1 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets!

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1 1 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

2 ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING PROGRAM ( AML/CTF PROGRAM ) INTRODUCTION The Anti0Money Laundering and Counter0Terrorism Financing Act 2006 (the AML/CTF Act ) became effectiveon12december2006.however,someparts oftheaml/ctfactcommencedinaphasedapproach uptodecember2008. CLMarkets Limited trading as Core Liquidity Markets ( CLM ) is a Reporting Entity on the basis that it providesadesignatedservice(asdefinedinsection6 oftheaml/ctfact). PursuanttotheAML/CTFActaReportingEntitymust have and comply with an AML/CTF Program. The AML/CTFProgramisdividedintoPartA(general)and PartB(customeridentification). ThisAML/CTFProgramhasbeenpreparedsothatCLM can assess the potential money laundering and terroristfinancing( ML/TF )riskstowhichitmaybe exposed and to manage those risks within the legislativeframework. This AML/CTF Program was adopted by CLM on July 25 th 2013.TheAML/CTFprogramwaslastupdatedon September11 th PARTA TheprimarypurposeofPartAofthisAML/CTFProgram istoidentify,mitigateandmanagetheriskthatclm may reasonably face (inadvertently or otherwise) by facilitating money laundering or terrorism financing throughtheprovisionofitsdesignatedservices. InthisAML/CTFProgram, we, us or our means CLM. BUSINESSOVERVIEW CLM is a company structured primarily to provide generaladvice,dealingandmarketmakingservicesin derivatives and foreign exchange contracts to both retailandwholesaleclients. CLM primary mode of operandi is by way of an electronic trading platform which operates over the Interneti.e.CLMgivesclientsdirectonlineaccessto the rates/prices in the derivatives and foreign exchangemarketsatwhichclmispreparedtodeal. THEPURPOSEOFAML/CTFRISKASSESSMENT ThepurposeofourAMLRiskAssessmentistoidentify, mitigateandmanageourpotentialml/tfrisk.thispart AoftheAML/CTFProgramformallydocumentsthatin identifyingourml/tfrisks,clmhasconsideredtherisk posedbythefollowingfactors: (a) ourcustomertypes,includingbeneficialownersof customersandanypoliticallyexposedpersons(peps) (domestic,internationalorganisationandforeign); (b) thesourceoffundsandwealthofourcustomers; (c) thenatureandpurposeofthebusinessrelationship withourcustomers; (d) controlstructuresofnon0individualcustomers,and thebeneficialownersofourcustomers; (e) thetypesofdesignatedservicesweprovide; (f) themethodsbywhichwedeliverourdesignated services; (g) theforeignjurisdictionswithwhichwedeal. TheidentificationoftheML/TFriskspotentiallyfacedby CLMenablesustodesignandimplementthecontrols and measures required to mitigate and manage these risks. CLMhasconductedafullriskassessmentofthebusiness whichhasformedthebasisofthisprogram.thepurpose of this risk assessment is to identify what ML/TF risks existforclmwhenprovidingdesignatedservices.the tworisktypes:businessrisksandregulatoryriskshave bothbeenconsidered. Therisksidentifiedhavethenbeenassessed/measuredin termsofacombinationof: Likelihoodthatthesewilloccur Impactoftheconsequenceoflossorseverityof damagethatmayresultifthesedooccur Scalesoflikelihoodandimpactwithinariskmatrixhave beencombinedtogenerateamatrixofriskscores.risk appetite,toleranceandtreatmenthasalsobeen defined. CLMiscommittedtoensuringthatitsproceduresand policiespreventitsservices(andproducts)frombeing usedtofacilitatemoneylaunderingorterrorist financing. 2 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

3 WHYISCLMATRISK? SomeoftheriskthemescurrentlyfacedbyCLMhave beensetoutbelow(thislistisnotexhaustive). Livechatfacility; CLM scustomerbaseisgrowingandfromalloverthe globe; InteractionsarenonJfacetoface;preferredby criminals; Variouselectronicformsofpaymentcreditcards usedtotrade EJpaymentsisaknownmethodtodisposeofillegally obtainedfunds, i.e.spendingorreceivingillegitimatemoneyviatrading accounts. HOWWEIDENTIFY,MITIGATEANDMANAGEML/TF RISK RiskFactors For the purposes of the AML/CTF Act and Rules, in identifyingitsml/tfrisks,clmhasconsideredtherisks posedbythesevenfactorslistedinparagraph2above and set out in detail below. Thus, certain customer types,sourceoffundsandwealth,businessrelationships and control structures, designated services, delivery methods, foreign jurisdiction considerations are all factorsthatcanresultinahigherml/tfrisk. AtahighJlevel,riskfactorsthatwemayreasonablyface areidentifiedasfollows: (i) CustomerTypes,(includingbeneficialownersof customers); Any politically exposed persons PEP s (domestic, internationalorganisationandforeign); Customers who are identified as being persons or entitieswhichsupportterroristactivityorarenamed in government lists or with credible sources in respectofcorruptionand/orcriminalactivity; Nature, volume and frequency of trading having regardtothefinancialstandingofthecustomer; Customers (not necessarily PEPs) based in, or conducting business in or through, a high risk geographic location, or a geographic location with known higher levels of corruption