Terms and definitions

AML/CTPF – Anti-Money Laundering and Counter-Terrorist or Proliferation Financing;

Beneficial owner – a natural person, who via ownership or other type of control, has the final dominant influence over a natural or legal person, or in whose interests, for the benefit of whom or in whose name a transaction or operation is made;

Business relationship - relationship between the Company and the Customer or the Collateral provider during provision of the Services by the Company;

Collateral provider – a natural person (aged at least 18) or legal entity, which may be a guarantor, pledgor or mortgagor, and which provides the collateral, which may be mortgage, commercial pledge or guarantee, in order to secure the Project owner’s liabilities arising from the loan agreement;

Company – FUNDAUS SIA, registration number: 40203692541, legal address: Duntes iela 28 – 213, Riga, LV-1005;

Customer – a Project owner or an Investor;

Due diligence – research of the Customer or the Collateral provider in order to get certainty in its trustworthiness;

Electronic identification – identification of the Investor via electronic means provided by the Payment service provider;

EU – European Union;

FATF – Financial Acton Task Force - an intergovernmental organization, aimed to combat money laundering and terrorism financing;

FIU (Financial Intelligence Unit) – a governmental authority under the supervision of the Cabinet of Ministers, which autonomously performs regulatory supervision and exercises the enforcement powers of the state in accordance with the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing.

GDPR – Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation);

High-terrorism-risk country – the High-risk country and jurisdiction being a safe haven of international terrorism;

High-risk country - third-country or jurisdiction which have strategic deficiencies in their national AML/CTF regimes that pose significant threats to the financial system of the European Union;

Identification form – the questionnaire filled in by the Customer or the Collateral provider for the purpose of identification;

Information sources –public sources available (internet, company registers, social networks, mass media etc.);

Investor – a natural person aged 18 years or older, or a legal entity, who has passed registration and identification on the Platform, has been identified and accepted by the Payment service provider and the Company, and receives the Services;

KYC information and documents - “Know Your Customer” information and documents obtained by the Company during the process of on-boarding, i.e., personal identification documents and the Due diligence documents and information;

Law – legal regulation applicable to the business activity of the Company;

Member state – European Union member state;

ML/TPF – Money Laundering or Terrorist or Proliferation Financing;

OFAC – Office of Foreign Assets Control of the United States (U.S.) Treasury agency that enforces economic and trade sanctions against foreign entities;

Payment service provider – the Company’s accepted provider of payment services – Lemonway SAS (www.lemonway.com);

PEP – a natural person who performs or has performed prominent public functions and with regard to whom related risks remain, it’s family member and close associate;

Policy – this Anti-Money Laundering and Countering-Terrorist Financing Policy;

Platform – an electronic system, connected with the Website and operated by the Company;

Project – commercial project offered by the Project owner for financing via the Platform;

Project owner – a legal entity, Member state resident, which has applied for the Services provided by the Company, has been identified and accepted by the Payment service provider and the Company, and receives the Services;

Regulation - Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937;

Related person – a person associated with the Customer or Collateral provider, i.e., the Beneficial owner, representative, member of ownership structure, management board member or director, who’s risk affects the Customer’s ML/TF risk level;

Sanctions - tool of foreign policy, which imposes as restrictive measures, aimed at supporting the maintenance or restoration of peace, international security, democracy, and the rule of law, following human rights and international law or achieving other objectives of the United Nations (UN) or the European Union (EU);

Sanctions law - Law on International Sanctions and National Sanctions of the Republic of Latvia;

Sanctions list - EU, UN and OFAC list of persons, organizations, and countries, being a subject to restrictive measures and prohibited for cooperation fully or partly with the view to prevent the involvement in terrorism activity, or protect national security interests, international law and international peace and security;

Services - lending-based crowdfunding services, provided by the Company;

Shell bank - a credit institution or financial institution or an institution that carries out activities equivalent to those carried out by credit institutions and financial institutions, incorporated in a jurisdiction in which it has no physical presence, involving meaningful mind and management, and which is unaffiliated with a regulated credit or financial group;

Suspicion of the ML/TPF –any circumstance or knowledge which indicates that a transaction or activity is directed at the commission of money laundering or the concealment of criminal assets, while the application of due diligence measures has not eliminated them;

Tax residence – the country where the person has an obligation of taxation;

UN – the United Nations;

Unacceptable person – the Customer or the Collateral provider, which cannot be accepted by the Company and with whom it rejects the Business relationship;

Unusual activity - economically unusual or illogical circumstances or long-lasting activity of the Customer, which under certain conditions may indicate possible links to the proceeds of crime or the ML/TPF;

Website – www.fundaus.com.

