Anti Money Laundering (AML) Policy

1. Introduction

This is the policy of Breakout Group B.V. (the Company) to prohibit and actively prevent money laundering and any activity, that facilitates money laundering, or the funding of terrorist, or criminal activities by complying with all applicable requirements and regulations, including, but not limited to the regulations of the Government of Curaçao, namely the National Ordinance Reporting Unusual Transactions, the National Ordinance Identification when Rendering Services and National Ordinance Obligations to Report Cross-Frontier Money Transportations.

Company’s AML policies, procedures and internal controls are designed to ensure compliance with all applicable regulations and rules and will be reviewed and updated on a regular basis to ensure appropriate policies, procedures and internal controls are in place to account for both changes in regulations and changes in our business.

Please note that the provisions of this policy also apply to the transactions made through the Company’s authorised payment agent – HQ BREAKOUT LINE LTD, a Cyprus company, registration number 424448 with the offices located at Vasili Michailidi, 9, 3026, Limassol, Cyprus.

Money Laundering (ML)

Money Laundering (ML) is the generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the proceeds appear to have derived from legitimate origins or constitute legitimate assets. Generally, money laundering occurs in three stages. Cash first enters the financial system at the "placement" stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler's checks, or deposited into accounts at financial institutions. At the "layering" stage, the funds are transferred or moved into other accounts or other regulated institutions to further separate the money from its criminal origin. At the "integration" stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.

Anti-Money Laundering

Anti-Money Laundering is a financial/legal term used to describe the legal controls that require financial institutions and other regulated entities to prevent, detect, and report ML activities.

An effective AML program requires a jurisdiction:

• criminalization of Money Laundering;
• granting the relevant regulators and authorities with investigation powers and instruments;
• ensuring that financial institutions and other regulated entities identify their players, establish risk-based controls, keep records and report suspicious activities;
• exchange of information with other jurisdictions as appropriate.

2. Regulation

2.1. Employees working in the online gambling industry are required to make a report in respect of information that comes to them in the course of their business:

• when they know;
• when they suspect;
• when they have reasonable grounds for knowing or suspecting that a person is engaged in money laundering or terrorist financing, including criminal spend.

These obligations are collectively referred to as grounds for knowledge or suspicion. What the authorities are looking for is that we are able to demonstrate, with supporting evidence, that a risk assessment is and has been undertaken prior to entering into business relationships with players and that adequate player due diligence is conducted in order to ensure that players’ transactions are consistent with the level of risk presented.

2.2. The Company must be able to demonstrate that the extent of the ongoing monitoring undertaken is conducted on a risk-sensitive basis and that all the records are retained to reflect this, with risk profiles being properly maintained. In this document, the Company has identified additional measures that are being applied in order to carry out risk monitoring and the need of where we would require a declaration of the source of funds from players in situations which present a high risk and potentially money laundering.

3. Principles and Practices

Company’s AML policy is based on the following principles and practices:

• we develop systems and controls that are appropriate for our businesses and comply with legal and regulatory requirements;
• we assess the AML risks inherent in our current business at least annually;
• we adopt a risk-based approach that is flexible, effective, proportionate and cost effective;
• we have full commitment and responsibility of senior management;
• we regularly assess the adequacy of our systems and controls;
• we maintain, where necessary, records of transactions that meet the needs of law enforcement investigations tackling money laundering and terrorist financing;
• we provide initial and ongoing training for all relevant employees;
• we support the nominated officer with resources and authority to operate objectively and independently.

4. Risk Management

We have a policy and procedures in relation to risk assessment and management, as required under the applicable regulations. This risk-based approach involves a number of discrete steps in assessing the most proportionate way to manage and mitigate the money laundering and terrorist financing risks:

• identify the relevant money laundering and terrorist financing;
• design and implement policies and procedures to manage and mitigate assessed risks;
• monitor and improve the effective operation of controls;
• maintain proper recording.

This risk-based approach focuses the effort where it is most needed and will have most impact. It has the full commitment and support of senior management as well as active co-operation of all employees. We have conducted an assessment of our business risk exposure to money laundering, which considers the threat, and its impact.

5. Suspicious Activity

Suspicious Activity is being referred to as suspicious transactions, extreme player profiles, when deposits are not matching up amongst other elements. The implemented proofs of player identity are the following:

• passport or ID card;
• utility bill;
• Bank statement;
• other proof of identity.

The enhanced due diligence checks are subject to players’ profile and the risk level they pose to us. Only when we determine some of the above points, or a combination of a few will we flag the player/players in question and conduct risk monitoring. This will include checks of residency, place of work, regular income size and its adequacy to the player spending.

Suspicious Activity Reports

Within the applicable framework, Suspicious Activity Reports (SARs) are an imposed requirement. The Company ensures that any employee reports to the risk team, where they have grounds for knowledge, or suspicion that a person, or player is engaged in ML, or terrorist financing. An employee failing to meet the relevant requirements may be subject to criminal prosecution.

Escalations of SARs should be done in a confidential, discreet manner, in a handwritten form and not via email so as to ensure maximum security and confidentiality of information exchange. An employee must not, under any circumstances, disclose, or discuss any AML concern with the person, or persons subject to an investigation, or any other person for that matter. Disclosure (also known as "tipping off") is strictly prohibited and may result in legal penalties. Furthermore, and in order to keep ourselves protected as much as possible, no remark should ever be left on an account that would give any indication that ML is suspected, a player being entitled, at any point in time, to request the full notes/remarks on their account.

