AML Policy

Policy Statement

Exchange Capital is committed to the prevention of money laundering, terrorist financing, proliferation financing, and sanctions evasion. This policy sets out our framework for identifying, assessing, and mitigating financial crime risks associated with our OTC desk operations.

All counterparties, employees, contractors, and partners of Exchange Capital are required to comply with this policy and with all applicable anti-money laundering and counter-terrorist financing legislation. Non-compliance may result in immediate termination of the business relationship and mandatory reporting to relevant authorities.

Scope

This policy applies to:

• All services provided by Exchange Capital, including OTC trading, RFQ execution, and settlement services.
• All counterparties seeking access to or using Exchange Capital's services.
• All employees, directors, officers, contractors, and agents of Exchange Capital.
• All jurisdictions in which Exchange Capital operates or has counterparties.

Regulatory Framework

Exchange Capital's AML/CTF programme is designed to comply with applicable requirements including:

• The Financial Action Task Force (FATF) Recommendations and guidance on virtual assets and virtual asset service providers.
• The EU Anti-Money Laundering Directives (AMLD) and associated implementing legislation.
• The Proceeds of Crime Act (POCA) and Terrorism Act 2000 (as applicable).
• The Bank Secrecy Act (BSA) and FinCEN guidance (where applicable to US counterparties).
• VASP registration and licensing requirements in applicable jurisdictions.
• Applicable sanctions regimes including OFAC, EU, UN, and UK sanctions lists.
• The Travel Rule requirements for virtual asset transfers as implemented in applicable jurisdictions.

KYB / KYC Programme

4.1 Customer Due Diligence

Exchange Capital applies Customer Due Diligence (CDD) to all counterparties prior to the commencement of any trading relationship. Our CDD process includes:

• Verification of the legal identity and corporate structure of the counterparty entity.
• Identification and verification of all Ultimate Beneficial Owners (UBOs) holding 10% or more of the entity.
• Verification of the identity of all directors, authorised signatories, and key controllers.
• Assessment of the nature, purpose, and anticipated volume of the business relationship.
• Source of funds and source of wealth verification for the entity and, where required, for UBOs.

4.2 Enhanced Due Diligence

Exchange Capital applies Enhanced Due Diligence (EDD) in higher-risk circumstances including:

• Counterparties from higher-risk jurisdictions as identified on FATF lists or internal risk assessments.
• Counterparties with Politically Exposed Person (PEP) connections.
• Complex or unusual ownership structures, including those involving trusts or nominee arrangements.
• Counterparties with higher transaction volumes or involvement in higher-risk Digital Assets.
• Any circumstances where standard CDD does not provide sufficient confidence in the counterparty's legitimacy.

4.3 Ongoing Due Diligence

Exchange Capital conducts periodic reviews of all counterparty relationships. The frequency and depth of review is risk-based. Counterparties must promptly notify Exchange Capital of material changes to their corporate structure, ownership, beneficial ownership, or regulatory status.

Transaction Monitoring

Exchange Capital operates a transaction monitoring programme designed to detect unusual or suspicious patterns of activity. Our monitoring considers factors including:

• Unusual transaction sizes, frequencies, or patterns inconsistent with the counterparty's stated business profile.
• Transactions involving high-risk jurisdictions, sanctioned entities, or known illicit wallet addresses.
• Structuring of transactions to avoid reporting thresholds.
• Rapid movement of funds without apparent legitimate commercial purpose.
• Use of privacy coins, mixers, or other obfuscation tools.
• Wallet addresses flagged by blockchain analytics tools as associated with illicit activity.

Exchange Capital uses blockchain analytics and transaction screening tools to assess the risk profile of Digital Asset transactions. Counterparties must provide wallet provenance information upon request.

Sanctions Screening

Exchange Capital screens all counterparties, beneficial owners, directors, and wallet addresses against applicable sanctions lists prior to onboarding and on an ongoing basis. Relevant sanctions regimes include those maintained by OFAC (US), HM Treasury (UK), the European Union, the United Nations, and other applicable authorities.

Any positive match against a sanctions list will result in immediate suspension of the business relationship pending further investigation, and mandatory reporting to relevant authorities where required by law. Exchange Capital will not knowingly provide services to any sanctioned person, entity, or jurisdiction.

Politically Exposed Persons (PEPs)

Exchange Capital identifies and applies EDD to all counterparties that are, or are connected to, Politically Exposed Persons. PEPs include current or former senior political figures, government officials, judicial officers, senior military personnel, executives of state-owned enterprises, and their immediate family members and known close associates.

Business relationships with PEPs require senior management approval and are subject to enhanced ongoing monitoring. Exchange Capital does not accept PEP connections as a grounds for refusal in isolation, but applies proportionate risk management measures.

Suspicious Activity Reporting

Exchange Capital has established internal procedures for the identification and reporting of suspicious activity. Where Exchange Capital has knowledge or reasonable grounds to suspect that a transaction or relationship is connected to money laundering, terrorist financing, or other financial crime, it is obligated to file a Suspicious Activity Report (SAR) or equivalent report with the relevant financial intelligence unit.

Exchange Capital is legally prohibited from "tipping off" counterparties that a SAR has been filed or that an investigation is underway. Exchange Capital may suspend or terminate a business relationship without providing reasons where required to do so by law or in connection with a SAR.

Record Keeping

Exchange Capital maintains records of all CDD and EDD documentation, transaction records, and internal reports for a minimum of five (5) years from the end of the business relationship or the date of the relevant transaction, whichever is later, or such longer period as required by applicable law. Records are maintained securely and are available for production to regulatory authorities upon request.

Training & Awareness

Exchange Capital ensures that all relevant staff receive regular AML/CTF training appropriate to their role. Training covers applicable legislation, typologies of financial crime in digital asset markets, internal procedures, and obligations regarding suspicious activity reporting. Records of training completion are maintained.

Governance & Oversight

Exchange Capital's AML/CTF programme is overseen by a designated Money Laundering Reporting Officer (MLRO) or equivalent compliance function. The MLRO is responsible for receiving internal suspicious activity reports, making external SAR filings, maintaining the AML programme, and reporting to senior management and the board on compliance matters. The AML policy is reviewed at least annually and updated to reflect changes in applicable law, regulatory guidance, and the risk environment.

Contact

For AML/CTF related queries, compliance certifications, or to submit documentation requested as part of our due diligence process, please contact Exchange Capital's compliance team:

• Compliance: compliance@excap.io
• General: desk@excap.io