1. Policy Statement

   1. This Policy establishes the Company’s measures for the prevention and mitigation of money laundering, terrorist and proliferation financing, and Sanctions compliance risks in accordance with the applicable legal and regulatory requirements.
   2. This Policy has been adopted by the Company in accordance with the Regulation and the Sanctions Law.
   3. The Company has established this Policy to ensure that all new and existing Customers are identified and verified to a reasonable level of certainty, appropriate Due diligence is performed, and ML/TPF and sanctions compliance risks are adequately assessed.
   4. As the Company provides the Services in cooperation with the Payment service provider, the Company and the Payment Service Provider cooperate in matters relating to AML/CTPF and Sanctions compliance as follows:
      • the Company applies sanctions compliance measures to Project owners and Collateral providers;
      • the Payment service provider performs AML/CTPF and sanctions-related Due Diligence of Customers in accordance with the applicable legal requirements and its internal AML/CTPF policies and procedures.
   5. As the Due diligence of Investors is performed solely by the Payment service provider in accordance with its AML/CTPF policies and procedures, it is outside the scope of this Policy.
   6. This Policy is binding on all Company employees involved in customer support and the implementation of AML/CTPF and Sanctions compliance measures.
   7. This Policy shall be reviewed and, where necessary, updated at least once every twelve (12) months or without undue delay following any amendments to the applicable legal or regulatory requirements. The current version of the Policy shall be published on the Company’s Website.

2. Money Laundering and Terrorist Financing

   Money laundering means following actions:

   • the conversion or transfer of property derived from criminal activity or property obtained instead of such property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an activity to evade the legal consequences of that person’s actions;
   • the acquisition, possession or use of property derived from criminal activity or property obtained instead of such property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation therein;
   • the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property derived from criminal activity or property obtained instead of such property, knowing that such property is derived from criminal activity or from an act of participation in such an activity;
   • the participation in, association to commit, attempts to commit and aiding, abetting, facilitating and concealment the commission of any of the above-mentioned activities.

   Money laundering is regarded as such also where a criminal activity which generates the property to be laundered was carried out outside of the Republic of Latvia, and also where the details of a criminal activity which generates the property to be laundered have been identified.

   Terrorism financing means the financing or knowing and supporting of an act of terrorism as well as terrorism organization or a person whose activities are directed against international security, the person or the environment while posing a threat to life or health, against foreign states or international organizations, or of a criminal offence dangerous to the public, or manufacture, distribution or use of prohibited weapons, illegal seizure, damaging or destruction of property to a significant extent, or interference with computer data or hindrance of functioning of computer systems as well as threatening with commission of such acts, if committed with the purpose of forcing the state or an international organization to perform an act or omission, or seriously interfering with or destroying the political, constitutional, economic or social structure of the state, or seriously interfering with or destroying the operation of an international organization, or seriously terrorizing the population.

3. Sanctions breach

   Sanctions are restrictive measures imposed by the United Nations, the European Union, the Republic of Latvia, and other competent authorities, which prohibit or restrict certain activities involving designated persons, entities, countries, territories, sectors, goods, services, or financial transactions.