or organized crime,ordrugproduction/distribution; Opportunitiesarepresentedforcriminalstoengage in transnational activities have expanded with globalisationandadvancementsininformationand communications technologies. CyberJcriminal activitiesincreasinglyaffectthefinancialsecurityof online business. It is widely accepted that the financial and insurance industry is the target of choice forfinanciallymotivatedcybercriminals; Professional service providers such as lawyers, accountants, investment brokers or other professionals holding accounts for their customers oractingonbehalfoftheircustomerandwherewe wouldberequiredtoplaceanunreasonablereliance ontheprofessionalserviceprovider; Requestsforunduelevelsofsecrecywitha transaction; WhetherthecustomerisalongJstandingcustomer orundertakesoccasionaltransactions;and thecustomer sbusinessactivitiesplacethecustomer inahighjriskcategory; CustomerswhowishtousepreJpaidcreditcardsand theassociatedriskswiththedigitalpaymentsarena. CUSTOMERS SOURCEOFFUNDSANDWEALTH SourcesofwealthJtheoriginoftheentirebodyof wealthgivesanindicationofthevolumeofwealthof thecustomer.whetheritisattheexpectedlevel; Sourceoffunds theoriginoffundsorassetswhich arethesubjectmatterofthebusinessrelationship betweenthecustomerandclm. Wheretheoriginofwealthorsourceoffundscannot beeasilyverified. (ii) Thenatureandpurposeofthebusinessrelationship withitscustomers, Risks arising from changes in the nature of the businessrelationship,controlstructureorbeneficial ownerofclm scustomers; Intendedtypeandleveloftransactionstobecarried out and risks associated with those transactions. LargertransactionspresenthigherAML/TFrisk. (iii) ThecontrolstructureofnonJindividualcustomers 3 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

4 CLM can only be satisfied that it knows who the beneficialownerisiftheyknowwhoultimatelyowns or controls the customer either directly, or indirectly through interests in the customer s beneficialowner(s); Where there is a failure to identify who ultimately controls the business relationship preventing developingaclearunderstandingoftheaml/tfrisk associatedwiththebusinessrelationship; Wherethestructureofthecustomer/entityrenders itdifficulttoidentifythetruecontrollingowner,or where there is no legitimate commercial rationale forthestructure. (i) TheTypesofDesignatedServicesWeProvide ThelistofDesignatedServices(locatedinSection6of the AML/CTF Act) has been reviewed and the ones thatclmprovidehavebeenidentifiedandrankedas low. Forex Designated Service Description securityofthecompany;and (a) inthecaseofanissueofa securityorderivative the issuedoesnotconsistof theissuebyagovernment bodyofasecurityofthe governmentbodyorofan optiontoacquireasecurity ofthegovernmentbody; and (b) inthecaseofanissueofa securityorderivative the issueisnotanexempt financialmarketoperator issue;and (c) suchotherconditions(if any)asaresetoutinthe AML/CTFRulesaresatisfied Risk Ranking Designate dservice Item33 Item35 Description Provisionofadesignatedserviceinthe capacityofagentofaperson,acquiring ordisposingof: (a) asecurity;or (b) aderivative;or (c) aforeignexchange contract;onbehalfof theperson,where: (d) the acquisition or disposal is in the course of carrying on a business of acquiring or disposing of securities, derivatives or foreign exchange contracts in the capacity of agent; and (e) the service is not specified in the AML/CTFRules Provisionofadesignatedservicein issuingorsellingasecurityor derivativetoaperson,where: (d) theissueorsaleisinthecourseof carryingonabusinessofissuingor sellingsecuritiesorderivatives;and (e) inthecaseofanissueofasecurity orderivative theissuedoesnot consistoftheissuebyacompany ofasecurityofthecompanyorof anoptiontoacquirea Risk Ranking Low Low Forex/Bullion Item54 Provision of a designated service in the capacity of holder financial services license, making arrangements for a person to receive a designatedservice(otherthan aservicecoveredbythisitem). Bullion Item1 (i) MethodsbywhichweDeliverDesignated Services Online Telephone Livechatfacili Sellingbullion,wherethe sellingisintheduecourseof carryingonabusiness* (i)foreignjurisdictions Countriesidentifiedbycrediblesourcesas providingfundingorsupportforterrorist activities or who have terrorist groups Low Low 4 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

