RULES OF PROCEDURE FOR APPLYING INTERNATIONAL SANCTIONS
BitPadre OÜ
Established by the decision of the management board of BitPadre OÜ, registry code 14729785, (hereinafter: Company) on 22.12.2020.
First name Last name Signature
Félix Mariánovich
Member of the Management Board
General provisions
These rules of procedure for applying International Sanctions (hereinafter: Rules) establish, inter alia, procedure to ensure the organizational structure enabling immediate identification of the entry into force, modification or termination of Financial Sanctions (defined below) and implementation thereof.
The obligation to observe the Rules rests with the Management Board members, CO and also employees of the Company, including temporary staff, agents of the Company who initiate or establish Business Relationship (defined below) (hereinafter all together called as Representative). Every Representative must confirm awareness of the Rules with a signature.
Also, any service providers with whom the Company has entered into a contract for fulfilling its AML/CTF or other obligations under the law is obliged to observe the Rules. Where the term “Company” or “Representative” is stipulated in the Rules, the relevant service provider shall be meant (unless otherwise agreed with the relevant service provider).
The Rules are primarily based on the regulation of International Sanctions Act (hereinafter: the Act).
For matters not governed within these Rules, the rules of procedure for prevention of money laundering and terrorist financing (hereinafter: AML/CTF Rules) and Money Laundering and Terrorist Financing Prevention Act shall apply, taking account of the specifications provided in these Rules and the Act.
Definitions
The definitions used in the Rules are defined as follows. If any of the definitions are defined differently in the applicable law (for example, if any of those definitions should be amended by the Act), the definition as defined in the applicable law shall have priority over the definitions stated in the Rules.
International Sanctions – an essential tool of foreign policy 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 Charter or the Common Foreign and Security Policy of the European Union. International Sanctions are imposed with regard to a state, territory, territorial unit, regime, organization, association, group or person by a resolution of the United Nations Security Council, a decision of the Council of the European Union or any other legislation imposing obligations on Estonia. International Sanctions may ban the entry of a Subject of an International Sanction in the state, restrict international trade and international transactions, and impose other prohibitions or obligations.
Financial Sanctions – International Sanctions as defined in the Act and which, most importantly:
obligate the freezing of funds and economic resources of the Subject of International Financial Sanctions;
prohibit the making available of financial and economic resources to the Subject of the Financial Sanctions;
prohibit the opening and use of a deposit, payment, securities or other account under the conditions prescribed by the Legal Act Implementing of International Sanctions;
prohibit investing under the conditions prescribed by the Legal Act Implementing International Sanctions; or
prohibit, under the conditions provided for by the Legal Act Implementing International Sanctions, the starting or continuing of Business Relationships, consultancy or the provision of other financial services related to the activities listed above.
Subject of International Sanctions/Financial Sanctions – any natural or legal person, entity or body, designated in the legal act imposing or implementing International Sanctions/Financial Sanctions, with regard to which the International Sanctions/Financial Sanctions apply.
Violation of International Sanctions/Financial Sanctions – a failure to perform an obligation or violation of a prohibition provided for in the Legal Act Implementing International Sanctions/Financial Sanctions.
Legal Act Implementing International Sanctions/Financial Sanctions – a treaty, a regulation of the Council of the European Union or the act of law of the Republic of Estonia on the basis of which the obligations and prohibitions prescribed in the legislation on the imposition of International Sanctions/Financial Sanctions shall be applied.
Compliance Officer or CO – representative appointed by the Management Board responsible for the effectiveness of the Rules, conducting compliance over the adherence to the Rules and serving as a contact person of the FIU.
FIU – the Financial Intelligence Unit of the Police and Border Guard Board of Estonia.
Business Relationship – a relationship of the Company established in its economic and professional activities with the Client.
Client – a natural or legal person, who uses services of the Company.
Company – BitPadre OÜ.
Management Board or MB – management board of the Company.
Virtual currency – a value represented in the digital form, which is digitally transferable, preservable or tradable and which persons accept as a payment instrument, but that is not the legal tender of any country or funds for the purposes of Article 4(25) of Directive (EU) 2015/2366 of the European Parliament and of the Council on payment services in the internal market or a payment transaction for the purposes of points (k) and (l) of Article 3 of the same directive.
Compliance Officer
The MB shall appoint a CO (see Exhibit 1) who shall be in in charge of performing the tasks, provided for by the Act, and is responsible for the application of International Sanctions, including Financial Sanctions.