   A Sanctions breach means any act or omission that results in a violation of applicable Sanctions laws or restrictive measures, including, but not limited to:

   • making funds or economic resources, directly or indirectly, available to or for the benefit of a designated person or entity, except where permitted under applicable law;
   • dealing with, transferring, converting, using, disposing of, or otherwise handling funds or economic resources that are subject to sanctions or asset-freezing measures in contravention of applicable sanctions;
   • establishing or maintaining a Business Relationship, or providing Services, where prohibited by applicable Sanctions;
   • participating in transactions involving sanctioned countries, territories, sectors, goods, services, vessels, aircraft, or other restricted activities in violation of applicable Sanctions;
   • knowingly and intentionally participating in activities the object or effect of which is to circumvent or facilitate the circumvention of applicable Sanctions;
   • failing to comply with restrictions, prohibitions, licensing requirements, reporting obligations, or asset-freezing measures established under applicable Sanctions legislation.

4. Customer on-boarding

   1. The initial Due diligence of Customers is allocated as follows:
      • the initial Due diligence of each Investor, including electronic identification, is performed solely by the Payment service provider in accordance with its AML/CTPF policies and procedures;
      • the initial Due diligence of each Project owner is performed by the Company and is followed by Due diligence and electronic identification performed by the Payment service provider;
      • the initial Due diligence of each Collateral provider is performed solely by the Company.
   2. The Company shall conduct Due diligence of Project owners and Collateral providers by applying, as a minimum, the following measures:
      • identification and verification of identity using reliable and independent sources, including electronic identification means where appropriate;
      • identification and verification of representatives and their authority to act;
      • identification of Beneficial owners and taking reasonable measures to understand and verify the ownership and control structure;
      • obtaining an understanding of the purpose and intended nature of the Business relationship;
      • determining whether the Customer, its Beneficial owners, or associated persons are Politically Exposed Persons (PEPs);
      • screening against applicable Sanctions lists;
      • ongoing monitoring of the Business relationship.
   3. The Company shall review and verify KYC information and supporting documentation submitted by Project owners and Collateral providers and decide whether to:
      • establish the Business relationship;
      • reject the application; or
      • request additional information or documentation.
   4. Where, based on the results of its Due diligence, the Company decides not to proceed with a Project owner, the relevant information shall not be submitted to the Payment service provider for further assessment, and the Business relationship shall be rejected.
   5. A Business relationship with a Customer may be established only after the Payment service provider has completed its onboarding assessment and approved the Customer, including opening or agreeing to open the relevant payment account.
   6. If the Payment service provider refuses to onboard the Customer or declines to open a payment account, the Company shall not establish the Business relationship.
   7. The Company shall not establish a Business relationship unless all applicable Due diligence measures have been completed and the Company is satisfied that the requirements of the Regulation, the Sanctions law, and this Policy are fulfilled.
   8. Where the Company is unable to apply the required Due diligence measures in accordance with the Regulation and the Sanctions law, it shall refuse to establish the Business relationship.
   9. The detailed procedures for implementing Due diligence and sanctions compliance measures are set out in the Company’s AML/CTPF and Sanctions control procedures.

5. Identity verification and the initial Due diligence of the Investor

   1. The potential Investor approaches the Company via the Website by filling the Identification form, providing its KYC information and the requested documents.
   2. After the potential Investor has filled in the Identification form, it passes the procedure of the Electronic identification, using the valid personal identification document of itself (in case of a natural person), or of its authorized representative (in case of a legal person).
   3. The Due diligence and the Electronic identification are processed by the Payment service provider by its electronic vehicles.

6. Identity verification and the initial Due diligence of the Project owner

   1. The potential Project owner approaches the Company via the Website or in other ways and applies for funding for its Project.
   2. The identity verification of the Project owner is performed either with its personal participation in the identity verification procedure (on-site identification), or remotely.
   3. The Project owner shall provide the information and documents listed in Annex 1 and Annex 2 to this Policy.
   4. The Project owners associated or cooperating with the High-sanctions-risk countries (Part 2 of the Annex 3) are subject to enhanced Due diligence.
   5. After acceptance of the provided information and documents, the Company forwards them to the Payment service provider for KYC and provides the Project owner with a link for the Electronic identification.