5 workingwithinthecountry; production and/or transnationaljshipment of illicit drugs. Countriessubjecttosanctions,embargoesorsimilar measures; Countries identified by credible sources as having significant levels of corruption and/or criminal activity; Countries identified by credible sources as lacking By way of an example a Risk Matrix which was formulated from the Financial Action Task Force on Money Laundering ( FATF ) Guidance Note, entitled Guidance on the risk based approach to combating money laundering and terrorist financing, sets out generalriskassessmentcriteria. appropriate AML/CTF legislation/ systems/ ARISKBASEDAML/CTFPROGRAM measuresorcontrols; CountriesidentifiedbytheFATFasnonJcoJoperative countriesandterritories; Countriesidentifiedbycrediblesourcesasbeingtax havens; Countries that are materially associated with ThisAML/CTFProgramisriskbased. The following diagram, formulated from the FATF Guidance on the risk based approach to combating moneylaunderingandterroristfinancing,setsoutthe suggestedriskassessmentandmanagementcontrols processthatshouldbeimplemented. RiskAssessmentLinktotheAML/CTFRisk RiskAssessment Identify&Measure Risk: Customers( Services( Delivery(Methods( Foreign(Jurisdictions( Source(of(funds( Nature(and(purpose(of( business(relationship( InternalControls DevelopApplicable: Policies( Procedures( Systems( Controls( Results ( Audit Review(of(the(risk( assessment(and( adequacy(of( internal(controls.( Also(reviews(the( controls ( effectiveness( through(a(risk> based(audit( program( ( Risk4Based Compliance Program Internal(controls( Audit(program( Compliance( Training( 5 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

6 Identify,verifyandthenassessthecustomer The following steps are performed in identifying, verifying and performing a risk assessment of the customer: STEP1. Initial(orminimum)KYCinformationisobtained toidentify andverifythecustomerasrequiredbythe AML/CTFRules CLM will initially seek to identify and then verify the customer is who they claim to be. As a result, initial questions/informationmustbeobtainedtoidentify (and verify) the person. This is referred to as Know YourClientinformation or KYCinformation. Beneficial owners and control structures are determined and KYC information is collected and verified. CLM review the parties to the trust deed; identify major shareholders; understand the customer s management structure; and understand the rights and responsibilities of senior managers to determinecontrolstructures. CLMhasstrictKYCprocedurestoverifytheapplicant s identity. Manual verification is under taken when a customer does not pass electronic verification (EV). WorldCheck(forinternationalclients) STEP2.IdentifywhetheracustomerisaPEP CLM determines whether any customer or beneficial ownerisapep(domestic,internationalorganisationor foreign).whereacustomerisdeterminedtobeapep, CLM collect and verify KYC information. CLM then determinewhetherthepepposesahighml/tfrisk. Additional due diligence measures and risk managementsystemsareimplementedwherethepep ishighml/tfriskoraforeignpep.foreignpep sare alwaysclassifiedashighrisk. If a customer is a foreign PEP or a domestic or internationalorganisationpepwhoisassessedasbeing ahighml/tfrisk,clmtakeadditionalmeasuressuchas taking reasonable measures to establish the source of wealthandfunds;andrequireseniormanagement approval before providing the PEP with designated services or establishing or continuing the business relationshipwiththem. STEP3. Additional KYC information is obtained to identify and verify thecustomerwheretheidentityis unclearornonjverifiable If the minimum KYC information is considered insufficientandclmisunabletoidentifyandverifythe customer,thenfurther(additional)questionsmustbe asked of the customer so that the identity of the customercanbeverifiedwithconfidence. STEP4. Ariskassessmentisperformedwithrespectto thatcustomer CLMisthenrequiredtocarryoutariskassessmentas toitsexposuretofacilitatingmoneylaunderingand/or terrorismfinancingbyitscustomerinordertoidentify, mitigate and manage the risk identified. To mitigate risk, CLM has taken the decision that Customers deemedtobehighriskattheoutsetarenotofferedan account. TheassessmentofML/TFexposuremustberiskbased. The Act requires an assessment based upon the followingriskfactors: (1) the types of customers we have (including beneficialownersandpeps); (2) thetypesofdesignatedservicesweprovide; (3) the methodsbywhichwedeliverourdesignated services;and (4) theforeignjurisdictionswithwhichwedeal; (5) Sourceoffundsandwealthofcustomers (6) The nature and purpose of the business relationshipswithitscustomers (7) ControlstructuresofnonJindividualcustomersand thebeneficialownersofcustomers. Followingthisassessment,ML/TFriskofthatcustomer isthenmeasuredorclassifiedaslow,mediumorhigh. 6 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

7 TheprocessbywhichCLMwillassessriskandformulateandimplementmanagementcontrol processesissetoutdiagrammaticallybelow: 7 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