The CO’s principal tasks are to:
apply International Sanctions and applicable law;
notify and correspond with the FIU as provided in the Rules and in the Act;
regularly follow the updates regarding International Sanctions (which includes regularly following the webpage of the FIU) and immediately take measures provided for in the Act on the imposition or implementation of International Sanctions;
upon entry into force of a Legal Act Implementing International Sanctions, the amendment, repeal or expiry thereof, immediately check whether any of the Clients is subject to International Sanctions with regard to whom the International Sanction is imposed, amended or terminated;
if Legal Act Implementing International Sanctions is repealed, expires or is amended in such a manner that the implementation of International Sanctions with regard to the Subject of International Sanctions is terminated wholly or partially, terminate the implementation of the measure to the extent provided for in the Legal Act Implementing International Sanctions;
keep an updated record of subjects of International Sanctions and submit this information to the Representatives in the form that allows to use this information in the course of their activity;
provide training to the Representatives that allows them to establish independently the Subjects of International Sanctions and, if necessary, provide the Representatives assistance;
supervise the application of the Rules by the Representatives;
review and update the Rules regarding the implementation of International Sanctions.
Implementation of Financial Sanctions
Upon the entry into force, amendment or termination of Financial Sanctions, the Representative shall verify whether the Client or a person who is planning to have a Business Relationship is a subject of Financial Sanctions. Such verification shall include, among other relevant procedures, the following:
using the search engine available at the webpage of the FIU;
using the search engine available at the EU SanctionsMap webpage;
check the list of Subjects of Financial Sanctions and any other relevant conditions for violation of Financial Sanctions at the relevant Legal Act Implementing Financial Sanctions.
If upon the verification, as established in section 4.1, the Representative identifies a person who is a Subject of Financial Sanctions or that the transaction or act intended or carried out by them is in breach of Financial Sanctions, the Representative shall immediately inform the CO and the MB. The CO shall apply Financial Sanctions and immediately notify the FIU (as stipulated in section 4.7).
If the Representative has doubts as to whether a Client or a person planning to have a Business Relationship is a Subject of Financial Sanctions, or the transaction or act intended or carried out by them violates Financial Sanctions, the Representative shall immediately inform the CO and the MB. The CO shall:
apply Financial Sanctions; and
together with the Representative apply due diligence measures as follows:
collect additional information as to whether the Client or the person planning to have a Business Relationship is a Subject of Financial Sanctions or whether a transaction or act which is planned or carried out violates Financial Sanctions and verify it on the basis of supporting documents, data or information from a reliable and independent source. This can be done, inter alia, by
determining the persons which have ownership and control over the Client/person planning to have a Business Relationship (including identifying the Beneficial Owners, as defined in the AML/CTF Rules);
checking whether any person determined under section 4.3.2.1.1 is a subject of Financial Sanctions;
applying any due diligence measures as described in the AML/CTF Rules, especially as described in sections 5.4-5.5;
requesting any documents and information deemed necessary by the CO, including, for example, the information and documents as described in section 5.6 of the AML/CTF Rules;
collecting necessary additional information via search engines (e.g. Googling the Client’s name or the person’s name planning to have a Business Relationship and any businesses and persons connected to them);
collect additional information regarding the purpose and nature of the Business Relationship, transaction or act and verify it on the basis of additional documents, data or information from a reliable and independent source. This can be done, inter alia, by
applying any due diligence measures as described in the AML/CTF Rules, especially as described in the sections 5.4-5.5;
by obtaining information/documents which identify the source and origin of the funds used;
collecting additional information via search engines (e.g. Googling the Client’s name or the person’s name planning to have a Business Relationship and any businesses and persons related to them).
