing measures, including but not limited to:

  • establishing and updating internal policies and procedures for the completion, review, submission and retention of all reports and records required under the applicable laws and regulations;
  • collecting Users' identification information and verifying the information provided;
  • implementing a records management system for appropriate storage and retrieval of documents, files, forms and logs;
  • collection and analysis of information referring to unusual transactions or transactions or circumstances suspected of money laundering or terrorist financing, which have become evident;
  • investigating any unusual, suspicious activity;
  • reporting to the appropriate authorities in the event of suspicion of money laundering or terrorist financing;
  • providing law enforcement with information as required under the applicable laws and regulations;
  • periodic submission of written statements on compliance with the requirements arising from law to the management board;
  • organization of the training of employees; performance of other duties and obligations related to compliance with the requirements of law;
  • updating risk assessment regularly.

The Compliance Officer is entitled to cooperate with authorized state authorities, which are involved in prevention of money laundering, terrorist financing and other illegal activity.

Verification Procedures:

WhiteBIT Georgia establishes its own customer identification-verification procedures within the standards of AML/CFT frameworks.

WhiteBIT Georgia carries out identification and KYC checks before entering business relations with customer, client, contractor.

In the process of due diligence and KYC and in order to open an account, a person's identity, information about a person provided and documents submitted have to be verified and checked against sanctions and watch lists, including PEP list.

WhiteBIT Georgia uses special tools, a structured system of verification and check for that. Regarding legal entities (their owners/shareholders/beneficiaries, etc.), WhiteBIT Georgia carries out special enhanced due diligence, KYC, compliance procedures. WhiteBIT Georgia ensures specific enhanced identification, KYC, due diligence, compliance procedure for customers referenced as PEP, whatever their place of residence.

Monitoring, risk assessment and risk-based approach:

WhiteBIT Georgia carries out customer's transactions monitoring, risk‐assessment and suspicious activity detection. For that purpose it uses specially developed systems, including using high-performance tools.

WhiteBIT Georgia uses a risk-based approach to combating/preventing money laundering and/or financing terrorism. To assist in determining the level of AML/CFT due diligence to be exercised with regard to the customer, a compliance risk profile is calculated first of all on entry into relations (Low, Medium, High), and is then recalculated routinely. AML/CFT compliance ensures that an ongoing transaction monitoring is conducted to detect transactions which are unusual or suspicious compared to the customer profile.

Determination of the unusual nature of one or more transactions essentially depends on a subjective assessment, in relation to the knowledge of the customer (KYC), their financial behavior and the transaction counterparty. If a transaction is inconsistent with a customer's known personal usual activities or personal habits, this transaction may be considered suspicious. Data and transaction monitoring tools are used to identify unusual/uncommon patterns of customer's activity.

After review and investigation, it is the Compliance Officer's decision whether to file a STR or not. Once a STR is filed with a relevant agency, a copy of filing documentation is maintained. STR filing is confidential and only the WhiteBIT Georgia's employees involved in the investigation and reporting process will be aware of its existence. All records are retained for no less than (5) years and are available upon official request by an authorized examiner, regulator, or law enforcement agency. Any WhiteBIT Georgia staff member must inform the Compliance Officer of any atypical transactions which they observe and cannot attribute to a lawful activity or source of income known to the customer.

We apply due diligence measures, in particular upon establishment of a business relationship; upon verification of information gathered while applying due diligence measures or in the case of doubts as to the sufficiency or truthfulness of the documents or data gathered earlier while updating the relevant data; upon suspicion of money laundering or terrorist financing; in some other cases, including in other exact cases prescribed by law and in cases of identifying "red flags" in accordance to internal procedures.

Preservation of data:

We retain the originals or copies of the documents, which serve as the basis for identification and verification of persons, and the documents serving as the basis for the establishment of a business relationship no less than five years after termination of the business relationship. We retain the documents prepared with regard to a transaction on any data medium and the documents and data serving as the basis for the notification obligations for no less than five years after making the transaction or performing the duty to report.

Our monitoring of a business relationship includes, in particular:

  • checking of transactions made in a business relationship in order ensure that the transactions are in concert with our knowledge of the customer, its activities and risk profile;
  • regular updating of relevant documents, data or information gathered in the course of application of due diligence measures;
  • identifying the source and origin of the funds used in a transaction; paying more attention to transactions that a likely to be linked with money laundering or terrorist financing, including to complex, high-value and unusual transactions and transaction patterns that do not have a reasonable or visible economic or lawful purpose or that are not characteristic of the given business specifics;
  • paying more attention to the business relationship or transaction whereby the customer (or payment provider, etc. of the customer) is from a high-risk third country or a country or territory specified by law as country or jurisdiction with factor(s) increasing the geographical risk.

