Anti-Money Laundering, Anti-Terrorist Financing statement

1. Company Business Model

Medium Rare N.V. (“Casino stake” or the “Company”) is a company incorporated under Curaçao law, established in 2017, and operates the online casino www.casinostake.in under license number 8048/JAZ2021-027. Casinostake currently supports users in more than 169 countries worldwide.

As part of its global operations, Casinostake has implemented compliance measures that align with its services and products, designed to deter and detect illicit activities on its platform. These measures include onboarding procedures, compliance screenings of customers, and transaction-based controls.

2. Company Policy Statement

Casinostake is not classified as a financial institution under the applicable laws of Curaçao and is therefore not directly subject to statutes and regulations that apply to certain financial institutions, money transfer services, or virtual asset service providers. However, in accordance with the 2016 Regulations for Anti-Money Laundering and Combating the Financing of Terrorism (“AML/CFT”) applicable in Curaçao, as enforced by the Curaçao Gaming Control Board, Casinostake explicitly prohibits and rejects the use of its products for any illicit activities, including money laundering, terrorist financing, or trade sanctions violations. This policy is consistent with various national anti-money laundering (“AML”) laws, regulations, and norms. Casinostake continues to monitor the standards set by the Financial Action Task Force (“FATF”) and relevant gaming industry groups, as well as the Curaçao Gaming Control Board, and will take necessary actions to reflect changes in the law.

Casinostake is committed to following global best practices to prevent its products from being used to facilitate such activities. These best practices include:

• Adoption of a written policy, procedures, and controls designed to guard against money laundering, terrorist financing, and trade sanctions violations;
• Designation of a compliance officer, where appropriate, to oversee the implementation of the policy, procedures, and controls;
• Provision of related education and training to relevant personnel; and
• Independent reviews, monitoring, and maintenance of the policy, procedures, and controls.

3. Definitions

The following terms are commonly used in the industry:

• Money Laundering: The process of making illegally obtained funds appear legitimate. This process is typically divided into three stages: placement, layering, and integration.
• Placement: The process of introducing unlawful proceeds into traditional financial institutions, such as through deposits or other methods.
• Layering: The process of distancing criminal proceeds from their source by using layers of complex financial transactions, such as converting cash into traveler’s checks, money orders, wire transfers, letters of credit, stocks, bonds, or purchasing assets.
• Integration: The process of making illicit funds appear legitimate through apparently lawful transactions, allowing the laundered funds to be reintegrated into the economy.
• Suspicious Activity: Transactions conducted by a user or non-user where there are indications that the individuals involved may be engaged in fraudulent or illegal activities.
• Sanctions: Actions taken by the international community to prohibit or restrict activities of the target of the sanctions, used to:
  • Encourage a change in behavior by a target country or regime;
  • Apply pressure on a target country to comply with set objectives;
  • Enforce international peace and security when diplomatic efforts have failed; or
  • Prevent and suppress the financing of terrorists or terrorist acts.

4. Governance and Oversight

Casinostake has appointed a Chief Compliance Officer (“CCO”) responsible for coordinating the implementation of the AML Policy and overseeing the compliance program. The CCO’s duties include developing AML initiatives, working with other stakeholders to revise the AML policy, assessing new regulatory requirements, and investigating potentially suspicious or unusual activities. Casinostake also provides regular AML training to all its employees.

5. Know Your Customer and Transaction Monitoring

Casinostake applies appropriate user due diligence and ongoing monitoring measures as required by law. Casinostake strives to prevent users from engaging in illicit or unauthorized activities. Casinostake uses a combination of software development and service agreements, enforced through internal operational features, to ensure compliance with applicable laws.

Know Your Customer

A. Customer Due Diligence

Casinostake has adopted a risk-based approach to Customer Due Diligence (CDD) to understand the nature and purpose of the user’s relationship with the Casinostake platform and to develop a customer risk profile. This involves collecting certain documentary and non-documentary information during account creation, commensurate with the nature of the account and services offered. Casinostake maintains different levels of CDD for various accounts and services.

For instance, CDD requires users to go through Casinostake’s Customer Identification Program (“CIP”), which includes procedures for:

• Collecting baseline information (e.g., wallet address, email address) at account creation through Casinostake’s user onboarding portal;
• Monitoring the risk profile associated with the cryptocurrency wallet used to fund the user’s account;
• Maintaining records of the information used to identify the user; and
• Determining if a user appears on any lists of known or suspected terrorists or terrorist organizations.