7. Identity verification and the initial Due diligence of the Collateral provider

   1. The identity verification of the Collateral provider is performed either with its personal participation (on-site identification), or remotely. If the Collateral provider is the Project owner itself, no additional identity verification is required.
   2. The Identification form related to the Collateral provider may be filled and the KYC information and documents may be provided by the Project owner on behalf of the Collateral provider, provided that the Collateral provider passes identity verification process by itself.
   3. The Collateral provider shall provide the information and documents listed in Annex 1 and Annex 2 to this Policy.
   4. The Collateral provider associated or cooperating with the High-sanctions-risk countries (Part 2 of the Annex 3) are subject to enhanced Due diligence.

8. KYC information and documents related requirements

   1. Documents provided by an Investor may be accepted in the form of scanned copies of the original documents, provided that they comply with the applicable legal and regulatory requirements regarding execution, signatures, translations, certification, legalization, or an Apostille, where applicable.
   2. Documents provided by a Project owner or a Collateral provider for the purposes of Due diligence shall be submitted either as original documents or as duly certified copies and shall comply with the applicable legal and regulatory requirements regarding execution, signatures, translations, certification, legalization, or an Apostille, where applicable.
   3. Documents submitted for the purposes of Due diligence may be provided in any official language of a Member State of the European Union. The Company may, at its discretion, require an official (certified) translation of any document into Latvian or English.
   4. The Company shall ensure that all documents obtained for the purposes of Due diligence comply with the applicable validity periods established by the applicable laws and regulations, this Policy, and, where relevant, the requirements of the Payment service provider.
   5. Where Due diligence documentation is submitted to the Payment service provider, the Company shall ensure compliance with any additional documentary or formal requirements established by the Payment service provider.
   6. The Company may request additional documents, information, explanations, or updated documentation whenever it considers such information necessary to complete or update the Due diligence process or to comply with applicable AML/CTPF or sanctions compliance requirements.

9. Unacceptable person

   1. The Company shall not establish or maintain a Business Relationship with any person or entity that meets one or more of the following criteria (“Unacceptable Customers”):
      • does not hold a payment account with a licensed credit institution or payment institution established in the European Union, where such account is required for the provision of the Services;
      • is a Politically Exposed Person (PEP), a family member of a PEP, or a person known to be a close associate of a PEP;
      • is subject to applicable international or national sanctions, asset-freezing measures, embargoes, or other restrictive measures;
      • is a legal person that derives more than 50% of its annual revenue from actual economic activities carried out in a low-tax or no-tax jurisdiction, or whose registered office, place of incorporation, or principal place of business is located in such jurisdiction, as determined in accordance with the applicable legislation of the Republic of Latvia;
      • is a shell bank or maintains a Business Relationship with a shell bank prohibited by applicable law;
      • has issued bearer shares or permits anonymous ownership through bearer share arrangements;
      • has an ownership or control structure that is unusually complex, lacks an apparent economic or lawful purpose, or prevents the identification and verification of the Beneficial Owner;
      • is established, domiciled, resident, operates in, or maintains significant business relationships with a high-risk third country, high-terrorism-risk country listed in the Part 1 of the Annex 3;
      • is established, domiciled, resident, operates in, or maintains significant business relationships with a country or territory that the Payment service provider has designated as prohibited for the provision of its services;
      • has been convicted of money laundering, terrorist financing, proliferation financing, sanctions violations, fraud, corruption, or any other financial or economic crime;
      • is reasonably suspected of involvement in money laundering, terrorist financing, proliferation financing, sanctions evasion, fraud, corruption, or any other financial crime;
      • conducts, or is materially connected with, a business activity classified by the Company as prohibited or high risk in accordance with Annex 4.
   2. Where information obtained during the Due diligence process indicates that a Customer meets any of the above criteria, the Company shall refuse to establish, or shall terminate where legally permitted, the Business relationship and shall take any additional measures required under applicable AML/CTPF and Sanctions legal regulation.

10. Monitoring of the Business relationship

    1. The Company permanently monitors the Project owner’s and Collateral provider’s compliance with requirements of this Policy.
    2. The Customer will be regularly asked and is obliged to provide updated information and documents to keep its files up-to-date and is obliged to provide them in the term prescribed by the Company or by the Payment service provider.

