Policies

Anti-Money Laundering and Anti-Terrorist Financing Declaration

Last updated: December 13th, 2023

1. Company Business Model

Common Square N.V. ("Rarebet" or the "Company") is a Curaçao-based entity founded in 2023, operating the online casino www.rare.bet under license number 8048/JAZ issued to Antillephone.

Rarebet's Anti-Money Laundering ("AML") Policy outlines the company's strategy for preventing and countering money laundering and terrorist financing. In its formulation, Rarebet meticulously considered all existing AML and Countering the Financing of Terrorism ("CFT") obligations mandated by Curaçao law, incorporating best practices from the gaming sector. This policy is crafted in alignment with guidance provided by the Curaçao Gaming Control Board.

Rarebet acknowledges the potential risk of its products and services being exploited by individuals or groups for money laundering or terrorism financing. Consequently, Rarebet is steadfast in cultivating and promoting a compliance culture throughout the company, underscoring the critical importance of preventing money laundering and terrorist financing.

2. Company Policy Statement

While not classified as a financial institution under Curaçao law, Rarebet aligns with the 2016 Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations. Rarebet strictly prohibits the use of its products for illicit activities, aligning with national AML laws and FATF guidelines. Rarebet adapts to evolving norms and regulations, maintaining a commitment to global best practices.

Rarebet's best practices include:

Adopting a written policy, and procedures and controls, reasonably designed to guard against laundering, terrorism financing and sanctions violations;
Designation of a compliance officer for oversight;
Provision of relevant education and training; and
Independent reviews and maintenance of policies and controls.

3. Key Definitions

Industry-standard definitions include:

Money Laundering is the process of making unlawfully acquired proceeds appear legal, typically involving three stages: placement, layering, and integration.
Placement involves placing illegal proceeds into traditional financial institutions through various means, such as deposits.
Layering entails separating criminal proceeds from their origin through complex financial transactions, like converting cash into traveler's checks, money orders, or engaging in wire transfers.
Integration involves using seemingly legitimate transactions to conceal illicit proceeds, allowing the laundered funds to be reintroduced into regular circulation.
Suspicious Activity refers to actions conducted within an institution, indicating that the individuals involved may be engaging in transactions for fraudulent or illegal purposes.
Sanctions are measures implemented by the international community to restrict or control the activities of a targeted entity. They are employed to encourage behavioral change, pressure compliance with set objectives, address threats to international peace and security, or prevent the financing of terrorists and terrorist acts.

4. Governance and Oversight

Rarebet has designated a Chief Compliance Officer ("CCO") tasked with overseeing the execution of the AML Policy and program. The CCO is responsible for spearheading AML initiatives, collaborating with various stakeholders to update the AML policy, evaluating emerging regulatory requirements, and conducting investigations into potentially suspicious or irregular activities. Additionally, Rarebet ensures that its employees undergo regular AML training.

5. Know Your Customer and Transaction Monitoring

Rarebet is committed to fulfilling legal requirements for user due diligence and ongoing monitoring to prevent illicit activities. Through a risk-based approach, Rarebet collects documentary and non-documentary information during account opening, tailored to different account types. This Customer Due Diligence ("CDD") includes identity verification, risk profiling of cryptocurrency wallets, and checks for individuals on terrorist watchlists.

5.1 Customer Due Diligence

Rarebet employs risk-based CDD processes to establish a thorough customer risk profile. This involves collecting essential customer information during onboarding and ongoing activity monitoring. Key measures within Rarebet's CDD include:

Collecting Baseline Information: Gathering wallet addresses and email addresses during account creation.
Monitoring Wallet Risk Profile: Actively assessing the risk profile of the cryptocurrency wallet used for funding.
Maintaining Records: Keeping detailed records of user identification information.
Counterterrorism Checks: Verifying if a user appears on known or suspected terrorists' lists.

This rigorous CDD process reflects Rarebet's commitment to a secure and compliant user environment, meeting regulatory standards.

The operationalization of these steps involves:

Identity and Age Verification: Leveraging a third-party service provider to authenticate user identification and confirm legitimacy. This provider also verifies the user's absence in sanctioned jurisdictions through global sanctions lists, using onboarding details like wallet addresses.
Customer Information: Rarebet collects user details to reasonably establish their identity in line with the risk profile. This includes wallet address, name, address, country, date of birth, or postal code (collectively, "KYC Information"). Rarebet gathers this information before issuing a funding address, and currently does not allow non-natural persons. Rarebet may rely on another institution to perform elements of its Customer Identification Program (CIP).
Geo-blocking for Prohibited Jurisdictions: Rarebet enforces contractual client certifications to prevent gaming services in countries where such activities are not permitted, utilizing IP address-based geo-blocking.
Geo-blocking for Sanctioned Jurisdictions: Rarebet also will require contractual client certifications that such users are not subject to United States, European Union, or other global sanctions or watch lists, including individuals or entities associated with the United States’ comprehensively sanctioned jurisdictions, Iran, Cuba, North Korea, Syria and the Crimean region of Ukraine. Rarebet will rely on various risk-based measures to verify these representations including as in the below-described know-your-user (“KYC”) measures and through IP address-based geo-blocking.
Contractual Prohibitions on Users Onboarding from Prohibited Jurisdictions: Users are informed during onboarding that Rarebet does not offer services in restricted jurisdictions. This policy is rooted in risk management, fraud prevention, AML standards, and assessments of service permissibility in specific jurisdictions.

5.2 Enhanced Due Diligence and Ongoing Monitoring

Rarebet diligently conducts ongoing monitoring of user activities to identify any behaviors or indicators that may raise suspicions related to money laundering and terrorism financing. To achieve this, Rarebet has implemented a set of red flag indicators designed to pinpoint such behaviors, prompting further action in the evaluation of customer information.