These steps are operationalized through the following measures:

• Identity and Age Verification: A third-party service provider supports Casinostake’s ability to verify the legitimacy of the identification information and other KYC materials provided by the user. This service also confirms that the user is not located in a sanctioned or prohibited jurisdiction and checks global sanctions lists to ensure the user does not appear thereon.
• Customer Information: Casinostake collects details on each user to form a reasonable belief that it knows the identity of its users, in line with the user’s risk profile. This may include collecting details such as wallet address, name, address, country, date of birth, or postal code (collectively, “KYC Information”). Casinostake collects this information before issuing a funding address (e.g., QR code) to users. Casinostake does not currently allow non-natural persons to open accounts. Casinostake may, at its discretion, rely on another institution to perform some or all elements of the CIP.
• Geo-blocking for Prohibited Jurisdictions: Casinostake requires contractual client certifications to ensure that, through IP address-based geo-blocking, no gaming services are offered in countries where such activity is not permitted.
• Geo-blocking for Sanctioned Jurisdictions: Casinostake also requires client certifications to ensure that users are not subject to United States, European Union, or other global sanctions or watch lists, including those associated with the United States’ comprehensively sanctioned jurisdictions, such as Iran, Cuba, North Korea, Syria, and the Crimean region of Ukraine. Casinostake employs various risk-based measures, including KYC procedures and IP address-based geo-blocking, to verify these representations.
• Contractual Prohibitions on Users from Prohibited Jurisdictions: Users are notified during onboarding that Casinostake does not offer services in restricted jurisdictions. Casinostake’s policy on restricting user activity is based on its risk management, fraud prevention, and AML standards, as well as any assessments related to the permissibility of its services in certain jurisdictions.

B. Enhanced Due Diligence and Ongoing Monitoring

Casinostake conducts ongoing monitoring of its users to detect any behaviors or indicators that might raise suspicions of money laundering or terrorism financing. For this purpose, Casinostake has implemented a set of red flag indicators that help it identify such behaviors and require further action to assess customer information.

When a red flag is triggered, the user account will be suspended, and Casinostake will pursue enhanced due diligence. Enhanced KYC diligence under this policy includes, but is not limited to, the provision of:

• Full legal name;
• Country of citizenship;
• Permanent address (for individuals, this must be a residential or business street address; for entities, a principal place of business, local office, or other physical location);
• Identification number (e.g., taxpayer identification number, passport number, alien identification card number, or another government-issued document with a photograph or similar safeguard);
• Identification document; and
• Source of funds and source of wealth.

Casinostake may use third-party service providers to verify any of the above information to establish a reasonable basis to know the true identity of the user when warranted by the user’s activity.

C. Acceptance Policy

Casinostake will not accept and will block users who:

• Do not provide the identification information requested by Casinostake;
• Provide fake identification documents;
• Attempt to deceive Casinostake about their location;
• Are from restricted or prohibited jurisdictions;
• Are subject to United States, European Union, or other global sanctions or watch lists;
• Are identified as gambling addicts or have mental health issues; or
• Have funds originating from or exchanged in restricted jurisdictions.

Casinostake reserves the right to block and suspend players for any other reason at its discretion.

Transaction Monitoring

Casinostake is firmly committed to complying with economic and trade sanctions programs imposed by jurisdictions where the company operates. To this end, Casinostake has established a transaction monitoring program with controls and processes to identify and detect unusual activity in real-time and during ongoing monitoring.

Casinostake conducts regular monitoring using rule-based systems developed in-house and by third-party vendors to review user history and activity patterns, detect and report any unusual activity, and develop and implement additional controls or limits on its platform.

Casinostake has implemented procedures addressing the following two key components of unusual or suspicious activity management:

• Identification of unusual activity, which may include employee and customer identification, law enforcement inquiries, other referrals, or transaction and surveillance monitoring system reports; and
• Alert management, focusing on the processes used to investigate, evaluate, and document identified unusual or potentially suspicious activity.