8 This Part A of the AML/CTF Program is designed to identify,mitigateandmanagethepossibleml/tfrisks posed to CLM and to document the controls and systems to address those risks. Any weakness in this PartAoftheAML/CTFProgrammayimpactadversely onthemanagementoftheml/tfrisks. BOARDANDSENIORMANAGEMENTOVERSIGHT CLM s Part A program must be approved by its governingboardandseniormanagement.partamust also be subject to the ongoing oversight of the reporting entity s board and senior management. CLM sboardandseniormanagementarededicatedto overseeing the AML/CTF program to ensure compliancewiththeact. ThisAML/CTFProgramhasbeenadoptedbytheBoard. AnyamendmenttothisAML/CTFProgramissubjectto Board oversight and approval i.e. the Board must formally adopt any amendment to the AML/CTF Program. TheAML/CTFComplianceOfficer/HeadofCompliance will provide a quarterly report to the Compliance CommitteeandtheBoard,whichwillincludeAML/CTF Programstatusreportsandincidentreports.Quarterly compliancemeetingshaveamlasanagendaitem. This AML/CTF Program has been designed to ensure and demonstrate compliance with the AML/CTF obligationsasfollows: TOFORMALLYDOCUMENTPOLICIESAND PROCEDURES Moneylaunderingandterroristfinancingschemescan bedifficulttoidentifyandcriminalscanbeingeniousin formulatingdifferentschemestofacilitatetheirmoney launderingorterroristfinancingagendas. Accordingly,forthisAML/CTFProgramtobeeffective, it requires regular review, and if necessary amendment,inorderthatitaccomplishesitspurpose ofidentifying,mitigatingandmanagingml/tfrisk. Further,theAML/CTFComplianceOfficer/Headof CompliancemustbenotifiedpriortoCLM: (i) introducinganewdesignatedservicetothemarket; (ii) introducing new methods of delivery of a designatedservice;and/or (iii)introducinganynewordevelopingtechnologyused fortheprovisionofdesignatedservices. This will enable the AML/CTF Compliance Officer/ Head of Compliance to identify any significant changesinml/tfrisksandtoformulatecontrolsto mitigateandmanagethoserisks. Whereproceduresareupdated,staffareformally trainedtoensuretheyareawareoftheprocedures relevanttotheirspecializedroleatclm. TOESTABLISHCUSTOMERIDENTIFICATION PROCEDURES(COMMONLYKNOWNAS KNOW YOURCUSTOMER OR KYC PROCEDURES) TheKYCproceduresmustberiskbasedhavingregard to the ML/TF risks relevant to the provision of the service/s offered. The procedures are designed to mitigate and manage the potential ML/TF risks and ensurethatclmisreasonablysatisfiedastothetrue identityofitscustomers(clients). Thecustomeridentificationandverification proceduresaredetailedinpartbofthisaml/ctf Program. TOIMPLEMENTEMPLOYEEDUEDILIGENCE PROCEDURES/CHECKS There is a requirement within the AML/CTF Act to perform due diligence on certain representatives of CLMi.e.staff,employees,contractors,thoseseconded tothecompanyforaninterimperiodetc.thelevelof due diligence required depends upon the function performedandlevelofseniority/workperformed. The employee due diligence program includes appropriateriskjbasedsystemsandcontrolsforclmto determinewhetherto,andinwhatmannerto,screen any prospective employee and also rejscreen an employee (where that employee is transferred or promoted)thatmaybeinapositiontofacilitatethe commission of a money laundering or financing of terrorismoffenceinconnectionwiththeprovisionofa designatedservicebyclm. Theemployeeduediligenceprogramalsoestablishes and maintains a system for CLM to manage any employee who fails, without reasonable excuse, to comply with any system, control or procedure establishedinaccordancewithpartaorpartbofthis AML/CTF Program (refer policy document entitled, DisciplinaryActionProcedures ). CLMhaspreparedaRecruitmentPolicywhichcovers thevettingofcandidatesforemployment,takingand checking of references and the procedures to be followedintherecruitmentprocess. TheRecruitmentPolicyrequiresseniormanagementto 8 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

9 conductaformalinterviewofthecandidate.clmmay alsoperformskillsassessment,referencechecksorany combination of these prior to offering a candidate a position.representativeswillbeselectedonthebasis of their experience, skills, qualifications and industry knowledge. The status of all new members of staff must be identified on their commencement of employment (authority to represent the company and provide a designated service) and the identification must be verified and recorded i.e. CLM will ensure that the identity and past history of a prospective employee (representative)hasbeenverifiedpriortoemployment orauthoritygrantedtorepresentthecompany. THEEMPLOYEEDUEDILIGENCEPROCEDURES Once employed (or appointed to represent the company), employees (representatives) that are identified as high risk will be subject to closer and morefrequentmonitoring.thisincludesmonitoringof the representative s customer accounts and relationships(i.e.monitoringwillbeundertakenmore frequentlythanthatprescribedbytheregularintervals pursuant to internal audit procedures). In addition, theserepresentativesmaybesubjecttotransactional limits until such time that comprehensive training in policiesandprocedureshasbeencompleted. Examplesofrepresentativestobeconsideredas high risk includethefollowing: (i) Representativeswhoareinapositionofdealing withcustomersorcircumstanceswhichare identifiedashighrisk. (ii) Representativesin key positions. (iii)representativesthatprovideunusualor extraordinaryactivities. (iv)representatives who fail to conform to the company sorgroup scompliancesystemsand/or controls. Employeesarenotallowedtoopenatradingaccount withclm.thisistominimizetherisksassociatedwith ML/TF. Customer accounts are subjected to the AML/CTF procedures under the supervision of the AML/CTFComplianceOfficer/HeadofCompliance. The