1. Policy Statement
Peloton Blockchain PTE LTD (“Peloton Blockchain”), together with its affiliates (“the Peloton Group”), is a “compliance first” organization which undertakes to operate at all times in the highest ethical and professional manner. The Peloton Group is committed at all levels of the organization to operate in conformity with all laws and regulations which apply to the conduct of its business. All Peloton Group directors, employees and contractors are required to make every effort to prevent any affiliate or corporate entity of the Peloton Group from being used to facilitate criminal activity. The Peloton Blockchain anti-money laundering (“AML”), countering the financing of terrorism (“CFT”), and sanctions compliance (“SC”) policies (together the “AML Policy”) set out the policies, procedures, systems, and controls that all Peloton Group directors, employees and contractors must observe and adhere to in order to ensure compliance with the requirements and principles of the relevant laws, rules, and regulations by which the Peloton Group is regulated from time to time.
The Peloton Blockchain AML Policy is not intended to reproduce any rules or regulations that may be applicable to the Peloton Group but rather to set out the guidelines for behavior for Peloton Group directors, employees and contractors and provide guidance for the operation of all individual Peloton Group affiliates which are responsible for developing and implementing the requirements of the AML Policy and complying with the laws and regulations of any jurisdiction to which any Peloton Group affiliate may be subject.
2. Money Laundering Defined
The Notice to Capital Markets Intermediaries issued pursuant to the Monetary Authority of Singapore ACT, CAP.186 titled “Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Markets Intermediaries”, dated 24 April 2015 and last revised on 5 October 2018 (“MAS Notice SFA 04-N02”), sets out the obligations of Capital Markets Intermediaries (“CMI”) to take measures to mitigate the risk of Singapore’s capital markets being used for money laundering or terrorist financing.
Paragraph 1-4-1 of the Guidelines to MAS Notice SFA04-N02 On Prevention of Money Laundering and Countering The Financing of Terrorism dated 24 April 2015 (“SFA 04-N02 Guidelines”), states that money laundering (“ML”) is “a process intended to mask the benefits derived from criminal conduct so that they appear to have originated from a legitimate source.
Paragraph 1-4-2 of the SFA 04-N02 Guidelines states that, “Generally, the process of ML comprises three stages, namely -
- Placement - The physical or financial disposal of the benefits derived from criminal conduct.
- Layering - The separation of these benefits from their original source by creating layers of financial transactions designed to disguise the ultimate source and transfer of these benefits
- Integration - The provision of apparent legitimacy to the benefits derived from criminal conduct. If the layering process succeeds, the integration schemes place the laundered funds back into the economy so that they re-enter the financial system appearing to be legitimate funds.
Terrorism Financing is the act of providing funds to terrorists to carry out acts of terrorism. Such funds may be derived from criminal activities and there may be an element of money laundering involved to disguise the source of funds. Terrorist acts and organisations may also be financed from legitimate sources and may not always involve large sums of money.
Additionally, Peloton Blockchain recognizes that cryptocurrencies and digital tokens by their nature raise new challenges in relation to money laundering, terrorist financing and sanctions compliance particularly with respect to the use of cryptocurrency specific money laundering processes and services such as “mixers”, “tumblers”, and “foggers”.
3. Peloton Group AML Policy, Procedures, Systems, and Controls
The MAS Notice SFA 04-N02, applies to (a) all holders of capital markets services licenses under Singapore’s Securities and Futures Act (Cap. 289) (“SFA”), all fund management companies registered under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg. 10) (“SF(LCB)R”) and to (b) all persons exempted under paragraph 3(1)(d), 3A(1)(d) and 7(1)(b) of the Second Schedule to the SF(LCB)R from the requirement of having to hold a capital markets services license. Peloton Group seeks to use the standards of the MAS Notice SFA 04-N02 as a benchmark and to adhere to it regardless of whether it technically applies to Peloton Group.
AML/CFT legislation in Singapore includes the following:
Peloton Blockchain’s executive management shall implement policies, procedures, systems and controls that reflect and meet the requirements of Singapore’s AML and CFT legislation and guidance. This executive action reflects Peloton Blockchain’s policy to ensure that its products and service offering do not facilitate money laundering, the financing of terrorism, or sanctions non-compliance.