Prohibited activities.

WhiteBIT Georgia regularly reviews the list of activities defined as prohibited. WhiteBIT Georgia prohibits any operations related to the following activities:

  • Drugs and drug paraphernalia (e.g., narcotics, controlled substances, and any equipment designed for making or using drugs);
  • Marijuana/cannabis dispensaries and related products and businesses;
  • Weapons, munitions, gunpowder, and other explosives (including fireworks);
  • Toxic, flammable, and radioactive materials;
  • Pseudo-pharmaceuticals, Substances designed to mimic illegal drugs;
  • Sexually explicit content, Sexually-related services;
  • Pyramid and investment schemes, multi-level marketing schemes, and other unfair, predatory or deceptive practices;
  • Items used for speculation or hedging purposes (such as derivatives);
  • Credit and collection services;
  • Items that infringe or violate any intellectual property rights such as copyrights, trademarks, trade secrets, or patents, including counterfeit or unauthorized goods;
  • Products and services with varying legal status from state to state;
  • Transactions that disclose the personal information of third parties in violation of applicable law;
  • Transactions related to cloud-mining;
  • Transactions involving sanctioned entities;
  • transactions with politically exposed persons (PEPs) or any other transaction, which contain an element of corruption;
  • anonymization services (e.g.: use of crypto mixers, tumblers, or other technologies designed to obscure transaction origins);
  • darknet marketplace transactions (i.e. any activities linked to illicit goods or services);
  • NFT wash trading and fraudulent token schemes (i.e. market manipulation through artificial trading volumes);
  • AI-generated fraud and deepfake financial scams (including synthetic identity fraud and fake investment schemes);
  • Unlicensed financial services (e.g. peer-to-peer lending, offshore brokers, and unauthorized remittance services);
  • Sale or promotion of hacking tools, stolen data, or cybersecurity breaches;
  • Any other business activity which, in our sole discretion, is outside our risk appetite.

WhiteBIT Georgia maintains a strict zero-tolerance approach toward transactions involving sanctioned individuals, entities, or platforms known for facilitating illicit activities. This includes, but is not limited to: Garantex, Hydra Market, Tornado Cash, Lazarus Group, ChipMixer, Blender.io, Sinbad.io, Samourai Wallet, Evil Corp or any similar. Engagement with any of such sanctioned entities, or similar operations identified by regulatory authorities, will result in immediate action, including but not limited to account suspension, transaction rejection, fund freezing, and reporting to law enforcement authorities. WhiteBIT Georgia fully adheres to international sanctions imposed by the global regulatory bodies.

Sanctions Policy.

In alignment with our commitment to maintaining robust Anti-Money Laundering and Counter-Terrorist Financing practices and compliance with applicable laws and regulations, as well as international financial Sanctions, WhiteBIT Georgia enforces a stringent Sanctions Policy regarding the freezing of transactions involving sanctioned entities or suspected violations of sanctions, as well as the suspension/terminations of use of our services by the Users, involved in such activities.

WhiteBIT Georgia takes all required steps to ensure that all Users with whom a business relationship is established are screened against relevant notices published by: United Nations Sanctions (UN); US Consolidated Sanctions; OFAC – Specially Designated Nationals (SDN); EU Financial Sanctions; UK Financial Sanctions (HMT); INTERPOL Wanted List; Bureau of Industry and Security (US); Department of State, AECA Debarred List (US); Department of State, Nonproliferation Sanctions (US), and others.

WhiteBIT Georgia ensures the maintaining of compliance with all regulatory, legislative, economic, and financial sanction requirements, and the performing sanctions screening on all Users and third parties before commencing business relationships and, on an ongoing basis during the life-cycle of the relationship.

WhiteBIT Georgia Sanctions Policy strictly prohibits any engagement with Users involved in money laundering or terrorist financing. This applies when the WhiteBIT becomes aware of or suspects potential involvement in such activities or when the User relationship poses an unacceptable level of sanctions risk.

If WhiteBIT Georgia harbors uncertainty regarding a User's potential status under financial sanctions or suspects a specific transaction by the User violates financial sanctions, WhiteBIT Georgia will initiate a suspension procedure and implement Due Diligence measures, including:

  • gather additional information to ascertain the User's potential involvement in financial sanctions or the potential violation of financial sanctions in a transaction or activity. This involves verifying data, documents, or information from a credible and independent source.
  • acquiring further details about the nature and purpose of the business relationship, transaction, or activity. WhiteBIT Georgia may request additional documentation from the User, such as Proof/Source of Funds or Proof of Transaction Origin, identity documents, request Photo/Video-verification materials, liveness check and validate these materials using credible and independent sources.
  • in cases where there's a risk or suspicion of a violation of this Sanctions Policy, WhiteBIT Georgia will rigorously apply Enhanced Due Diligence measures.
  • freeze the funds and economic resources of the subject of international financial sanctions and suspend or terminate the User access to WhiteBIT Georgia products and services.

