Trade The Pool Anti-money laundering policy

Anti-money laundering policy

Updated on: July 2024

1. PREFACE

Trade The Pool, a registered trademark brand name, operated and owned By Five Percent Online Ltd. (the “Company“) is a proprietary trading firm that operates platforms for evaluation of potential traders (the “Platform“). The Platform offers several simulated training programs to evaluate the potential traders’ abilities (“Evaluation“) as well as educational resources. If a user successfully completes the Evaluation and the verification process, the Company may offer them the opportunity to become a funded user and reward them based on their trading success (“Funded User“).

Money laundering, Financing of Terrorism, and violations of international sanctions all threaten this experience by exploiting the Platform provided and operated by the Company for malicious purposes.

The Company takes a no tolerance approach to money laundering and terrorist financing and is committed to upholding all laws relevant to anti-money laundering and counter-terrorist financing in the applicable jurisdictions. The Company is committed to implementing appropriate and effective policies, procedures and controls to prevent those activities. The Company’s policies are shaped by industry best practices, a risk-based approach and the effective anti-money laundering and sanctions application approach recommended, among others, by the US and the EU.

The formulation and adoption of the Anti-Money Laundering, Terrorist Financing and Sanctions Implementation (the “AML/Sanctions Policy” or the “Policy“) has important benefits for the Company and for its officers and employees. These benefits include, among others, the possible protection from criminal and administrative proceedings against the Company and its officers and employees, possible mitigation in said proceedings in the event they take place, clarification of ambiguous business practices and greater certainty in the field regarding what is forbidden and permissible, maintaining the Company’s reputation as law-abiding, maintaining the trust of investors in the Company, and more.

This policy is aimed to apply to the Company and any of its fully owned affiliates and any Platforms it may operate from time to time.

2. OVERVIEW

The Platform includes access to tools for simulated exchange trading or trading with other instruments on other financial markets, the provision of analytical tools, training and educational materials, and other ancillary services.

In order to access the Evaluation stage, the users pay a fee that is determined based on the Evaluation program the users select. The Company accepts funds from users by credit cards, bank transfers, E-wallets/E-money in fiat or crypto currencies through recognized service providers. Funded Users may be entitled to a payout of their rewards as a sole compensation, calculated on an allocation of their trading profits (“Payout“). Therefore, the Company acknowledges the necessity of this AML/Sanctions Policy in order to prevent improper use of the Platform.

The Company’s AML/Sanctions Policy is tailored to the types of products and services offered by the Company, and the locations in which such products and services are offered. The Company’s customized AML/Sanctions Policy reflects the Company’s customer or client base, products, services, supply chain, counterparties, transactions, and geographic locations. This Policy will include procedures designed to address the risks identified in the Company’s risk assessment.

The AML/Sanctions Policy aims to set out the standards of conduct and professionalism that apply to all individuals employed by the Company, including officers and directors, in relation to this AML/Sanctions Policy and applicable laws. The Company’s policy is to apply at a minimum the standards set out in this policy.

The purpose of this text is to provide to the Company’s Clients, Providers, Partners, Vendors, Contractors, Employees, Law enforcement and other concerned stakeholders a high-level and summarized overview of the Company’s main AML and sanctions implementation policies and procedures. By no means is this content to be considered as the whole set of all policies, procedures and controls that are implemented and in place by the Company for prevention of money laundering, financing of terrorism and other forms of illicit activity.

The Company’s senior management’s commitment to, and support of, this Policy is one of the most important factors in determining its success. This support is essential to ensuring the AML/Sanctions Policy receives adequate resources and is fully integrated into the Company’s daily operations, and also helps legitimize the program, empower its personnel, and foster a culture of compliance throughout the Company.

The Company’s senior management shall take actions that discourage misconduct and prohibited activities, in order to send a strong message that highlights the potential repercussions of non-compliance with the AML/Sanctions Policy.

