Compliance Framework

1. Overview

BlockHQ is committed to maintaining the highest standards of compliance with Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and Know Your Customer (KYC) regulations. This Compliance Framework outlines our policies, procedures, and controls designed to prevent illicit financial activities and ensure regulatory adherence.

2. Regulatory Framework

BlockHQ adheres to the following regulatory standards:

• Financial Action Task Force (FATF) Recommendations
• Union of Comoros financial services regulations
• International best practices for digital asset service providers (DASPs)
• Sanctions compliance with OFAC, UN, EU, and other international bodies

3. Know Your Customer (KYC) Procedures

3.1 Customer Identification Program (CIP)

All clients must complete our Customer Identification Program before accessing services. We collect and verify:

• Individual Clients: Full name, date of birth, residential address, nationality, government-issued photo ID
• Corporate Clients: Legal entity name, registration number, jurisdiction of incorporation, principal place of business, beneficial ownership structure (UBOs with >25% ownership), corporate documents (articles of incorporation, board resolutions)

3.2 Enhanced Due Diligence (EDD)

We apply Enhanced Due Diligence for high-risk clients, including:

• Politically Exposed Persons (PEPs) and their close associates
• Clients from high-risk jurisdictions (as defined by FATF)
• Complex corporate structures with opaque ownership
• Clients with unusually large or frequent transaction volumes
• Sources of wealth and funds verification
• Ongoing monitoring of business relationships and transactions

3.3 Ongoing Monitoring

KYC information is reviewed annually (or more frequently for high-risk clients). Clients must update information within 30 days of any material change.

4. Transaction Monitoring

4.1 Automated Surveillance

Our transaction monitoring system flags suspicious activity based on:

• Transaction size and frequency anomalies
• Unusual trading patterns or timing
• Inconsistency with client profile or stated business purpose
• Transactions involving high-risk jurisdictions or counterparties
• Structuring (breaking large transactions into smaller amounts to evade reporting thresholds)

4.2 Blockchain Analytics

We utilize industry-leading blockchain analytics tools to trace the source and destination of digital assets, identifying exposure to:

• Sanctioned entities or individuals
• Darknet marketplaces
• Ransomware or hacking-related addresses
• Mixing/tumbling services designed to obfuscate transaction origins

5. Sanctions Screening

All clients and counterparties are screened against:

• OFAC Specially Designated Nationals (SDN) List
• UN Security Council Consolidated Sanctions List
• EU Consolidated Sanctions List
• UK HM Treasury Sanctions List
• Interpol and national law enforcement databases

Screening occurs at onboarding and continuously throughout the client relationship. Matches trigger immediate escalation to our Compliance team.

6. Suspicious Activity Reporting (SAR)

If we detect activity that may constitute money laundering, terrorist financing, fraud, or other financial crimes, we will:

1. Conduct an internal investigation
2. File a Suspicious Activity Report (SAR) with relevant authorities within required timeframes
3. Preserve transaction records and supporting documentation
4. Cooperate fully with law enforcement investigations

7. Risk-Based Approach

We categorize clients and transactions using a risk-based framework:

8. Employee Training

All employees receive comprehensive AML/CTF training, including:

• Initial onboarding training (minimum 4 hours)
• Annual refresher courses
• Role-specific training for compliance, operations, and customer-facing staff
• Updates on regulatory changes and emerging risks
• Red flag identification and escalation procedures

9. Record Retention

We maintain comprehensive records for a minimum of 7 years, including:

• Customer identification and verification documents
• Transaction records and confirmations
• Internal investigation reports
• Correspondence with clients and regulators
• Blockchain transaction hashes and wallet addresses
• SAR filings and supporting documentation

10. Governance and Oversight

10.1 Compliance Officer

Our Chief Compliance Officer (CCO) has direct authority over AML/CTF policies and reports to the Board of Directors quarterly.

10.2 Independent Audits

We engage external auditors to conduct annual reviews of our AML/CTF program effectiveness and regulatory compliance.

10.3 Whistleblower Protections

Employees who report suspected violations in good faith are protected from retaliation. Anonymous reporting is available through our ethics hotline.

11. Client Responsibilities

Clients must:

• Provide accurate and complete information during onboarding
• Update BlockHQ promptly of any material changes to their status or beneficial ownership
• Respond to information requests within specified timeframes
• Comply with all applicable AML/CTF laws in their jurisdiction
• Ensure assets traded through BlockHQ are derived from legitimate sources

Failure to meet these obligations may result in account suspension or termination.

12. Contact Compliance Team