Casinostake uses the following processes to achieve these goals:

• Transaction Monitoring for Sanctioned or Prohibited Jurisdictions: Casinostake may, at its discretion, impose certain due diligence requests during user balance withdrawals. Casinostake currently uses a combination of manual and automated transaction monitoring processes to identify “red flag” behavior. Where such behavior is identified, Casinostake may refuse to process withdrawal attempts or request additional information from the recipient. Casinostake will also seek to limit user account funding attempts from prohibited jurisdictions, where the associated wallet address indicates that the user or the user’s funds are located in such a jurisdiction.
• Screening for Sanctioned Parties: Before issuing a funding address, Casinostake screens a user’s wallet address against applicable sanctions databases using third-party blockchain forensics vendors like Chainalysis. Casinostake periodically re-screens wallet addresses against these databases.
• Identification of Unusual Activity: Casinostake monitors account activity for unusual size, volume, pattern, or type of transactions, considering risk factors and red flags appropriate to its business. Monitoring is conducted through regular reports of unusual, high-risk, or suspicious user activity.
• Anti-Mixing Measures: Casinostake uses software designed to detect suspicious deposit or withdrawal patterns. Such instances are handled on a case-by-case basis, depending on the perceived level of risk. In such cases, users may be required to explain their methodology and purpose for using the platform.
• Chainalysis Review: Every crypto deposit or withdrawal, both direct and indirect, is reviewed through Chainalysis for signs of fraud or suspicious behavior. Accounts flagged for potential illicit behavior are suspended and reviewed. High-risk accounts may be required to provide proof of wealth. Casinostake may refuse to process withdrawals to certain “high-risk” addresses as determined in consultation with Chainalysis risk scoring.
• Withdrawal Threshold KYC: Independently, every account, regardless of association, will be suspended until adequate KYC diligence is completed once the account reaches a withdrawal threshold based on the account’s risk profile.

D. Other Ongoing Monitoring Controls

In addition to the above-mentioned procedures, Casinostake has implemented the following controls to complement its know-your-customer and ongoing monitoring procedures:

• Ban Evasion Detection: Casinostake uses third-party software to detect users who attempt to use multiple accounts. This software identifies links between devices used to access multiple accounts. Such instances are dealt with on a case-by-case basis, depending on the perceived risk level. Users may be required to explain their methodology and purpose for using the platform. Casinostake accounts are funded by users using local (non-custodial) or hosted (custodial) wallets. In addition to Chainalysis screening, Casinostake monitors user activity within the platform, and withdrawals must meet Casinostake’s and its third-party service provider’s verification processes. Casinostake prohibits peer-to-peer account transfers within its platform. Any attempts to circumvent this restriction will be treated as a red flag.
• Time Zone Monitoring: Casinostake has implemented time zone controls that detect user device information and cross-reference it with restricted jurisdictions to determine if users are attempting to use geolocation software to hide their location.
• Products and Services Review: Casinostake establishes additional procedures to prevent users from exploiting the platform. Casinostake has a robust set of user-facing terms that users must agree to in order to use the platform. Additional safeguards may include limiting the types of assets that can be onboarded to the platform. Casinostake lists the assets available for use and does not allow the use of anonymity-enhancing technologies, such as mixers, tumblers, or certain coins and tokens. If Casinostake becomes aware of the use of such technologies on its platform, it will disallow their use.
• Vendor Management: Casinostake works with reputable third-party service providers as part of its compliance infrastructure. Casinostake periodically assesses the strength of its key third-party service providers to determine if additional services are needed, if the service provider is not performing according to its contractual obligations, or if other remedial actions are necessary for Casinostake to comply with this policy. Casinostake may request information from any third-party service provider as part of its vendor review process.
• Compliance Innovation: In addition to vendor management, Casinostake continuously monitors non-documentary compliance mechanisms to determine their viability. Casinostake may run test or trial programs on a limited basis with compliance vendors to assess the effectiveness of such programs. Blockchain-native compliance tools include fraud prevention services, on-chain KYC providers, and other tools designed to reflect the technological features associated with blockchain platforms.

6. Education and Training

Casinostake, with the assistance of its legal counsel and under the oversight of its CCO, may provide employees with AML, anti-terrorist financing, and trade sanctions compliance training on a periodic basis, as deemed appropriate.

7. Reporting

Casinostake is obligated to report any unusual or suspicious transactions in accordance with the National Ordinance. Customers identified as being on a sanctions list, linked to money laundering, terrorism financing, or other criminal activities will be reported as suspicious activity to the regulator.