performance of supervisors with respect to compliance with the AML/CTF obligations will be monitoredaspartoftheirannualperformancereview. Should any customer account be managed by the AML/CTF Compliance Officer/ Head of Compliance thenthesewillbereviewedbyseniormanagement. Representatives who fail to comply with the compliancesystemsand/orcontrolswillbesubjectto disciplinaryprocedures,whichmayincludetermination of employment (cancellation to represent the company). Representatives that are suspected of facilitatingmoneylaunderingorterrorismfinancingwill bereportedtotheappropriateauthorities. AML/CTFRISKAWARENESSTRAININGPROGRAM Appropriatetrainingwithregardtomoneylaundering andterroristfinancingisvitalinmanagingtheml/tf risk. Accordingly, all representatives are required to undergotraininginaml/ctflawsandinternalpolicies. InorderthatourML/TFcontrolsaresuccessful,training programs are formulated having regard to the representative slevelofresponsibilityandposition. Updated or refresher training will depend upon staff promotions and/or depending upon the level of assessedml/tfriskofthedesignatedservice.training will be carried out under the supervision of the AML/CTFComplianceOfficer/HeadofComplianceand senior management. Ongoing general refresher trainingforallstaffwilloccurona periodicbasis (at least annually) and monthly AML updates will be providedtoallstaff. AtaminimumtheAML/CTFtrainingprogramwillbe designedtoenablerepresentativestounderstandthe following: (i) thecompany(orgroup s)aml/ctfpolicy; (v) Staffpromotedtomoreseniorlevelswithgreater AML/CTFresponsibilitiesthatareyettocomplete further AML/CTF training in policies and procedures. (vi)representativeswithlavishlifestyles,whichcannot be supported by the representative s salary or otherpracticalreason. Thelevelofstaffturnoverwillalsobeconsideredand monitoredonaregularbasis. (ii) thecompany(orgroup s)aml/ctfprogram; (iii)theobligationsofclmundertheaml/ctfactand Rules; (iv)the types of ML/TF risk CLM might face and the potentialconsequencesofsuchrisks; (v) howtoidentifysignsofml/tfthatariseduringthe courseofcarryingouttheirduties; (vi)escalationproceduresi.e.whattodoonceaml/tf riskisidentified; 9 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

10 (vii)whatemployees'rolesareinthefirm'scompliance effortsandhowtoperformthemi.e.theprocesses andproceduresrelevanttoeachperson srole; (viii) the company s (or Group s) record keeping and recordretentionpolicy;and (ix)the consequences (including civil and criminal penalties)fornonj compliancewiththeaml/ctf Act and supporting Rules (Civil penalties of a maximumof$3.4millionforanindividualand$17 million for a company apply for nonjcompliance undertheact); (x) Monthlyclosedjurisdictionupdates; (xi)aml Regulatory updates to update and inform staff, to ensure ongoing understanding of obligations. Training may be developed and provided either in houseorbycontractedtrainingorganizations,external AMLConsultants.Deliveryofthetrainingmayinclude written updates, educational pamphlets, videos, intranet systems,injpersonlectures,andexplanatory memos. Recordsoftrainingaremaintainedtodemonstratethat theperson/sattendedthetrainingsession/s,thedates oftraining,abriefdescriptionofthesubjectmatterof thetrainingprovidedandthenumberofhours(orlevel ofaccreditation)forattendingthe course/session/seminar. CertainkeyemployeesexposedtoagreaterML/TFrisk or those identified as high risk will undergo specializedadditionaltraining. AML/CTFCOMPLIANCEOFFICER/HEADOF COMPLIANCEDUTIES TheAML/CTFComplianceOfficer/HeadofCompliance reportstothecompliancecommitteeandtheboard. The AML/CTF Compliance Officer s/ Head of Compliance duties specifically in relation to ensuring compliance with the AML/CTF Act and Rules include thefollowing: (i) monitoring compliance and adherence to the obligationsoftheaml/ctfactandrules; (ii) receiving an investigating reports of suspicious mattersactivities; (iii) adopting a risk based approach to monitor customeractivitytoidentifysuspiciousactivity; (iv) overseeing communication and training for employees; (v) ensuring that proper AML/CTF records are maintained; (vi) reporting suspicious activity to senior management,thecompliancecommitteeandthe Board; (vii) submitting regular reports to the Compliance Committee(atleastquarterly); (viii)submitting regular reports to the Board (at least annually); (ix) providing advice to senior management, the ComplianceCommitteeandtheBoard; (x) lodgingannualcompliancereport; (xi) receiving and carrying out directions or orders issuedbyauthorities;and (xii) Liaison with regulatory bodies and law enforcement in respect of suspicious activity reporting. TheAML/CTFComplianceOfficer/HeadofCompliance isauthorizedtoactindependentlyinordertofulfilthe commitmentsofhisrole. TheAML/CTFComplianceOfficer/HeadofCompliance, underthedirectionoftheboard,willensurethatany governmentorfatffindingsconcerningtheapproach to money laundering and/or terrorism financing prevention, in particular countries or jurisdictions, is