Managers at all levels are responsible for ensuring their subordinates are aware of and understand this AML/Sanctions Policy and for responding to questions regarding Policy. All Company employees are responsible for ensuring compliance with this AML/Sanctions Policy and for reporting any actual or suspected violations of the policy.

Ms. Taly Polonsky , the Company’s compliance officer (CCO), was appointed by the Company’s board of directors (the “Board“) on 01/07/2024 , as the compliance officer serving as the entity responsible for the implementation and enforcement of this policy in the Company.

There is an obligation to contact the CCO at any time with any question concerning the AML/Sanctions Policy and there is also an obligation to contact him in any case where the applicant knows or believes there is a violation of this policy or any other failure in its implementation. You can contact the CCO at any time by phone and/or email.

3. APPLICABILITY

This Policy applies to all persons working for, or on behalf of, the Company and any of its affiliates in any capacity, including employees at all levels, directors, officers, agency workers, seconded workers, volunteers and interns (collectively, the “Covered Person(s)”). Where appropriate, the Policy applies to agents, contractors, external consultants, third-party representatives, business partners, sponsors, or any other person associated with the Company, wherever located.

The Company operates in a highly innovative industry, and the regulation of its business is in its early stages, and highly dynamic. Thus, the Company opted to take a conservative and cautious approach. Hence, procedures and obligations required by the AML/Sanctions Policy are not necessarily required by law.

4. DEFINITIONS APPLICABLE TO THE POLICY

Money-Laundering (“ML“) can be defined as ‘the process by which the proceeds of criminal activity are dealt with in a way to conceal or disguise their illicit criminal origins’. Typically, ML consists of three stages:

Placement: the physical disposal of criminal proceeds where the money launderer attempts to place cash into the financial system.
Layering: the separation of criminal proceeds from their source by the creation of ‘layers’ or a sequence of transactions designed to disguise the audit trail and provide the appearance of legitimacy.
Integration: the conversion of the criminal proceeds, for example, into real estate, property or investments, so that they appear to be legitimate funds or assets.

Criminal activity can include any kind of conduct that would be a criminal offense in any country in which the Company operates, including but not limited to terrorism, drug trafficking, activities of criminal organizations, corruption, fraud, theft and tax evasion or other tax related offenses.

Terrorist Financing (“TF”) means the provision or collection of funds or assets, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, to carry out terrorist activities.

The Company understands violations of Sanctions to include

all violations of sanctions imposed on countries or persons by the US, the EU and any other jurisdiction in which the Company operates, (whether they are defined as sanctions any other term e.g. “Restrictive measures“).

5. RISK ASSESSMENT

The Company takes a risk-based approach towards assessing and containing the money laundering, terrorist financing and sanctions violation risks arising from any transactions it has with users of the Platform and uses all available data when reviewing users’ activity.

Overview

There is the potential for a money launderer at each of the above stages. For instance, in online purchasing of the Evaluation program, where electronic transfers are required for placements, identity theft and identity fraud may enable a money launderer to move criminal proceeds with anonymity.

The use of multiple internet transactions may facilitate the layering stage of ML.

ML may also arise from simple criminal spend (‘Proceeds of Crime’).

Covered Persons may also facilitate ML by colluding with customers or other third parties, or dishonestly manipulating records or processes.

Specific Risks

Users could use illicit funds to pay for evaluation fees, which can be challenging to track without thorough checks.

Criminals might use fake or stolen identities to create accounts and launder money.

Criminals may use stolen identities or hacked accounts, effectively laundering money through the Platform.

Unusual trading behaviors, such as high-frequency trades with little financial logic, may indicate money laundering.

Users may pay evaluation fees through various means, such as through intermediaries or third-party payment processors, to obscure the origin of funds.

Analysis

The assessment of risk factors undertaken shows that the main risks involve the use of the platform not for normal use, but for other purposes. When a person uses the Platform for educational and prop trading purposes, there is only a remote chance that the transaction would be part of a plan to launder money, transfer funds or bypass sanctions. Such risks become significant when the activity on the Platform does not reflect its normal.