If, after implementing Due Diligence measures, WhiteBIT Georgia confirms that a User is indeed subject to financial sanctions or that the transaction or activity of such User violates financial sanctions, or if additional information obtained through Enhanced Due Diligence fails to conclusively determine this, or in the event of suspected financial sanction violations, WhiteBIT Georgia will freeze funds involved in such transaction and suspend the User, promptly reporting such findings or suspicions to the relevant regulatory authorities.

Additionally, if during the Due Diligence procedure, WhiteBIT Georgia identifies that a transaction or operation of the User involves a sanctioned entity or another third party associated with sanctions — such as a Deposit from such a sanctioned entity or its associated third party — the User bears full responsibility for this transaction and/or operation, assumes complete accountability for its execution, subsequent Due Diligence procedures concerning the operation, potential freezing of funds involved in said transaction, and further suspension of the User.

High-Risk Countries.

Government and international agencies issue details of countries whose financial or social systems are such that they are likely to pose a high risk of money laundering. The rules require additional 'due diligence' checks to be carried out when dealing with individuals or money hailing from these countries. In addition, they require these checks to pay regard to the specific shortcomings or concerns highlighted by the national or international bodies.

The usage of the WhiteBIT Georgia products/services is prohibited for citizens and/or residents of the following countries (territories) and jurisdictions*: Afghanistan, American Samoa, U.S. Virgin Islands, Territory of Guam, Iran, Yemen, Libya, State of Palestine, Puerto Rico, Somalia, the Democratic People's Republic of Korea, The Northern Mariana Islands, USA, Syria, Russian Federation, Republic of Belarus, Republic of Sudan, Transnistria, temporarily occupied territories of Georgia, Turkish Republic of Northern Cyprus, Western Sahara, Federal Republic of Ambazonia, Kosovo, South Sudan, Canada, United Kingdom, Trinidad and Tobago, Venezuela, Myanmar, and temporarily occupied territories of Ukraine.

*Please be advised that the above list of prohibited and high-risk jurisdictions is subject to continual revision by WhiteBIT Georgia per current laws and regulations, and consequently, it is your responsibility to verify the latest version available on our Website.

By decree of the President of the National Bank of Georgia, high-risk jurisdictions and a list of offshore countries are determined. When establishing a business relationship with citizens and/or residents of these countries, the client must be subject to Enhanced Due Diligence (EDD) measures.

Red-flags, Abnormal activity, Unusual behavior, or Questionable conduct

A transaction that may trigger Red-flags, Abnormal activity, Unusual behavior, or Questionable conduct often deviates from the User's established legitimate business or personal activities, or from the customary transactions typical for that particular User profile. Thus, the primary element in identification is possessing adequate knowledge about the User's business to discern any unusual or irregular transaction or a series of transactions.

WhiteBIT Georgia gathers proof of the origin of funds and the beneficiary's identity from Users. Additionally, the origin of funds and the transaction's purpose are obtained.

While a document (e.g., bank statement, cash declaration) aiding in establishing the funds' origin (e.g., inheritance, real estate sale) might be provided, it alone may not suffice to justify the source of funds. Declarations or attestations provided by the User within the business relationship may not be considered conclusively adequate.

If WhiteBIT Georgia encounters User opposition, refusing to disclose relevant evidence citing business or professional secrecy, WhiteBIT Georgia treats this as grounds for questions. In this scenario, doubts persist, establishing concerns due to the unremoved doubt.

In the field of AML/CTF, international laws and regulations mandate our adherence to all aforementioned compliance procedures, including the collection of all necessary additional documents and information from Users, as a part of our AML/CTF policies.

Amendments and Final provisions.

This AML/CTF Policy is effective as of the date of publishing on our Website and will remain in effect except concerning any changes in its provisions in the future, that come into force and will be applied immediately after they are published on the website.

We may update and/or change the terms of this AML/CTF Policy, and it is your responsibility to monitor all relevant updates to this document.

If you disagree with this AML/CTF Policy, then you should refrain from using our Website, mobile application, and/or Services or opening an Account. This AML/CTF Policy is an integral part of our User Agreement.

If you have any questions regarding this AML/CTF Policy, please contact our AML Department at aml@whitebit.ge.