assessed and appropriate changes made to the AML/CTF Program. Amendments will be communicated to those representatives affected by thechanges. ONGOINGCUSTOMERDUEDILIGENCE Ongoing customer due diligence is an important componentinmitigatingandmanagingtheml/tfrisks (potential and identified). CLM maintains an ongoing relationshipwithitscustomersthroughupdatingkyc information, implementation of a transaction monitoring program (TMP) and by conducting enhancedcustomerduediligence. CLMhassystemsinplacetodeterminewhenfurther KYC or beneficial owner information should be collectedorverifiedtoreviewandupdateinformation. Allcustomerrecordsarereviewedandupdatedwhere theml/tfriskwarrantsthis.thisappliestobothnew andprejexistingcustomers. (a) Allnewaccountsarescreenedforerrorsbythenew accountsteamwithsupervisionandguidancefrom the AML/CTF Compliance Officer/ Head of Compliance. (b) Sales and support staff maintaining an ongoing relationship/ contact with clients. This contact is both for commercial purposes, to provide ongoing technical support and also for the purposes of updating and maintaining KYC information by verifyingname,dateofbirthandaddress.allnotes arerecordedinsalesforceinthecompany saccount information. Customers are requested to provide 10 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

11 evidence in the form of proof of address documentation(suchasautilityorbankstatement) toactionachangeofaddressonthesystem; (c) EachmemberoftheCLMsalesteammaintainsalist oftheirowncustomers.thislistismonitoredona dailybasis.contactisthereforemaintainedwithall customers.thosecustomersnotactivelytradingare contactedtoincentivizeareturntotrading.those actively trading will be contacted to ensure everything is running smoothly and that they are happy with the platform performance. Ongoing monitoring is undertaken during this process and KYCinformationverifiedtoensureitisuptodate. Further, if any suspicion is aroused, further KYC is collectedandthesmrprocedureisfollowed; (d) Initial courtesy calls are made to clients at the beginningoftherelationshipwhenademoaccount isdownloaded.atthisstagethesalesteamascertain the trading experience of the applicant and will canvasstradingstrategiesandintendedlengthofthe relationshipandspend.thisenablesclmtomonitor andidentifyanyunusualtradingactivity,patternsof spendwithreferencetothedisclosedstrategiesand relationshiplength. (e) Salesstaffacceptwithdrawalrequestsandwillflag totheaccountsteamifthereanydiscrepanciesor attemptedthirdpartywithdrawalrequests; (f) NewaccountsstaffreJverifycustomersifanyerrors are identified on an account, or any suspicion is formed; (g) Theaccountsandtradingteamsreviewtransactions, includingtradingandelectronicfundtransfers,inthe contextofotheraccountactivitytodetermineifa transactionissuspicious.aformaltmpisinplace; (h) the AML/CTF Compliance Officer/Head of Complianceisresponsibleformonitoringadherence totheaml/ctfact,willdocumentwhenandhowit iscarriedout,andwillreportsuspiciousactivitiesto theappropriateauthorities; (i) exception reports are utilized to identify possible ML/TFrisksandincludemonitoringtransactionsize, location,type,numberandnatureoftheactivity; (j) the AML/CTF Compliance Officer/ Head of Compliance conducts an appropriate investigation beforereportingasuspiciousmatter. Instances where CLM rejverify for the purposes of updatingandmaintainkycinformationonallcustomers CLM ensures that the information it retains about its customers is up to date. The trading team monitor customer account activity, including trading and electronicfundtransfersonanongoingbasis.staffare trained to identify triggers for the requirement to update KYC information. For example, disconnected telephonenumbers,returnedmail. Staff are trained to identify and verify beneficial ownershipinformationforallnonjindividualcustomer typesonanongoingbasis.wherebeneficialowneror true controllers are determined, additional KYC informationiscollectedandverified. RISKBASEDTRANSACTIONMONITORING PROGRAM(TMP)TOMONITORTRANSACTIONS CLMhasariskbasedtransactionmonitoringprogram (TMP)tomonitortransactionsofcustomers,including regard to complex, unusual large transactions and unusual patterns of transactions which have no apparenteconomicorvisiblelawfulpurpose Staff in the new accounts team manually monitor accountstoensurethatthereisn tfraudulentactivity ontheaccounts,staffreviewid,andlookforlayering offundsusingthetradingaccounts. Transactions are monitored by staff on an ongoing basis.customersaremonitoredonanongoingbasisin order to identify any suspicious activity; Staff are requiredtoreviewdepositalerts,andtradingactivity. SuspiciouspatternsarereportedtoManagerofteam inthefirstinstance.thisinformationiscommunicated to the AML/CTF Compliance Officer/ Head of Compliance who will apply enhanced customer due diligence Accountsandsalesstaffaretrainedtolookforspecific activitywhichisdeemedaredflagtrigger,asfollows:j (i) The customer engaging in transactions involving cash or cash equivalents or other monetary instrumentsthatappeartobestructuredtoavoid the$10,000governmentreportingrequirements. i. especiallyifthecashormonetaryinstrumentsare in an amount just below reporting or recording thresholds (ii) Thecustomerattemptstomakefrequentorlarge deposits of currency, insists on or asks for exemptionsfromthefirm spoliciesrelatingtothe depositofcashandcashequivalents. (iii)fornoapparentreason,thecustomerhasmultiple accountsunderasinglenameormultiplenames, withalargenumberofinterjaccountorthirdjparty transfers. 11 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

