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Anti-money laundering and counter-terrorist financing policy

1. INTRODUCTION

This Anti-Money Laundering and Anti-Terrorist Financing Notice (hereinafter – “Notice”) provides a general overview of the anti-money laundering and anti-terrorist financing principles and measures applied by Frapex Inc. (hereinafter – “Company”, “We”, “Us” or “Our”).

The Company is registered with the Financial Transactions and Reports Analysis Centre of Canada (hereinafter – “FINTRAC”) as a money services business (hereinafter – “MSB”) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (hereinafter – “PCMLTFA”), applicable regulations and FINTRAC requirements.

The Company maintains an anti-money laundering and anti-terrorist financing (hereinafter – “AML/ATF”) compliance framework designed to prevent the misuse of the Company, the Website and the Services for money laundering, terrorist financing, sanctions evasion, fraud or other unlawful activities.

This Notice applies to the Services that may be provided by the Company from time to time, including Money Transfer Services, OTC Virtual Currency Exchange and Settlement Services, Payroll Payment Services and other related services, in each case to the extent legally permitted, registered, authorized or otherwise available to the Company.

Certain payment-related Services may be subject to the Retail Payment Activities Act and the related requirements applicable to payment service providers in Canada. The Company does not represent that any Service requiring registration with the Bank of Canada is available unless and until the applicable registration, legal, regulatory and operational requirements have been satisfied.

2. TERMS AND DEFINITIONS

For the purposes of this Notice, unless the context requires otherwise, the following terms have the meanings set out below.

Applicable Law means any law, regulation, rule, regulatory requirement, order, directive, guidance or other legal or regulatory requirement applicable to the Company, the Website, the Services, the Customer or the relevant transaction.

Company means Frapex Inc., a company incorporated under the laws of Alberta, Canada under company registration number 2027786017, with its registered office at 700-602 12 Ave SW, Calgary, Alberta, T2R 1J3, Canada.

Customer means a person or entity that has been accepted by the Company for onboarding, transaction discussions, provision of Services or another customer relationship, as applicable.

Customer Due Diligence (hereinafter – “CDD”) means the measures applied by the Company to identify and verify Customers, understand the nature and purpose of the relationship or transaction, assess risk and comply with Applicable Law.

Electronic Funds Transfer means an electronic transfer of funds, where applicable to the relevant Service or transaction flow.

Money Transfer Services means transaction-specific fiat transfer services made on a Customer’s instruction to an identified payee, recipient or beneficiary, subject to the Company’s approval, compliance procedures and operational requirements.

OTC Virtual Currency Exchange and Settlement Services means over-the-counter virtual currency exchange and related settlement services that may include fiat-to-Virtual Currency, Virtual Currency-to-fiat or Virtual Currency-to-Virtual Currency transactions, where supported by the Company.

Payroll Payment Services means services involving transaction-specific payment or payout instructions related to payroll or similar payment flows, subject to the Company’s approval, compliance procedures and operational requirements.

PEP/HIO means politically exposed person or head of an international organization, including, where applicable, relevant family members and close associates.

Services means the services that may be provided by the Company from time to time, including Money Transfer Services, OTC Virtual Currency Exchange and Settlement Services, Payroll Payment Services and other related services, in each case to the extent legally permitted, registered, authorized or otherwise available to the Company.

Virtual Currency means a digital representation of value that may be used for payment or investment purposes and that is not fiat currency, including crypto-assets where they fall within the meaning of virtual currency under applicable Canadian AML/ATF requirements.

Website means the website available at https://frapex.exchange/ and any pages, content, communication tools, forms or functionality made available through that website.

3. AML/ATF FRAMEWORK

The Company maintains a documented AML/ATF compliance framework designed to support compliance with applicable Canadian AML/ATF, sanctions, record-keeping and reporting requirements.

The Company’s AML/ATF framework is based on a risk-based approach. This means that the Company identifies, assesses and manages money laundering, terrorist financing, sanctions evasion, fraud and related risks by taking into account the Customer, the business relationship, the Service, the transaction, the payment or settlement flow, the jurisdiction, the Virtual Currency or payment method involved and other relevant risk factors.

The Company’s AML/ATF framework may include, as applicable:

  • Customer identification and verification;
  • business verification and KYB measures;
  • beneficial ownership and control checks;
  • verification of authority to act;
  • assessment of the purpose and intended nature of the relationship or transaction;
  • sanctions, PEP/HIO, adverse media and other compliance screening;
  • source-of-funds, source-of-Virtual Currency and, where appropriate, source-of-wealth review;
  • wallet screening, blockchain analytics, KYT and transaction monitoring;
  • ongoing monitoring of business relationships and transactions;
  • regulatory reporting and record keeping;
  • compliance training for relevant personnel; and
  • periodic review of the effectiveness of the AML/ATF framework.

