AML and KYC policy

01Purpose and legal status

This is the anti money laundering and know your customer policy of NIO X PTE. LTD. registered in Singapore, the operator of the NioX spot exchange. It binds the company, every person who holds or applies for a NioX account and every officer and member of staff.

NIO X PTE. LTD. operates a risk based anti money laundering and know your customer program and maintains the registrations and permissions required to operate. NioX conducts its business in line with applicable law and with the standards expected of a regulated exchange, and it will not permit its platform to be used to launder the proceeds of crime, to finance terrorism, to fund proliferation or to evade sanctions.

The board approves this policy, owns the program at the highest level and reviews the policy at least once each year and again whenever the law, the risks or the business change in a material way.

02Risk based approach

NioX applies a risk based approach across the whole of its business. A firm wide risk assessment identifies and measures the money laundering, terrorist financing, proliferation financing and sanctions risks that arise from its customers, its products, its delivery channels and the countries it deals with. The controls in this policy are set to match that assessment, which is documented, approved and refreshed at least once each year and again whenever a material change occurs.

Every customer is given a risk rating when the relationship begins. That rating governs the depth of due diligence that applies, the frequency of review and the sensitivity of the monitoring that follows. A rating is not fixed and will be raised whenever new information warrants it.

03Customer identification and verification

No account may be opened, funded or used until NioX has identified the customer and verified that identity from reliable and independent sources. NioX will complete each of the steps below before it permits any deposit, trade or withdrawal.

1. NioX confirms the identity of the customer by matching a valid government issued identity document against a live facial image captured during the application.
2. NioX establishes the residential address of the customer from an independent source or from documentary evidence dated within the last three months.
3. NioX records the purpose and the intended nature of the relationship and the expected pattern of activity.
4. NioX verifies that the person opening the account has the authority to do so and, for an entity, identifies and verifies the entity and the individuals who direct it.

Where any check cannot be completed to the required standard, the account remains closed, no transaction is processed and NioX decides whether a report is warranted. NioX may repeat or refresh identification and verification at any time.

04Beneficial ownership

NioX identifies the beneficial owner behind every customer and takes reasonable measures to verify that person, so that it knows who ultimately owns or controls the account and on whose behalf a transaction is conducted. Each account must be operated for the benefit of the verified account holder alone.

For a customer that is a legal person or a legal arrangement, NioX identifies the natural persons who ultimately own or control the customer, understands the ownership and control structure and verifies the identity of each beneficial owner. Where no natural person is identified through ownership, NioX identifies the natural persons who exercise control by other means or who hold the position of senior managing official.

Any attempt to conceal a beneficial owner, to open an account in a false or borrowed name or to act as a front for an undisclosed third party is a serious breach and will lead to refusal or closure and, where warranted, a report.

05Ongoing due diligence and enhanced due diligence

NioX keeps customer due diligence current for the whole life of every relationship. It reviews the information it holds on a schedule set by the risk rating and whenever a trigger event occurs, and it requires customers to keep their information accurate and up to date.

NioX applies enhanced due diligence wherever the risk is higher, including in the situations set out below.

• The customer, a family member of the customer or a known close associate of the customer is a politically exposed person.
• The customer has a connection to a country or territory that carries higher risk.
• The activity on the account has no apparent economic or lawful purpose or does not match the profile of the customer.
• Screening flags the source of funds, the counterparty or the transaction as carrying raised risk.

Enhanced due diligence includes establishing and corroborating the source of funds and the source of wealth, obtaining senior management approval to begin or continue the relationship, applying tighter monitoring and reviewing the account more often.

06Source of funds and source of wealth

NioX may require a customer to evidence the source of the funds placed with NioX and the source of the wider wealth of the customer. This may apply at onboarding where risk warrants it and at any later point during the relationship.

The customer must provide accurate and complete information and supporting evidence on request, which may include records of employment, business ownership, sale of assets, inheritance, investment returns or another lawful origin. NioX assesses whether that evidence is credible and consistent with what it knows about the customer.

Where a customer cannot or will not evidence the source of funds or the source of wealth to the required standard, NioX may decline the transaction, may refuse, freeze or close the account and will report where its obligations require it.

07Sanctions and politically exposed person screening

NioX screens every customer, every beneficial owner and, where relevant, every counterparty against sanctions lists, lists of politically exposed persons and adverse media sources. Screening is carried out before an account is opened and is repeated for the whole life of the relationship and each time a relevant list changes.

NioX will not establish or maintain a relationship with a person who is subject to sanctions, and it will freeze assets and report where the law requires. A relationship with a politically exposed person, or with a family member or known close associate of one, is subject to enhanced due diligence and to senior management approval.