Upon the activation of any red flag indicator, the user account is promptly suspended, and Rarebet initiates enhanced due diligence. This enhanced KYC diligence includes, but is not limited to, the provision of the following information:

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

Rarebet may engage a third-party service provider to verify any of the mentioned information, ensuring a reasonable basis for confirming the true identity of the user when the user's activity warrants such scrutiny. This robust approach underscores Rarebet's commitment to maintaining a secure and compliant user environment.

5.3 Acceptance Policy

Rarebet has a stringent acceptance policy, refusing to accept and blocking users who:

Fail to provide requested identification information;
Submit fake identification documents;
Attempt to deceive about their location through various means;
Originate from restricted or prohibited jurisdictions;
Are subject to United States, European Union, or global sanctions or watch lists;
Exhibit gambling addiction or mental health issues;
Have funds originating or exchanged in restricted jurisdictions.

Rarebet retains the right to block and suspend users for other reasons at its discretion.

Transactions Monitoring

Rarebet is unwavering in its commitment to complying with economic and trade sanctions programs in jurisdictions where it operates. To achieve this, Rarebet has established a comprehensive transaction monitoring program with controls and processes to identify and detect unusual activity in real time and during ongoing monitoring.

Rarebet conducts regular ongoing monitoring using in-house rule-based systems and third-party vendors to review user history, detect patterns of activity, and report any unusual behavior. The program addresses two key components of unusual or suspicious activity management:

Identification of Unusual Activity: This involves methods such as employee and customer identification, law enforcement inquiries, referrals, and transaction and surveillance monitoring system reports.
Alert Management: Focused on processes for investigating, evaluating, and documenting identified unusual or potentially suspicious activity.

Rarebet utilizes the following processes to achieve these goals:

Transaction Monitoring for Sanctioned or Prohibited Jurisdictions: Rarebet may impose due diligence requests at user balance withdrawal, conducting manual and automated monitoring to identify "red flag" behavior. Withdrawal attempts from prohibited jurisdictions may be refused, and funding from such regions may be limited.
Screening for Sanctioned Parties: Prior to issuing a funding address, Rarebet screens a user's wallet address against applicable sanctions databases, relying on third-party blockchain forensics vendors like Chainalysis.
Identification of Unusual Activity: Rarebet monitors account activity for unusual size, volume, pattern, or type of transactions, considering risk factors and red flags appropriate to its business.
Anti-Mixing Measures: Rarebet uses software to detect suspicious deposit or withdrawal patterns, handling instances on a case-by-case basis, with users potentially required to explain their methodology.
Chainalysis Review: All crypto deposits and withdrawals undergo Chainalysis review for signs of fraud or suspicious behavior. Accounts may be suspended upon alerts, and proof of wealth may be requested from high-risk accounts. Rarebet may refuse withdrawals to certain "high-risk" addresses based on Chainalysis risk scoring.
Withdrawal Threshold KYC: Every account, regardless of association, is independently suspended until adequate KYC diligence occurs upon reaching a withdrawal threshold, dependent on the account's risk characterization over its life.

Rarebet's multifaceted approach to transaction monitoring ensures a secure and compliant environment for its users.

5.4 Other Ongoing Monitoring Controls

In addition to the aforementioned control measures, Rarebet has implemented the following procedures to complement its Know Your Customer ("KYC") and ongoing monitoring processes:

Ban Evasion Detection: Rarebet employs third-party service provider software to detect the use of multiple accounts by a single user. Instances are handled on a case-by-case basis, with users required to explain their methodology and purpose. Rarebet accounts are funded using local (non-custodial) or hosted (custodial) wallets. In addition to Chainalysis screening, Rarebet monitors user activity within the platform, and withdrawals must adhere to Rarebet's and its third-party service provider's verification processes. Peer-to-peer account transfers within the Rarebet platform are strictly prohibited, and any attempts to circumvent this restriction are treated as red flags.
Time Zone Monitoring: Rarebet has implemented time zone controls that analyze users' device information, cross-referencing it with restricted jurisdictions to identify attempts to use geolocation software to conceal their connection jurisdictions.
Products and Services Review: Rarebet establishes additional procedures to prevent user exploitation of the platform. This includes setting policies or procedures to limit which user assets can be onboarded to the Rarebet platform. Rarebet provides a list of available assets and prohibits the use of anonymity-enhancing technologies such as mixers, tumblers, or specific coins and tokens. Any detection of such technologies on the Rarebet platform results in immediate disallowance.
Vendor Management: Rarebet collaborates with reputable third-party service providers as part of its compliance infrastructure. Periodic assessments are conducted to determine the need for additional services, assess the performance of third-party service providers against contractual obligations, and implement remedial actions to ensure compliance.
Compliance Innovation: In addition to vendor management, Rarebet continuously monitors non-documentary compliance mechanisms for their viability in the Rarebet program. Test or trial programs may be run with compliance vendors to gauge effectiveness. Blockchain-native compliance tools, including fraud prevention services, on-chain KYC providers, and other technologies reflecting blockchain features, are explored for integration into the platform.

These measures demonstrate Rarebet's commitment to ongoing monitoring and proactive risk management, ensuring the security and integrity of its platform.

6. Reporting

Rarebet is mandated to report any unusual or suspicious transactions, aligning with the requirements of the National Ordinance. Customers identified on sanctions lists, associated with money laundering, terrorism financing, or other criminal activities will be reported as suspicious activity to the regulatory authorities. This commitment underscores Rarebet's dedication to maintaining a transparent and compliant financial environment.