The Peloton Blockchain policies, procedures, systems and controls will:
- Ensure that the Peloton Blockchain executive committee is provided with regular management information and updates regarding the operation and effectivness of the Peloton Blockchain AML systems and controls in relation to identification, categorization and measurement, management, and control of the Peloton Group’s money laundering risks;
- Have sufficient capability to accurately determine whether Peloton Blockchain’s investors, clients, or beneficial owners of investors or clients are politically exposed persons (“PEP”); and
- Enable Peloton Group to comply with Singapore AML/CFT rules and regulations.
The Peloton Group shall perform regular tests and assessments on the adequacy of its AML systems and controls and its overall ability on a continuing basis to identify, assess, monitor and manage money laundering and terrorist financing risks and to confirm that its systems and controls continue to be adequate and proportionate relative to the nature, scale, and complexity of its activities and shall otherwise ensure that the Peloton Group’s AML systems and controls shall remain fit for purpose and will include the following:
- Identification procedures, including appropriate and accurate client / investor identification resulting from “Know Your Customer” processes;
- Verification of clients/investors using reliable documents which contain information that are objective and independent in nature;
- Identification of beneficial ownership and control to determine the ultimate controller of any client or investor;
- If client is a corporate entity, undertake to understand the nature of that client’s business;
- Conduct ongoing due diligence and scrutiny of all clients, investors, and related transactions;
- Client/Investor due diligence requirements or enhanced due diligence requirements shall be applied to any potential client/investor that presents a higher risk, including PEPs;
- Accredited Investor qualification confirmation;
- Refreshed due diligence and Accredited Investor due diligence as may be warranted;
- Establish and maintain adequate and sufficient record-keeping procedures;
- Establish and maintain internal reporting procedures;
- Enquiring whether the client/investor is the owner of the cash/cryptocurrency received as payment in the transaction, and if not, to obtain and record the identifying information of the owner of that amount of cash/cryptocurrency.
- Independent audit of the Peloton Group AML policies, procedures, systems and controls; and
- Monitoring staff compliance with AML policies, procedures, systems, and controls, including periodic training. The AML Policy shall remain available to all staff and all staff shall remain familiar with its contents.
If any employee of Peloton Group knows or has reasonable grounds to suspect that any property, in whole or in part, directly or indirectly, represents the proceeds of, was used in connection with or is intended to be used in connection with, any act which may constitute drug dealing or criminal conduct, and the information or matter on which the knowledge or suspicion is based came to his attention in the course of his trade, profession, business or employment, he shall report it to a superior, who shall investigate and, if applicable, disclose the knowledge or suspicion or the information or other matter on which that knowledge or suspicion is based to the Suspicious Transaction Reporting Office through https://www.police.gov.sg/sonar as soon as is reasonably practicable.
Employees of Peloton Group shall disclose to the police any possession, custody or control of any property belonging to any terrorist or terrorist entity, or any information about any transaction or proposed transaction in respect of any property belonging to any terrorist or terrorist entity in accordance with the First Schedule of the TSFA (https://sso.agc.gov.sg/Act/TSFA2002#Sc1-).
Peloton Group shall also ensure that it does not deal with or provide financial services to the designated individuals and entities pursuant to the TSFA and the various regulations giving effect to the United Nations Security Council Resolutions (http://www.mas.gov.sg/Regulations-and-Financial-Stability/Anti-Money-Laundering-Countering-The-Financing-Of-Terrorism-And-Targeted-Financial-Sanctions/Targeted-Financial-Sanctions/Lists-of-Designated-Individuals-and-Entities.aspx).
4. Money Laundering Reporting Officer
The Peloton Group shall appoint a Money Laundering Reporting Officer to be responsible for all AML policies, procedures, systems, controls, and activities within the Peloton Group, including ensuring that appropriate awareness and training is always available and provided to all staff (existing and new), and that such training is kept up to date such that it remains fit for purpose.
The Peloton Group reserves the right to perform enhanced due diligence which may include:
- A “blockchain” analysis to verify past transaction history;
- Confirmation of cryptocurrency provenance;
- Cross-checks against “blacklisted digital wallets”;
- Review of any history or suspected history of transacting through known, or suspected, “mixer, tumbler or fogger” service providers; and
- Pilot transfers, whereby the Peloton Group may conduct a small value transfer to client’s proposed wallet in order to confirm client’s control of said wallet.