Hence, the guidelines and procedures included in the AML/Sanctions Policy aim to differentiate between cases in which persons use the Platform for its intended purposes, and pose no significant risk of illicit activity, and cases in which the person uses the Platform in ways which might seem to be outside the normal course of business. It is in these latter cases that this Policy focuses.

6. GUIDELINES

These guidelines detail the way in which this AML/Sanctions Policy responds to the risks mentioned above. It applied to all users of the Platform.

Sources of Information

In addition to information gathered by the Company, as detailed below, the Company relies on external sources in order to assess whether persons are subject to sanctions or any other limitation imposed by authorities on their ability to trade. These sources include (but are not limited to):

OFAC Specially Designated Persons List (SDN list) and Sectoral Sanctions Identification (SSI) list; EU Consolidated Sanctions List; UK sanctions list; UN sanctions list (hereinafter “sanction lists”)
Politically Exposed Persons list (PEP list)
Special Interest Persons or entities (SIP, SIE) list
Media Coverage

Use of these lists may be done by the Company’s employees, or at the sole discretion of the Company, be outsourced to paid screening service of any kind.

Customer Due Diligence

The Company has implemented customer due diligence processes which are appropriate, proportionate to the nature and size of its business and tailored to its various business activities.

The Company conducts due diligence on all users who successfully pass the Evaluation stage and before offering them to become Funded User to mitigate the risks associated with money laundering, terrorist financing, and sanctions violations. This process involves obtaining information to better understand the customer, which may include simplified due diligence (“SDD“) or enhanced due diligence (“EDD“) measures.

If the customer due diligence process is not concluded in a reasonable timeframe (generally within 28 days), the account will be subject to additional and proportionate supervision, consistent with the value and risk profile of the account and the deposits.

Where the customer due diligence fails then no further use will be allowed.

The Company must assess whether to apply SDD or EDD on a risk-sensitive basis.

While the Company allows payment using cryptocurrencies the Company does not handle such directly and uses a third party provider to receive such funds and make payouts in crypto. Therefore, the Company does not assign at this time an increased risk to the use of crypto currencies.

Requirement to Carry Out SDD

SDD must be carried out when a user successfully passes the Evaluation stage and is now a potential Funded User.

SDD Measures Include

Applying SDD measures involves several steps:

Identifying the user and verifying the user’s identity on the basis of documents, data or information obtained from a reliable and independent source e.g. original, certified or notarized documentation and documents issued by an official body;
All users will be screened against Sanction Lists. If a user’s name appears on a Sanctions List, they will not be permitted to use the platform, unless the Company conducts EDD on the user and is satisfied that the user is approved.
Each user will be screened against PEPs databases. If it is revealed that a user is on a PEP list, the Company will be required to carry out EDD on the user.
The Company shall also collect IP addresses and to the extent applicable MAC addresses from its customers during the identification and verification process. The Company will not accept any user from any IP address located in a forbidden territory (e.g., United States, Afghanistan, Burundi, Central African Republic, Cuba, Congo Republic, Crimea, Democratic Republic of Congo, Eritrea, Guinea, Guinea-Bissau, Iraq, Iran, Israel, Laos, Liberia, Libya, Myanmar, North Korea, Palestinian Territory, Papua New Guinea, South Sudan, Sudan, Somalia, Syria, Vanuatu, Venezuela and Yemen).

Enhanced Due Diligence

Regarding EDD, the Company evaluates the risk level of users based on the monetary value of their potential pay-out on the Platform, among other factors, as outlined below. This assessment includes both SDD measures and additional due diligence steps.

Users successfully completing Evaluation in a track or multiple tracks on the Platform which will potentially allow a pay-out at a monetary value higher than USD 50,000 in a 12 month period will be subject to EDD.