11. Suspension and termination of the Business relationship

    1. If the documents or information provided by the Customer are insufficient to enable the Company or the Payment service provider to perform the required Due diligence or ongoing monitoring of the Business relationship in accordance with this Policy or the Payment service provider’s AML Policy, or if the Customer fails to provide the documents or information requested by the Company or by the Payment Service Provider, the Company shall suspend the provision of the Services until the deficiencies have been remedied.
    2. The provision of the Services may be resumed only after the Customer has submitted all requested documents and information and the required Due diligence has been successfully completed by both the Company and the Payment service provider, where applicable.
    3. The Company may refuse to continue or may immediately terminate the Business relationship where any of the following circumstances occur:
       • the Customer or the Collateral provider has provided false, misleading, incomplete, or forged identification information or documentation;
       • the Customer or the Collateral provider is engaged in unlawful, fraudulent, or otherwise prohibited activities;
       • the Customer or the Collateral Provider conducts activities that are contrary to public policy, public order, or accepted standards of business ethics and expose the Company to legal or reputational risk;
       • the Company identifies a connection between the Customer or the Collateral provider and ML/TPF or Sanctions evasion, or any other financial or economic crime;
       • the Customer becomes insolvent, enters liquidation, restructuring, or another insolvency-related proceeding, or is otherwise unable to fulfil its financial obligations;
       • the Company is unable to apply the Due diligence measures or conduct ongoing monitoring of the Business relationship as required by applicable law because the Customer fails or refuses to provide the requested information or documentation within three (3) months from the date of the Company’s request;
       • the Company is unable to verify the accuracy, completeness, or reliability of the information obtained during the Due diligence process;
       • the Customer is identified as an Unacceptable Customer in accordance with this Policy;
       • the Payment service provider refuses to establish or continue a Business relationship with the Customer, closes the Customer’s payment account, or otherwise terminates the provision of payment services to the Customer;
       • the continuation of the Business relationship would otherwise expose the Company to an unacceptable ML/CTPF or Sanctions compliance risk or would result in a breach of applicable legal or regulatory requirements.
    4. The Customer shall be notified of the Company’s decision to suspend or terminate the Business relationship in accordance with the procedure specified in the Terms and Conditions for Investors. To the extent permitted by applicable law, the Company is not obliged to disclose the reasons for such decision.
    5. Suspension or termination of the Business relationship under this Policy shall not affect the Company’s obligation to fulfil any reporting, record-keeping, or other obligations imposed by applicable AML/CTPF, Sanctions, or other legal and regulatory requirements, nor shall it release the Project owner or the Collateral provider from any obligations or liabilities arising under any Loan Agreement or any related collateral document.

12. Retaining and safekeeping

    1. The Company shall retain the KYC documents and information relating to Customers and Collateral providers, as well as all records relating to identity verification, Due diligence, ongoing monitoring, the basis for the application of Due diligence measures, and the results thereof, for a period of five (5) years following the termination of the Business relationship or for such longer period as may be required by applicable law.
    2. Information and data obtained in the course of implementing this Policy and complying with the applicable AML/CTPF and Sanctions legislation shall be processed and used solely for the purposes specified in this Policy and the applicable legal and regulatory requirements and shall not be used for any incompatible purpose, except where otherwise required or permitted by law.
    3. Personal data shall be processed, stored, and protected in accordance with the applicable data protection legislation, including the General Data Protection Regulation (EU) 2016/679 (“GDPR”), and the Company’s Privacy Policy.
    4. The Company shall implement appropriate technical and organisational measures to ensure the confidentiality, integrity, and availability of the information and personal data obtained during the Due diligence process and to prevent unauthorised access, disclosure, alteration, or destruction of such information.

Annex 1

KYC information

Information on a natural person

• Name, surname;
• Personal identification code;
• Date and place of birth;
• Address of the place of residence or seat;
• Nationality (citizenship);
• Personal valid identification document data;
• Tax number;
• Tax residence address;
• Telephone (mobile);
• E-mail.

