LXDX KYC / AML / CTF COMPLIANCE PROCESS
LXDX Ltd. (“we” or “our”) has developed a comprehensive Know Your Customer, Anti-Money Laundering, and Counter Terror Financing Compliance Process (“KYC/AML/CTF Process”) for our digital asset exchange platform and services (collectively, “LXDX”).
To facilitate the maximal compliance with all applicable regulations relating to anti-money laundering in Malta, the European Union and all other countries where we may conduct business, we adopt the following non-exclusive procedures:
- Establish thorough and robust internal policies and controls that thwart any and all attempts to leverage LXDX products for illegal or illicit purposes
- Establish detailed internal procedures to ensure that customer basic protections under applicable customer protection laws are upheld
- Maintain comprehensive records of all transactions, orders, and transfers and provide this data in a simple and easy format for relevant regulators
- Follow strict record retention requirements—in forward compliance with MiFID, all electronic records are retained for at minimum seven (7) years
- Enforce Know Your Customer (“KYC”) procedures on all applicable customers
- Comply with all applicable regulations and guidance as set forth by the Financial Crimes Enforcement Network (“FinCEN”)
- File Suspicious Activity Reports (“SARs”) and Currency Transaction Reports (“CTRs”) when and where applicable
- Secure yearly, independent audits of our KYC/AML Process
- Educate all new and existing employees via a formal and ongoing training program of our KYC/AML Process
INTERNAL POLICIES AND CONTROLS
The aforementioned KYC/AML Process has been reviewed and approved by our Board of Directors (the “Board”). The Board regularly reviews and, when necessary, revises the process to maximally comply with all applicable rules, regulations and policies.
We have developed robust internal policies and controls designed to comply with applicable BSA/AML laws and regulations. Key pieces of our solution are our Know Your Customer requirements, the adherence to record retention and reporting requirements, the filing of SARs and CTRs, as well as other reporting requirements and audits.
Will Roman serves as our KYC/AML Compliance Officer.
ACCOUNT OPENING PROCESS
To use LXDX products and services, the user’s identify must be verified and checked against international watchlists, including those of the European Union as well as United States and United Nations sanction lists.
Prior to allowing account creation on any of the LXDX products, we attempt to collect, verify and authenticate the following information as part of our Know Your Customer (KYC) requirements:
Full legal name
Mobile phone number
Relevant government Identification Number
Date of birth (“DOB”)
Proof of identity (e.g., passport or government-issued ID) via photo upload and facial recognition
Additional relevant documentation at the discretion of our Compliance Team
Institution full legal name
Full legal names (of all beneficial owners)
Email addresses (of all signatories)
Mobile phone numbers (of all signatories)
Relevant Corporate Identification Number
Proof of legal existence
Company Address (principal place of business)
Proof of Identity for all beneficial owners and account signatories
Additionally, we ask both classes of customers:
What is your purposes for trading on LXDX?
What is the nature of your trading/business?
These questions inform surveillance and monitoring on accounts and help us flag abnormal behavior.
Upon successful completion of our KYC requirements and validation against international watchlists, only then will users be provided with electronic account opening agreements. In the case of institutional customers, these watchlists searches are run against each beneficial owner owning more than 10% of the company as well as against all account signatories.
We monitor in varying frequency, at minimum daily, for suspicious trading activity. We watch for various market abuses including price manipulation, wash trading, and money passing. We keep full records of all transactions and orders through our system and all analysis tooling in place.
All employees and officers receive ongoing position-specific and broad-based KYC/AML training. This training is refreshed every twelve (12) months to ensure that all employees are knowledgeable and in full compliance with all pertinent laws and regulations. Within ninety (90) days of their start date, all new employees receive training.
SUSPICIOUS ACTIVITY / CURRENCY TRANSACTION REPORTS
SARs are filed promptly if, at any time, LXDX comes to suspect or have reason to suspect illicit or suspicious activities have occurred on its platforms. Suspicious transactions include transactions that are highly inconsistent with the customer’s known and legitimate conduct. Our Market Surveillance systems and our Compliance department jointly own responsibility for monitoring unusual customer activity.
Additionally, all currency transactions above a determined value are reported to the relevant regulator via a CTR filing. We maintain records, supporting documentation, and tooling to review and diagnose all filed SARs and CTRs.
All records are retained for seven (7) years and are readily available upon official request by the relevant regulator.
KYC/AML PROGRAM AUDIT
Our CEO and COO jointly oversee and review the performance of an independent test of our KYC/AML Program at least annually from the launch date of our LXDX exchange. Results of this review are made available to the Board for review and recommendations.