Moreover, the Company will require EDD in specific cases:

EDD will be applied in any instance where the Company perceives a high risk of ML or TF. Factors considered in assessing the risk of ML or TF are detailed in the Red Flags Section below;
Performance of SDD reveals the user is a PEP or SIP/SIE;
Performance of SDD reveals that the user is on a Sanctions List. If a name of a user appears on a Sanctions List, the user will not be able to use the Platform, unless the Company performs enhanced due diligence on such a user, and the Company will be satisfied that such a user is approved to use the Platform;
In any case where a purchase in the Platform is complex or unusually large, or there is an unusual pattern of purchases, and the deposit or deposits have no apparent economic or legal purpose;
Performance of SDD indicates the user engages in large numbers of purchases, suggesting their potential role as a mule or a victim of elder financial exploitation;
The user changes its means of payment after being rejected by the payment services provider; and
In cases in which the CCO is not satisfied by the standard verification of identity, or by the enhanced due diligence, he may, at his discretion, require the user to provide more information, or exclude the user from using the Platform.

In addition to the information provided by the individual in the SDD, the Company may also ask the individual to provide documentary and verifiable proof of source of wealth (saving account statements; last three months’ pay slips; months of bank statements showing salary payments; latest accounts or tax declaration; statement from investment provider or bank statement showing settlement from investment provider; signed letter from a solicitor/advocate or estate agent or contract of sale/settlement statement; copy of will; signed letter from a solicitor; a grant of probate or a letter from the executor; or the latest audited company accounts/dividend statement)

The Company may use recognized and specialized electronic providers for the technical acquisition of the identity data, and for checking the name against the Sanctions List.

It’s within the discretion of the CCO in consultation with the external legal counsel to change the transaction value.

Prohibited Users

A user that has been linked to extortion or ransomware, listed on the Sanctions List.
User from the following types of IP addresses: non-trusted sources; locations in United States, Afghanistan, Burundi, Central African Republic, Cuba, Congo Republic, Crimea, Democratic Republic of Congo, Eritrea, Guinea, Guinea-Bissau, Iraq, Iran, Israel, Laos, Liberia, Libya, Myanmar, North Korea, Palestinian Territory, Papua New Guinea, South Sudan, Sudan, Somalia, Syria, Vanuatu, Venezuela and Yemen; FATF-black or gray listed jurisdictions; or IP addresses previously flagged as suspicious.
A user declines a request for a KYC document or inquiries regarding his source of funds.
A user provides a KYC document or account credentials shared by another user.

In all these cases, the user will be immediately prohibited from using the Platform. All prohibited cases will be immediately reported to the CCO, which will decide whether the event requires reporting to authorities.

Red flags

The Company uses a system of “red flags” according to which the Company may ask users for additional information if a certain activity of the user is “flagged”. In these cases, in addition to the above mentioned limitations, the Company may also ask the user for information and documents that are mentioned in the EDD above.

The following are considered “red flags”.

a user is reluctant to provide evidence to verify their identity;
a user provides false, forged or stolen identification documentation;
a user uses multiple credit cards to purchase on the Platform within a short period of time (which may suggest the use of stolen cards);
a user uses a combination of multiple means of payments (which may suggest an attempt to mask the source of funds or fall under the screening radar);
there is a mismatch between the user’s country of residence and the location of their method of payment, such as their bank or credit card account;
where a user uses one payment method for purchasing on the Platform and requests a payout to be made to a different account;
media reports that the account holder is linked to known terrorist organizations or is engaged in terrorism;
a customer engages in unusual or inconsistent activity; or
a customer uses a number of anonymous payment methods, such as pre-paid cards.

A “flagged” event will be reported to the CCO. The CCO may, in his discretion, assess the risk in the situation and require the user to perform enhanced due diligence, or prohibit the user from using the Platform according to the level of the risk.

Payout

It is the Company’s policy not to permit payment or withdrawal to third parties from a user’s account. Therefore, when a Funded User wishes to Payout any trading profits from their account the Company will transfer the Payout directly to the same payment method originally used by the user for purchases on the Platform.

Any request to use other accounts will be transferred to the CCO and strictly reviewed. Additional documents may be required in order to review the request.

Vendor due diligence

The Company uses a number of third party services critical to its operation.