4. CUSTOMER DUE DILIGENCE AND VERIFICATION

CDD is an essential part of Our AML/ATF framework and enables the Company to identify and understand its Customers, the nature and purpose of their relationship with Us, and the risks associated with providing the Services. 

Before accessing the Services, Customers must complete the identification, verification, screening and risk assessment measures required by the Company.

Depending on the Customer, the Service, the transaction, the payment or settlement flow and the assessed level of risk, the Company may:

  • identify and verify the Customer;
  • identify beneficial owners and take reasonable measures to confirm the accuracy of beneficial ownership information;
  • verify directors, officers, authorized representatives, signatories, persons exercising control and other relevant persons;
  • establish the purpose and intended nature of the business relationship or transaction;
  • assess expected activity, source of funds, source of Virtual Currency and, where appropriate, source of wealth;
  • make third-party determinations where applicable;
  • conduct sanctions, PEP/HIO, adverse media, fraud-prevention, wallet, blockchain and transaction screening; and
  • request additional information, documentation, confirmations or explanations where required for compliance or risk-management purposes.

Customers must provide accurate, complete and current information and cooperate with reasonable requests for information or supporting documentation.

If the Company cannot complete the required due diligence, verification, screening or risk assessment, the Company may refuse onboarding, decline a transaction, restrict the provision of Services or terminate the relationship, subject to Applicable Law.

5. CUSTOMER ACCEPTANCE AND PROHIBITED RELATIONSHIPS 

The Company applies a risk-based approach when determining whether to establish or continue a business relationship with a Customer or provide a Service. Customer acceptance is subject to completion of the applicable due diligence, screening and risk assessment measures and to the Company being satisfied that the associated risks can be adequately understood and managed within its AML/ATF framework.

Certain Customers, business relationships, transactions, jurisdictions and activities fall outside the Company’s risk appetite and will not be accepted or continued.

This may include, without limitation:

  • persons or entities subject to applicable sanctions, terrorist-property restrictions or other legal restrictions;
  • persons or entities materially connected with jurisdictions subject to applicable prohibitions, restrictions or unacceptable risk exposure;
  • PEPs/HIOs and, where applicable, relevant family members or close associates;
  • persons or entities whose identity, beneficial ownership, control, authority to act or legitimate business purpose cannot be reasonably established;
  • Customers who fail or refuse to provide information or documentation reasonably required for due diligence, verification or compliance purposes;
  • persons or entities engaged in unlawful activities or regulated activities without the required licence, registration or authorization;
  • persons or entities where there are reasonable grounds to suspect involvement in money laundering, terrorist financing, fraud, sanctions evasion or other unlawful activity; and
  • Customers, relationships, transactions or activities presenting risks that cannot be adequately understood, assessed or mitigated within the Company’s AML/ATF framework.

The above categories are not exhaustive. The Company may refuse to establish or continue a business relationship, decline a transaction or restrict access to the Services where required by Applicable Law or where the associated risks fall outside the Company’s risk appetite.

6. ONGOING MONITORING AND COMPLIANCE REVIEW

The Company conducts ongoing monitoring of Customer relationships, transactions, payment flows, wallet activity and related activity in accordance with applicable AML/ATF requirements and the level of risk associated with the relevant Customer, relationship or transaction.

Ongoing monitoring enables the Company to:

  • identify transactions, activities, patterns or behaviours that may be unusual, inconsistent, suspicious or otherwise require further compliance review;
  • keep relevant Customer identification, beneficial ownership, authority, business relationship and risk information up to date;
  • reassess the level of money laundering, terrorist financing, sanctions, fraud or other financial-crime risk associated with the Customer, relationship or transaction; and
  • determine whether transactions and activities are consistent with the information available to the Company about the Customer, including the purpose and intended nature of the relationship.

The frequency and extent of monitoring are determined on a risk-sensitive basis. Higher-risk Customers, relationships, transactions or payment flows may be subject to enhanced and more frequent monitoring in accordance with the Company’s internal AML/ATF framework.

7. COMPLIANCE REQUESTS AND SERVICE RESTRICTIONS

The Company may request additional information, explanations or supporting documentation where necessary to complete CDD, verify information, review a transaction, assess a payment or settlement flow, conduct ongoing monitoring or otherwise meet AML/ATF, sanctions, fraud-prevention, record-keeping or other compliance obligations.

Customers are expected to cooperate with reasonable compliance requests and provide information that is accurate, complete and sufficiently supported. The Company may seek clarification where information is incomplete, inconsistent, outdated, unsupported or insufficient to understand the nature, purpose, transfer, source, destination or circumstances of a transaction, payment, transfer, wallet activity, Customer relationship or related activity.

