Anti-Money Laundering Compliance Program
National Digital Asset Exchange Inc. (“NDAX”) has developed an Anti-Money Laundering Compliance Policy (“AML Policy”), in an effort to maintain the highest possible compliance with applicable laws and regulations relating to anti-money laundering and terrorist financing in Canada, and with other such laws and regulations to which NDAX operations are subject to in other jurisdictions.
NDAX has been registered with the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) as a Money Service Business (“MSB”) and as such, has obligations to comply with the reporting, record keeping and know-your-client requirements under Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA or the “Act”) and associated regulations. This includes, but is not limited to:
- Establishing robust internal policies, procedures and controls that strive to combat any attempted use of NDAX for illegal or illicit purposes.
- Appointing a Chief Compliance Officer (“CCO”), responsible for the implementation and oversight of the AML Policy.
- Conducting ongoing monitoring of all transactions for potentially suspicious and attempted suspicious activities and filing Suspicious Transaction Reports (“STR”), Attempted Suspicious Transaction Reports (“ASTR”) and Terrorist Property Reports (“TPR”) when required.
- Identifying and verifying all users through our account opening processes.
- Performing regular, independent effectiveness review of the AML Policy.
- Following all applicable record retention requirements.
- Implementing a formal and ongoing compliance training program for all new and existing employees.
POLICIES AND PROCEDURES
NDAX has adopted a risk based approach regime approved by its board of directors (“the Board”). NDAX personnel and the Board recognize the importance of implementing and maintaining a sound Anti-Money Laundering and Counter Terrorist Financing (AML/CTF) policy that meets the requirements of all applicable laws and regulations, and as such, has implemented internal policies and procedures to achieve these requirements. The AML Policy is reviewed on a regular basis and, if necessary, revised in an effort to comply with regulatory changes.
A Chief Compliance Officer (“CCO”) has been appointed under the PCMLTFA requirements. The CCO is responsible for developing and enforcing the AML Policy. The CCO is required to report any violations of the AML Policy directly to the CEO and the Board. In addition, the CCO is responsible for recording and filing STRs, ASTRs, TPRs and performing AML Policy audits at least annually.
NDAX complies with all the reporting requirements as per the Act and regulations as enforced by FINTRAC. There are multiple situations where we are obligated to submit reports, such as:
- An STR and/or an ASTR will be submitted if suspicious transaction is suspected or attempted.
- A TRP will be filed with FINTRAC immediately if property is identified to be owned or controlled by or on behalf of a terrorist or terrorist group.
CUSTOMER IDENTIFICATION AND ACCOUNT OPENING PROCESS
Our Customer Identity Program (“CIP”) is an important part of our AML Policy, which helps detect suspicious activity in a timely manner and prevent fraud.
In order to open an account and use NDAX, every client's identity must be verified, authenticated, and checked against various government watch lists. Only Canadian persons are able to open accounts with NDAX.
Failure to complete any of these steps will result in the inability to open an account and use the exchange platform on NDAX.
Individual Account Opening
Prior to opening an account for an individual customer, we attempt to collect, verify, and authenticate the following information:
- Full legal name.
- Date of birth.
- Contact information including email address and mobile phone number.
- Social insurance number or any comparable identification number issued by the government.
- Proof of identity (e.g., driver’s license, passport or any other government issued picture ID).
- Permanent home address (not a mailing address or P.O. Box).
- Additional information or documentation may be required at the discretion of our compliance team.
Prior to opening an account for a corporation, we attempt to collect, verify, and authenticate the following information:
- Corporation’s legal name.
- Proof of legal existence (e.g., certificate of corporate status, a record that has to be filed annually under provincial securities legislation, any other record that confirms the corporation’s existence).
- Address (principal place of business and/or other physical location).
- Employer identification number or any comparable identification number issued by the government.
- Full legal name of all account signatories and beneficial owners.
- Contact information for all account signatories (email address and mobile phone number).
- Contact information of owners, principals, and executive management (as applicable).
- Proof of identity (e.g., driver’s license, passport or any other government issued picture ID) for each individual beneficial owner that owns 25% or more, as well as all account signatories.
- Identifying information for each entity beneficial owner that owns 25% or more (see individual customer information collected above for more details).
Other Account Opening
Requirements are generally the same as those for corporate clients (as applicable). Certain additional information may be required due to the unique nature of the client structure.
- Proof of legal existence, such as, a partnership agreement, articles of association and/or any other similar records that confirm the entity’s existence.
Prior to opening an account for an institutional client, we attempt to collect, verify, and authenticate the following information:
- Full legal name.
- Contact information.
- Address of head or principal office (which must be a physical location).
- Names and contact information of persons authorized to give instructions on the account.
- Evidence of assets under administration or management if applicable.
- Additional information or documentation may be required at the discretion of our Compliance Team.
NDAX conducts ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, including, but not limited to, information regarding the beneficial ownership of legal entity users.
AML POLICY AUDIT
Internally the CCO is responsible for performing an audit of the AML Policy at least annually and presenting the results to the CEO and the Board.
Independent review will occur a minimum of once every two years. The independent review of AML/CTF compliance regime will be performed by a qualified AML/CTF regime auditor as per FINTRAC’s guidelines. The process will assess NDAX’s internal controls, transactional systems and procedures. The findings from such examination are sent directly to the Audit Committee of the Board for review.
RECORD KEEPING REQUIREMENTS
NDAX complies with the record keeping requirements as per the Act and it’s associated regulations. Records are retained for seven (7) years and are available upon official request by an applicable examiner, regulator, or law enforcement agency.
All NDAX employees and officers receive ongoing broad-based AML training, as well as position-specific training. They must repeat this training at least once every twelve (12) months to ensure they are knowledgeable and in compliance with all pertinent laws and regulations. New employees receive training within thirty (30) days of their start date. All documentation related to compliance training including: materials, tests, results, attendance and date of completion are maintained. In addition, our compliance training program is updated as necessary to reflect current laws and regulations.
This Anti-Money Laundering Compliance Policy was last updated on May 14, 2018.