12 (iv)thecustomerhasaccountsin,acountryidentified as a nonj cooperative country or territory by the FinancialActionTaskForce. (v) Thecustomer saccounthasunexplainedorsudden extensivewireactivity,especiallyinaccountsthat hadlittleornopreviousactivity. (vi)thecustomer saccountindicateslargeorfrequent wiretransfers,immediatelywithdrawnwithoutany apparentbusinesspurpose. (vii)thecustomermakesafundsdepositfollowedbyan immediaterequestthatthemoneybewiredoutor transferred to a third party, or to another firm, withoutanyapparentbusinesspurpose (viii) The customer makes a funds deposit for the purposeofpursuingalongjtermtradingstrategy, followedshortlythereafterbyarequesttotransfer theproceedsoutoftheaccount. CLM ALSO HAS AN ENHANCED DUE DILIGENCE PROGRAM Although it is CLM s policy not to accept customers identifiedashighriskattheoutset,ithasimplemented anenhancedduediligenceprogramtoincludesystems andcontrolstoensure,whereappropriate,measures such as clarifying, analyzing, verifying or updating beneficial owner information collected from the customer; or collecting further beneficial owner information (such as the source of the beneficial owner sfundsandwealth)aretaken. CLM has implemented systems so that ongoing due diligenceisconductedonthebusinessrelationshipand scrutinizing transactions to ensure that the transactionsareconsistentwiththeknowledgeofthe customer,andtheirbusinessandriskprofile. Enhancedduediligencewillbeundertakenforallhigh riskcustomersandtransactionsandwhere:j (a) thereisarequirementtoaccessfurther informationinordertoclarify&updatekycinfo; (b) obtainfurtherkycinfo; (c) considerandinvestigatethesuspicioustransaction; (d) verifyorrejverifyinformation; (e) undertake more detailed analysis and monitoring regardingtransactions;and (f) lodgeasuspiciousmatterreport. Whereitisdeterminedthatenhancedduediligence shouldbeapplied,theprocesswillbeasfollows; 1. AML/CTFComplianceOfficer/Headofcompliance willconductathoroughinvestigationtodetermine the source of the customer s and each beneficial owner swealth; 2. Checkthevalidityoftheaccountregistrationdetails; 3. Reviewanylinkedaccounts; 4. ReJverifyKYCinformation; 5. Analyze the customer s past transactions and possibly monitor future transactions if deemed necessary; 6. Thepurposeornatureofspecifictransactions 7. Check IP address where possible to detect any suspiciousconnectionsources 8. Determineifasuspiciousmatterreportshouldbe lodgedinaccordancewithprocesssetoutbelow Monitoringwillbeconductedeither: MANUALLY TheAML/CTFComplianceOfficer/HeadofCompliance and senior management will ensure that a sufficient sample of activity will be selected to enable the identificationofmattersofconcern,suchaspatternsof unusual size, volume, type of transactions, foreign jurisdictionfactors,oranyofthe triggers identified. It is proposed that representatives will review transactions (including trading and electronic fund transfers)inthecontextofothercustomeractivityto determineifatransactionlacksfinancialrationaleoris suspicious because it is an unusual transaction or strategyforthatcustomer,or ELECTRONICALLY CLM may also seek to utilise automated (exception) reportingthatwillincludeacomprehensivesampleof activity and monitor things such as transaction size, location,type,numberandnatureoftheactivity. TheAML/CTFComplianceOfficer/HeadofCompliance, will be responsible for performing these ongoing monitoringactivities. Theywilldocumentwhenandhowitiscarriedoutand willreportsuspiciousactivitiestoseniormanagement and/or the appropriate authorities (where required). TheAML/CTFComplianceOfficer/HeadofCompliance will conduct an appropriate investigation before reportingasuspiciousmatter. Employee guidelines with examples of suspicious money laundering activity and lists of highjrisk customersthatmaywarrantfurtherscrutinywillalso bepreparedanddistributedtothoseconcerned. Inadditiontoregularreviews,circumstancesmayarise in which an otherwise low risk customer will be elevatedtohighrisk. 12 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