NioX also screens digital asset transfers and wallet addresses against sanctions designations and applies its controls to the parties on both sides of a transfer.

08Transaction monitoring and surveillance

NioX monitors activity for the whole life of every relationship against the profile fixed when the account opened. Automated surveillance and analyst review look for activity that is unusual, that lacks an apparent economic or lawful purpose or that fits a pattern associated with money laundering, terrorist financing, fraud or market abuse.

Digital asset transfers pass through blockchain analytics that trace links to sanctioned addresses, to darknet markets, to ransomware, to fraud, to theft and to mixing and other obfuscation services. Where a link or a pattern crosses a defined threshold, an alert is raised and reviewed, and NioX may pause the activity while it does so.

NioX keeps its rules, thresholds and models under review and updates them as new typologies, technologies and standards emerge.

09Suspicious activity reporting

Any officer or member of staff who knows or suspects, or who has reasonable grounds to know or suspect, that a person is engaged in money laundering, terrorist financing or another financial crime must report the matter to the nominated officer without delay.

The nominated officer assesses every internal report and, where the suspicion stands, makes an external report to the relevant authorities in the manner and within the time the law requires. NioX cooperates fully with lawful requests from the relevant authorities. Where the law requires, a transaction is held until consent is given or the required period has passed.

No person may disclose to a customer or to any other person that a report has been made or contemplated, or that an investigation is under way, where such disclosure would or might prejudice that investigation. This duty binds every officer and member of staff.

10Prohibited customers and activity

NioX will not open or maintain a relationship, and will not process a transaction, in any of the following cases.

• A person who is subject to sanctions or who is ordinarily resident in a sanctioned country or territory.
• An anonymous account, an account in a false or fictitious name or a numbered account.
• A shell bank or a customer known to deal with a shell bank.
• A deposit funded by a third party or a withdrawal paid to a third party.
• A transfer to or from a mixing service or another tool designed to conceal the origin of funds, wherever it is detected.

This list is not exhaustive and NioX may refuse any customer or activity that presents an unacceptable risk.

11Customer obligations

Each customer must provide information and documents that are accurate, complete and current, must confirm that they act for themselves unless they have disclosed and NioX has approved another arrangement, and must not provide false, misleading or forged information.

Each customer must keep their information current and must notify NioX without delay of any change to their identity, their contact details, their beneficial ownership, their tax residence or their circumstances that bears on this policy. Each customer must respond to a request for information within the time NioX specifies.

A failure to meet these obligations is a breach of the terms on which the account is held and may lead NioX to refuse, freeze or close the account and to report where its obligations require it.

12Rights reserved by NioX

NioX reserves the right, at any time and at its discretion where it acts reasonably and in line with applicable law, to take any of the following actions.

• Request further information, documents or evidence from a customer, including on identity, beneficial ownership, source of funds and source of wealth.
• Decline to open an account or to process a deposit, a trade or a withdrawal.
• Suspend, restrict or freeze an account or a transaction while it carries out checks or complies with a legal duty.
• Close an account and return funds to their verified lawful source, subject to any legal restriction.
• Report to the relevant authorities and act on their lawful instructions.

NioX may take these actions without prior notice where notice is not possible or where notice would or might prejudice an investigation or breach the law. NioX is not liable for a loss that results from action taken in good faith to meet its legal and regulatory obligations.

13Record keeping periods

NioX retains records of identification and verification, of beneficial ownership, of due diligence, of source of funds and source of wealth, of transactions, of screening results and of internal and external reports.

These records are held for at least five years from the later of the end of the business relationship and the date of the relevant transaction, and for longer where the relevant authorities require it or where the records are needed for an investigation. Records are held securely, are protected against loss and unauthorised access and are made available to the relevant authorities on a lawful request.

14Training and culture

Every officer and member of staff completes anti money laundering and know your customer training when they join and at least once each year after that. Training covers the applicable law, this policy, the indicators of suspicious activity, the way to make an internal report and the prohibition on disclosure.

NioX keeps a record of completion and escalates any person who does not complete their training. NioX promotes a culture in which compliance is the responsibility of everyone and in which concerns can be raised without fear of reprisal.

15Governance and assurance

A nominated officer of sufficient seniority owns the day to day operation of this policy and has a direct line to the board. The compliance function operates independently of the commercial side of the business and has the authority and the resources it needs.

The program is subject to independent review. Findings are reported to the board with a named owner and a target date and are tracked until they close. NioX monitors changes in law, regulation, guidance and financial crime typologies, including those affecting digital assets, and updates this program so that it remains effective as standards evolve.