The main services are:

payment services in fiat and cryptocurrencies;
simulated trading services providers

The Company will conduct due diligence on the payment services providers and the AML policies applied thereby, in order to ensure that the service provider is reputable and does not increase risk of AML through the Platform. The Company will consider the screening policies of the payment services provider and its sufficiency. The CCO will update the internal AML rules based on the review process of the payment services provider.

The Company will work together with the trading platforms in order to set out its internal rules in a manner which will be aligned with the requirements of the trading platforms accessed as part of the Platforms’ activity.

7. TRAINING

An effective training program is an integral component of the AML/Sanctions Policy’s success. The training program should be provided to all appropriate employees and personnel on a periodic basis (and at a minimum, annually) and generally should accomplish the following: (i) provide job-specific knowledge based on need, (ii) communicate the compliance responsibilities for each employee, and (iii) hold employees accountable for sanctions compliance training through assessments.

The Company commits to ensuring that its AML/Sanctions Policy-related training program provides adequate information and instruction to Covered Persons in order to support the Company’s compliance efforts. Such training should be further tailored to high-risk employees within the Company.

The Company commits to providing AML/Sanctions Policy-related training with a scope that is appropriate for the products and services it offers; the customers, clients, and partner relationships it maintains; and the geographic regions in which it operates.
The Company commits to providing AML/Sanctions Policy-related training with a frequency that is appropriate based on its risk assessment and risk profile.
The Company commits to ensuring that, upon learning of a confirmed negative testing result or audit finding, or other deficiency pertaining to its AML/Sanctions Policy, it will take immediate and effective action to provide training or other corrective action with respect to relevant personnel.
The Company’s training program includes easily accessible resources and materials that are available to all applicable personnel.

8. REPORTING SYSTEM

Reporting a Possible Violation

It is Company policy to encourage Covered Persons to notify the CCO or their supervisor of any complaints or concerns regarding this AML/Sanctions Policy. As such, the Company encourages its Covered Persons to report known or suspected violations of laws, rules, regulations, or Company policies. Reports of violations can be submitted through Legal@the5ers.com .

Investigation of a Possible Violation

All reports will be properly investigated. Recommended actions will be taken in light of the outcome of an investigation, including disciplinary measures where appropriate and consideration of whether any relevant authorities should be informed. It is important that reporting persons do not conduct their own investigations.

No Retaliation, Whistleblowing

The Company strictly prohibits retaliation, harassment, or intimidation against any Covered Person who makes a report in good faith of suspected misconduct or wrongdoing. If you believe you have suffered any of the above, please notify the CCO.

9. PROCEDURE

The Company will strictly enforce the prohibitions and all restrictions and procedures set forth in this AML/Sanctions Policy.

As discussed above, the violation of the AML/ Sanctions Policy can lead to significant legal difficulties, fines, and punishment. Moreover, Covered Persons who violate any portion of this AML/Sanctions Policy are subject to disciplinary action by the Company, which may include termination of employment depending on the circumstances as determined by the Company at its discretion.

Disciplinary action may be taken not only against those who authorize or participate directly in a violation of applicable laws or this AML/Sanctions Policy, but also against:

Any individual who deliberately fails to report a violation, or suspected violation, as required;
Any individual who deliberately withholds material and relevant information concerning a violation;
Any individual who fails to cooperate with an investigation into an actual or potential violation; and
Any offender’s supervisor or manager, to the extent there was a lack of leadership, oversight, supervision, or diligence.

10. NO RIGHTS CREATED

This AML/Sanctions Policy is a statement of fundamental principles, policies, and procedures that govern the usage of the Platform. It is not intended to and does not create any legal rights for any customer, supplier, vendor, competitor, investor, or any other non-Covered Person or entity.

11. AMENDMENTS, WAIVERS AND PUBLIC DISCLOSURE

The Board reserves the right at its sole discretion to modify or grant waivers to this AML/Sanctions Policy. Any amendments or waiver may be publicly disclosed if required by applicable laws, rules, and regulations.