Where the Company is unable to obtain sufficient information, resolve a compliance concern or adequately assess or mitigate an identified risk, We may, as appropriate:

  • delay, decline, cancel, return or refuse to process a transaction;
  • restrict, suspend or refuse access to the Services;
  • refuse to establish a business relationship;
  • terminate an existing business relationship; or
  • take any other action required or permitted by Applicable Law.

In certain circumstances, Applicable Law may prevent the Company from disclosing whether a regulatory report has been filed or from providing specific details regarding a compliance review, internal investigation, monitoring decision or related action.

8. REGULATORY REPORTING AND RECORD KEEPING

The Company maintains procedures to meet its reporting and record-keeping obligations to the FINTRAC under applicable Canadian AML/ATF legislation.

Where applicable, the Company submits prescribed reports to FINTRAC, including:

  • Suspicious Transaction Reports, where the Company has reasonable grounds to suspect that a completed or attempted transaction is related to the commission or attempted commission of a money laundering, terrorist activity financing or sanctions evasion offence;
  • Large Virtual Currency Transaction Reports, where applicable to Virtual Currency transactions that meet the prescribed reporting threshold and related requirements;
  • Electronic Funds Transfer Reports, where applicable to electronic funds transfers that meet the prescribed reporting threshold and related requirements;
  • Listed Person or Entity Property Reports, where the Company is required to report property in its possession or control that is owned or controlled by or on behalf of a terrorist or terrorist group, listed person or entity, or foreign state.
  • other prescribed reports, disclosures or records where additional reporting or record-keeping requirements become applicable to the Company’s activities or particular transactions.

The Company also creates and maintains records required under applicable AML/ATF legislation, including records relating to Customer identification and verification, beneficial ownership, business relationships, transactions, payment instructions, Virtual Currency transfers, screening results, monitoring activity and regulatory reports. 

Such records are retained for the applicable statutory retention periods. The Company maintains appropriate safeguards to protect the confidentiality, integrity, accessibility and retrievability of records maintained for AML/ATF purposes.

9. USE OF THIRD-PARTY SERVICE PROVIDERS

The Company may use specialised Third Party Service Providers and technological solutions to support certain elements of its AML/ATF framework. Depending on the services required, such providers may support identity and business verification, sanctions screening, PEP/HIO screening, adverse media screening, fraud prevention, transaction monitoring, blockchain analytics, wallet screening, Travel Rule compliance, payment or settlement support, record keeping and other compliance-related functions.

The Company applies appropriate selection, oversight and control measures in relation to such providers and maintains appropriate controls over the functions they support.

The use of Third-Party Service Providers does not transfer the Company’s regulatory responsibilities. The Company remains responsible for meeting its obligations under applicable Canadian AML/ATF requirements.

10. AML/ATF COMPLIANCE PROGRAM AND GOVERNANCE

The Company maintains a documented AML/ATF compliance program designed to support compliance with applicable Canadian AML/ATF requirements and to identify, assess and mitigate money laundering, terrorist financing, sanctions evasion and related financial-crime risks.

The Company’s compliance program includes:

  • a designated Compliance Officer responsible for the implementation and oversight of the AML/ATF compliance program;
  • written AML/ATF policies and procedures, maintained and updated to reflect applicable legal, regulatory and operational requirements;
  • a documented risk assessment addressing risks relevant to the Company’s Customers, business relationships, Services, transactions, payment flows and geographic exposure;
  • an ongoing compliance training program for relevant personnel; and
  • a periodic effectiveness review, conducted at least every two years, to assess whether the compliance program remains effective and appropriately implemented.

The Company reviews and updates its AML/ATF framework where necessary to reflect changes in Applicable Law, regulatory guidance, business activities, Services, operational arrangements and identified risks.

11. REVIEW AND CHANGES TO THIS NOTICE

The Company may review, amend, supplement or replace this Notice from time to time to reflect changes in Applicable Law, regulatory guidance, relevant industry practices, the Website, the Services, business activities, payment or settlement arrangements, technologies used, third-party providers, risk-management practices or the Company’s AML/ATF framework.

Any updated version of this Notice will be made available through the Website and will indicate the date on which it was last updated.

12.  CONTACT INFORMATION

Questions, notices, requests, and other communications relating to this Notice may be directed to the Company through the following contact details:

Company name: Frapex Inc.

Registered address: 700-602 12 Ave SW Calgary, Alberta, T2R 1J3, Canada

Email: officialfrapexinc@gmail.com 

Website: https://frapex.exchange/

Where a communication relates to a specific Customer relationship, onboarding process, Service, transaction, payment, payout, settlement or compliance request, the communication should include sufficient information to allow the Company to identify the relevant matter.