Working Procedure

Company reviews player’s spending and game play to check for suspicious activity. Before any withdrawal is processed the following procedures are carried out:

1. The player’s deposit history is reviewed to confirm that no suspicious payments have been made to the player’s account. The frequency of deposits and the sum of deposits are reviewed to ensure they are within normal range for the player based on his depositing history and the general depositing range throughout our network.
2. The player’s turnover is reviewed to ensure that they have played in the casino and are not using Company as a method to move money.
3. When possible, funds must always be refunded back to the original payment method used by the player to make a deposit.

Withdrawal Procedure

When reviewing a player’s account prior to withdrawal the agent must answer the following AML questions in the risk entry:

1. Did the player wager?
2. Does the payment method belong to the player and has the player used it to deposit?
3. Are the player’s transactions and bets in line with expectations for the player?

Escalation Process

Following the AML policies in place and escalating any suspicious activity, as previously described, are crucial to the Company as they protect it from financial losses and ensure, that it remains compliant within the different governing jurisdictions. Any activity which appears suspicious has to be escalated. Not escalating a suspicion of money laundering can lead to criminal prosecution.

6. Employees

Senior Management

Senior management is fully committed to and responsible for the implementation of this policy. Senior management is made aware of their individual personal liability for consenting to, or conniving in, the commission of offenses under the applicable regulations, or where such offense is attributable to any neglect on his part.

Staff Training

All employees will complete training on their obligations in respect of money laundering reporting and are aware of the procedures in place for escalation of any suspected incidents to the MLRO. As part of this process, employees are aware that personal non-compliance with applicable legal requirementsmay result in criminal or regulatory action.

Relevant employees complete training for proper compliance with policies and procedures for:

• client due diligence (CDD), including enhanced requirements for high risk clients, which includes PEPs;
• reporting suspicious activity to the nominated officer where necessary, seeking appropriate consent to allow participation in gaming and to conduct gaming and other business transactions.

7. High Risk Jurisdictions

High risk countries are those respectively identified by the Financial Action Task Force, or other local and international authorities. Client residing in high risk countries are always subject to enhanced due diligence.

Jurisdictions under increased monitoring currently on the FATF list are:

• Iran,
• Democratic People’s Republic of North Korea,
• Albania,
• The Bahamas,
• Barbados,
• Botswana,
• Cambodia,
• Ghana,
• Jamaica,
• Mauritius,
• Myanmar,
• Nicaragua,
• Pakistan,
• Panama,
• Syria,
• Uganda,
• Yemen,
• Zimbabwe.

Players from the FATF list of jurisdictions seen to threaten the international financial system from on-going and substantial money-laundering or terrorist financing activities, as identified on FATF publications, will be refused.

8. Record Keeping

We ensure availability of audit trail to assist in any financial investigation by a law enforcement authority. Our record keeping policy and procedure covers records in the following areas:

• compliance monitoring by the nominated officer;
• delegation of AML/CTF tasks by the nominated officer;
• nominated officer reports to senior management;
• withdrawal actions by the nominated officer with relevant reasoning;
• player identification and verification information;
• supporting records in respect of business relationships or occasional transactions;
• employee training records;
• internal and external SARs;
• communications between the nominated officer and law enforcement authorities.

9. Offenses

All employees are made aware of their risk of committing the following related offenses:

• failing to report suspicious activity;
• non-compliance with the disclosure obligations to the nominated officer or respective authority;
• disclosure of information about SAR submission that is likely to prejudice any investigation, or disclose information that an investigation into allegations that an offense has been committed, that is likely to prejudice the investigation;
• falsification, concealment, destruction or disposal of documents which are relevant to the investigation.

10. Vetting Procedures for New Employees

The Company undertakes a number of vetting procedures for employment. We will ensure the employee is not a minor through proper identification checks and we will verify the identification and credentials of the employee through at least two independent references. We will also look to verify any further personal information, or background information.

11. Protecting Our Equipment from Internal Crime and Criminal Misuse

The Company is aware that a key way to combat fraud is to first identify where the company's most valuable assets are. Processes and controls have been built into the routine business of the company to minimize the chances of any of the key assets being misused. Our server equipment is located at secure location, with necessary policies around protection of equipment, for example, a visitors management procedure, fire alarms, shredding of confidential documents, locked cabinets, testing, a security team etc. Same policies are also implemented at Company’s offices.

12. Dealing with Trustworthy and Reputable Counterparts

Company promotes strong principles of business and professional ethics at every level. When selecting business counterparts, the following criteria are considered:

• financial strength (for long term sustainability);
• legal and regulatory compliance;
• commitment to a wider corporate responsibility program; and
• desire and ability to deliver quality and value.

All new suppliers must go through a rigorous approvals process where all information put forward by them is verified. This information is then assessed internally to consider the risks associated with the supplier, taking into account all of the above criteria. If rejected, the supplier will be informed. Company ensures, that all organizations we contract with understand the compliance obligations under the relevant player jurisdictions.

13. Our Responsibilities

Company is fully aware of the procedures and policies required by the applicable Laws and regulations and apply related internal policies and procedures.

14. International Record Keeping

• Records on all player transactions regardless of their relation to payments or plays will be kept for at least 3 years after the transaction.

• Records on player details regardless of their value state or open/blocked status will be kept for at least 3 years after the relationship with the player was terminated.

• Records on money laundering investigations and suspicious activity reports will be kept for 3 years after the investigation was completed.

15. Prevention of Collusion and Data Protection Compliance

The Company's Terms of Service make clear that cheating will not be tolerated and that player accounts will be closed if cheating occurs. In terms of data protection, all data related to player payment accounts is stored, encrypted, and Company's employees have no access to player payment information. All player information in the organization will be protected through a strict information security policy that all employees and suppliers will adhere to, that will include system access and authentication control, password policy, malware protection measures, intrusion prevention policy, encryption policy, and strict network control and management.