Information on a legal entity

• Name;
• Legal form;
• Registration number, court of jurisdiction and the date of registration;
• Legal address;
• Name, e-mail, telephone, address, date of birth, nationality of the director, members of the management board or other body replacing the management board or representative and their authorization in representing the legal person;
• Identification document data for the representative;
• Tax residence country;
• Tax residence number;
• Business activity location (post address);
• Telephone;
• E-mail;
• Type of business activity;
• License, license number (if the activity is subject to licensing).

Information on the Beneficial owner

• Name, surname;
• Date of birth;
• Identification document data;
• Nationality (citizenship);
• Address;
• The date the person became the Beneficial owner;
• Way of control;
• Ownership per cents (in case of legal entity).

Information on a representative

• Name, surname;
• Date of birth;
• Identification document data;
• Nationality (citizenship).

Annex 2

KYC documents

Natural person:

• A valid identification document (front and back sides);
• A second valid identification document or a tax assessment notice issued within the last 12 months;
• A bank statement (to be submitted upon request of the payout of funds from the account with the Payment service provider);
• Self-employed person’s document certifying registration.

Additional documents are requested in the following cases:

• Power of attorney or other right and scope of representation proving document - in case of representation;
• A valid identification document (front and back side);
• A second valid identification document or a tax assessment notice issued within the last 12 months;
• A valid identification document of the Beneficial owner (front and back side);
• Tax residence document - if it is not possible to detect tax residence country from other available Information source.

Legal entity:

• Extract from the Company Register proving identification data of a legal entity, issued within the last 3 months;
• A valid identification document of each Beneficial owner (front and back side);
• Memorandum and Articles of Association or relevant document;
• Declaration of income or tax return document;
• A document from the Company Register, showing the Beneficial owner and proving its identification data;
• A letter signed by the legal representative if the capital structure is not stated in the Memorandum and Articles of Association or relevant document;
• A valid identification document (front and back side) of a natural person authorized to represent a legal entity;
• A document proving the representation rights of an authorized person, i.e., power of attorney or extract from the Company Register, issued within the last 3 months.

Additional documents are requested in the following cases:

• Legal entity and its Beneficial owner’s Tax residence document - if it is not possible to detect tax residence country from other available Information source.

Annex 3

Part 1. High-risk and High-terrorism-risk countries

• High-risk countries and other monitored jurisdictions defined by FATF;
• High-risk third countries defined by European Commission;
• Countries and territories being subject of International, National Sanctions or Sanctions imposed by EU or NATO organizations member state, for example, OFAC.

Part 2. High-sanctions-risk countries

• Armenia
• Azerbaijan
• China (inc. Hong Kong)
• Georgia
• India
• Kazakhstan
• Kirgizstan
• Mongolia
• Serbia
• Tadzhikistan
• Thailand
• Turkey
• United Arab Emirates
• Uzbekistan
• Vietnam

Annex 4

High-risk business activity

1. Any kind of illegal activity;
2. Extremist/ultra-radical/dissident/propagandist movements;
3. Religious organizations;
4. Piracy device/spyware sales;
5. Counterfeit product sales;
6. Airsoft/imitation firearm sales;
7. Production or trade in weapons and munitions;
8. Dual use goods production and sales;
9. Production, trade, storage, or transport of significant volumes of hazardous chemicals, or commercial scale usage of hazardous chemicals;
10. Quarries, mining, or processing of metal ores or coal;
11. Unauthorized streaming sites;
12. Any business relating to pornography or prostitution;
13. Pre-paid card issuing;
14. Security trading or forex sites;
15. Currency, including virtual currency purchasing;
16. Proselytising sites;
17. Online unlicensed Gambling/Betting/ Casino/Horse Racing/Bingo/Sports Betting;
18. Sales of followers, views, likes or comments;
19. Tobacco sales;
20. Narcotic substance sales;
21. Cannabis-derived product sales;
22. Trade in wildlife or wildlife products regulated under CITES;
23. Trading with living animals;
24. Trading of Bones and Ivory;
25. Adoption services;
26. Human Body Parts/organs and Pathogens;
27. Unlicensed donations/charities;
28. Travel agencies/operators;
29. Government owned entities;
30. Political organizations;
31. Pyramid or Ponzi scheme;
32. Hawala.