Anti-Money Laundering Clauses

Anti-Money Laundering (AML) refers to the laws and regulations designed to prevent criminals from illegally earning or transferring illicit funds. While many illegal activities are targeted by AML laws, some of the most critical include tax evasion, public corruption, and market manipulation through activities like money laundering transactions.

Numerous government agencies and legislations play a role in setting AML requirements. In the U.S., agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) provide general information and resources for brokers and futures commission merchants to establish AML standards. In Canada, FINTRAC has introduced similar legislation and regulates the registration of MSBs (money services businesses).

Due to the complexity of these laws, many financial institutions use AML software to detect suspicious activities. These software solutions perform tasks ranging from cross-checking customer names against government sanction lists to generating the necessary records to maintain compliance.

AML is closely related to Know Your Customer (KYC) requirements, which mainly involve verifying a customer's identity and source of income. KYC also mandates that financial institutions monitor their users' activities continuously. Like AML, KYC procedures are highly automated, with many institutions using the onboarding process to gather proper identification from new clients.

AML procedures are also relevant in the cryptocurrency sector. Many cryptocurrency exchanges have made coordinated efforts to comply with anti-money laundering laws, as regulators begin to pay more attention to the cryptocurrency market. However, there are criticisms in the crypto sector regarding KYC and AML requirements, with critics arguing that compliance compromises privacy and undermines the decentralized benefits by placing sensitive personal data in centralized databases. Supporters, however, believe that solutions can be designed to meet regulatory requirements while still ensuring user privacy.

A trend in the cryptocurrency ecosystem related to AML and KYC compliance is the willingness of many exchanges to self-regulate, even if they fall outside the current regulatory framework. In some cases, companies have even formed industry organizations to create self-regulatory frameworks. This voluntary compliance can help minimize legal risks for crypto-related businesses and promote broader adoption of cryptocurrencies.

At ZKE Exchange, we are registered and will continue to register with the appropriate government agencies, strictly adhering to all local AML laws and regulations.

ZKE Exchange reserves the right to take action to ensure users engage in secure trading. Money laundering severely damages the development of digital token trading, encourages corruption, lowers societal moral standards, undermines the legitimate rights and interests of users, weakens the operational foundation of digital token exchanges, and increases legal and operational risks. Therefore, ZKE Exchange provides the following rules to guide users in preventing illicit funds from entering the platform. Users are responsible for their activities on the platform and must ensure they follow these rules as part of the anti-money laundering efforts.

1. Ensure Transactions are from Legitimate Counterparties: When conducting fiat currency transactions, ensure you do not accept payments from anyone other than your trading counterparty. If you receive payments from different sources, return the funds to the original source.

2. Avoid Sensitive Payment References: If you receive payments with sensitive references (e.g., “cryptocurrency,” “Bitcoin,” etc.), filter or refund the payment with the note "Unknown Reference." This reduces the risk of being monitored or having your bank account frozen.

3. Use Different Cards for Payments and Withdrawals: Use multiple bank cards for buying and selling. Since receiving funds into a card carries a higher risk, it's recommended to filter the received funds and transfer them to another, more secure card. The card used for receiving funds must be the same as the one linked to the platform.

4. Avoid Holding Large Amounts in Frequently Used Cards: Do not keep large amounts of money in the cards you frequently use. Regularly withdraw and transfer funds, and cease using the card for a while to protect yourself from illicit fund contamination.

5. Check the Card’s Status Before Reuse: Always check whether your card can receive or make payments before reusing an old card.

6. Verify Identity at Registration: The platform will verify your identity during registration. Ensure that all accounts are registered and used by the account holder. ZKE Exchange will not be responsible for any violations of terms, policies, government laws, or participation in illegal activities. If necessary, ZKE Exchange will assist authorities in investigations.

II. How to Screen Your Funds?

1. Transfer to Financial Management Accounts: After receiving funds, you can transfer the money to a financial management account with a larger balance. Then, you can screen and transfer the funds to a secure bank account.

2. Withdraw and Deposit into a Secure Bank Account: If the amount received is small, you can withdraw the funds as cash and deposit them into another secure bank account.

III. Bank Account Unfreezing Procedures

Accounts may be frozen by the bank or due to legal issues. The following outlines common reasons for account freezes and how to resolve them:

1. Bank Freezes

   • Reasons:
     • Frequent large transactions;
     • Frequent transactions with many different parties;
     • No transaction history or long periods without balance;
     • Transactions with sensitive references (e.g., "cryptocurrency").
   • Resolution:
     • If your account is frozen for these reasons, contact your bank and provide the required information to unfreeze the account.

2. Frozen Due to Legal Issues

   • Reasons:
     • Typically related to financial fraud cases. The freezing period may range from 3 days to several months.
     • For example, if illicit funds are transferred across multiple accounts, all related accounts may be frozen.
   • Resolution:
     • If the freeze is temporary (a few days), you can work with authorities on the investigation, and your account will likely be unfrozen within a few days.
     • If the freeze lasts longer (e.g., several months), contact the bank as soon as possible to clarify the freeze details and get contact information for the local authorities involved. Once you have this information, contact the relevant parties to coordinate the investigation.

3. Important Notes:

   • Supporting Evidence: You may be asked to provide proof of income, transaction details, and other information. You can find this data in "Account Management" > "Transaction History."
   • Support from ZKE Exchange: If you need support from ZKE Exchange, you must request evidence from local authorities or judicial rulings or contact us directly at: [email protected].
   • Process Varies by Location: The process may differ depending on your location and the complexity of the case. Once your account is unfrozen, ensure you withdraw your funds to prevent future freezing.