In the event of a risk or suspicion of a violation of a Financial Sanction, the Representative shall inform the CO and the MB. The CO shall apply the due diligence measures provided for in section 4.3.2 above. The event of a risk or suspicion of a violation of a Financial Sanction shall be, inter alia, considered to be the occurrence of the following circumstances:
it becomes known or there is a suspicion that the Client/person planning to have a Business Relationship has been engaged/linked to criminal offenses/financial offenses or there are other indications of a negative background;
there is suspicion that the Client/person planning to have a Business Relationship is trying to conceal its true identity or the true identity of its Beneficial Owners (as defined in the AML/CTF Rules) or any other connected persons (e.g. board members);
in case of companies that have nominee shareholders or shares in bearer form;
the Business Relationship foundations are based on unusual factors, including in the event of complex and unusually large transactions and unusual transaction patterns that do not have a reasonable, clear economic or lawful purpose or that are not characteristic of the given business specifics;
the Client is a legal person or a legal arrangement, which is engaged in holding personal assets;
the ownership structure of the Client/person planning to have a Business Relationship appears unusual or excessively complex, given the nature of its business;
payments received from unknown or unassociated third parties;
there is a reason to believe that forged or incorrect documents were presented or there where efforts to conceal the Beneficial Owners;
if during the Business Relationship the behaviour of the Client and transactions changes, including where:
the scope of the transactions changes;
the location of making of the transactions changes;
the time of making the transactions changes;
in the case of incoming payment with value of more than 1000 euros (in fiat money), the name of the payee does not correspond to the name of the account holder;
not enough explanations or documents are provided which are necessary for conducting due diligence measures or the submitted explanations or documents are not viable;
in one transaction (or with several related transactions) the Client buys virtual currency worth more than 32 000 euros;
the origin of the virtual currencies is unknown;
there is a single large purchase or sale of (or regular buying or selling of) virtual currencies using a service that makes it difficult to identify one or more counterparties to a virtual currency transaction, such as a drum or mixing service (tumbler, mixer);
PEP (as defined in the AML/CTF Rules) buys or sells more than 10 000 euros in virtual currency;
virtual currency transaction uses the services of intermediaries that guarantee / complicate the impossibility or difficulty of identifying a person (for example, service providers who allow personal data not to be passed on to law enforcement authorities).
If, as a result of application of due diligence measures specified in section 4.3.2 above, the CO identifies a Subject of the Financial Sanction or that the transaction or act which is planned or carried out by them violates Financial Sanctions, or if additional information obtained upon application of due diligence measures does not enable to identify it, as well as in the case of the suspicion of violation of Financial Sanction specified in section 4.4, the CO shall notify the FIU and of the Financial Sanction applied (as stipulated in section 4.7).
If the Legal Act Implementing Financial Sanctions requires the freezing of funds and economic resources of a Subject of Financial Sanctions, the Financial Sanctions shall be applied also in the case the funds and resources are jointly owned by several persons and at least one of them is a Subject of Financial Sanctions. A person who is not a Subject of Financial Sanctions, but whose funds and economic resources have been frozen, may apply for authorisation from the FIU to use their share in the joint ownership.
The notification shall be done to the FIU (if required under the Rules) via FIU’s web-form following the guidelines adopted by the Estonian Ministry. Copies of the documents as set forth by guidelines of FIU or further requested by FIU shall be appended to the notice.
The Subject of Financial Sanctions and about whom the notification is made to the FIU, shall not be informed thereof.
Collection and storage of data
The Representative shall ensure that the required data are collected in the Company’s Client database within the required scope.
The Representative shall collect and store the data concerning:
the inspections specified in sections 4.1-4.2 (at least data regarding the time of inspection; name of a person who carried out inspection; and results of inspection);
the data collected during the exercise of due diligence measures specified in sections 4.3-4.4;
results of the inspection carried out as stipulated in section 6.
The data shall be stored in the course of five years in a manner that allows comprehensive and prompt response to inquiries by the FIU.
Internal audit and amendment of the Rules
Compliance with the Rules shall be inspected at least once a year by the CO. Procedure of such inspection shall be determined by the CO but must include, inter alia, the following:
sending questionnaires to the Representatives regarding implementation of Financial Sanctions and reviewing the answers;
interviews with the Representatives (the persons to be interviewed is up to the CO to decide);
checking randomly whether persons considered as subjects of Financial Sanctions by the Representatives and not considered as subjects of Financial Sanctions were correctly identified.
The report on the results of the inspection shall set out the following information:
time of the inspection;
name and position of the person conducting the inspection;
purpose and description of the inspection;
analysis of the inspection results, or the conclusions drawn on the basis of the inspection.
If the inspection reveals any deficiencies in the Rules or their implementation, the report shall set out the measures to be applied to remedy the deficiencies, as well as the respective time schedule and the time of a follow-up inspection.
If a follow-up inspection is carried out, the results of the follow-up inspection shall be added to the inspection report, which shall state the list of measures to remedy any deficiencies discovered in the course of the follow-up inspection, and the time actually spent on remedying the same.
The inspection report shall be presented to the MB, who shall decide on taking measures to remedy any deficiencies discovered.