13 For example, a customer on commencement of the relationship may be classified as low risk. However, afterachangeinclientcircumstancesoractivities,the riskprofileofthecustomermaybeelevatedtomedium or high. An example of this is a client s change of countryofresidence. In circumstances where the customer s risk profile is elevated, further measures and controls will be implementedtomitigateandmanageagainstpotential ML/TFrisks,includingthefollowing: (i) Immediatenotificationtoallappropriate representatives/businessunits; (ii) furtherkycinformationandverificationprocedures performed; (iii)an increase in the level on monitoring (i.e. in accordancewiththenewclassificationorratingof the customer risk, being medium or high and monitoring intervals commensurate with the identifiedrisk); businessdaysofformingthesuspicion.ifthesuspicion relatestothefinancingofterrorism,thesmrmustbe submittedwithin24hoursofformingthesuspicion. Staff are trained to avoid tipping off in respect of suspicious matters to avoid wrongfully disclosing to others,informationaboutasuspiciousmatter.staffare awarethatthisisanoffence. If staff form a suspicion whilst dealing with a prospective(orexisting)customers,thissuspicionmust bereferredtotheaml/ctfcomplianceofficer/head ofcompliancewhowillmakeadecisionastowhether asuspiciousmatterreportshouldbesubmitted Suspicion is formed when a representative considers thatanexistingorprospectivecustomerisattempting tousetheservicesofferedbyclmforml/tfpurposes and/oranyoneofthefollowingconditionsismet: (i) therepresentativesuspectsonreasonablegrounds thatthecustomerisnotthepersontheyclaimto be; (iv)increasedmonitoringoftransactionsinaccordance withseniormanagementsrequirementsinrespect ofthecustomerortransaction. SUSPICIOUSMATTERREPORTING(SMRS) CLM has implemented monitoring and reporting systems in respect of designated services offered acrossallrelevantbusinessunits. Relevant employees are trained to identify and reportsuspiciousmatterstotheheadofcompliance AML/CTFComplianceOfficer/HeadofCompliance. TheAML/CTFComplianceOfficer/HeadofCompliance isadequatelytrainedtoinvestigatesuspiciousmatters, prepare,lodgeandretainrecordsofsuspiciousmatter reporting. Staffaretrainedtobeawareofpotentialindicators thatwilltriggerasuspicion.theaimistoidentifythose prospective(orexisting)customersthatareseekingto usetheservicesofferedbyclmformoneylaundering or terrorist financing purposes, thereby triggering reportingobligationstotherelevantauthorities. The AML/CTF Compliance Officer/ Head of Compliance is responsible for submitting SMR s, however staff are aware that it is a shared responsibilitytobevigilantinrespectofanysuspicious matters. An SMR must be submitted by the AML/CTF ComplianceOfficer/HeadofCompliancewithinthree (ii) therepresentativesuspectsonreasonablegrounds that the customers agent is not the person they claimtobe; (iii) therepresentativesuspectsonreasonablegrounds thattheprovision,orprospectiveprovision,ofthe service is preparatory to the commission of an offenceoffinancingofterrorism; (iv) therepresentativesuspectsonreasonablegrounds thatinformationcollectedbyclmconcerningthe provision, or prospective provision of the service may be relevant to the investigation of, or prosecutionof,apersonorentityforanoffenceof financingofterrorism; (v) therepresentativesuspectsonreasonablegrounds thattheprovision,orprospectiveprovision,ofthe service is preparatory to the commission of an offenceofmoneylaundering; (vi) therepresentativesuspectsonreasonablegrounds thatinformationcollectedbyclmconcerningthe provision,orprospectiveprovision,oftheservice may be relevant to the investigation of, or prosecutionof,apersonorentityforanoffenceof moneylaundering. (vii) therepresentativesuspectsonreasonablegrounds thatinformationcollectedbyclmconcerningthe provisionorprospectiveprovisionofservices: (viii) mayberelevanttoinvestigationof,orprosecution ofapersonorentityforanevasion,oranattempted evasionoftaxationlaw; (ix) mayberelevanttoinvestigationof,orprosecution 13 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

14 ofapersonorentityforanevasion,oranattempted evasion,ofalawofastateorterritorythatdeals withtaxation;or (x) mayberelevanttoinvestigationof,orprosecution ofapersonorentityfor,anoffenceagainstalawof thecommonwealthorofastateorterritory;or (xi) may be of assistance in the enforcement of the Proceeds of Crime Act 2002 or regulations under thatact;or (xii) maybeofassistanceintheenforcementofalawof astateorterritorythatcorrespondstotheproceeds ofcrimeact2002orregulationsunderthatact; THRESHOLDTRANSACTIONSREPORTS CLM will design and implement robust systems to detect threshold transactions covering all prescribed requirements. Currently, the prescribed threshold amountis$10,000i.e.cashtransactionsinexcessof thisamountmustbereportedtoaustrac.clmhas confirmation stating they are not required to report thesetransactionsasthesearereporteddirectlyfrom thebankreceivingfunds. AML/CTFCOMPLIANCEREPORT An AML/CTF Compliance Report is an annual report whichclmpreparesthathelpsprovideauthoritieswith information on our compliance with the Anti0Money LaunderingandCounter0TerrorismFinancingAct2006 (AML/CTF Act), the regulations and the Anti0Money Laundering and Counter0Terrorism Financing Rules Instrument 2007(No.1) (AML/CTF Rules). AML/CTF Compliance Report contributes to monitoring of ongoingindustrycompliancewiththeaml/ctfact,the regulations and the AML/CTF Rules. CLM follows the AML/CTFActobligationsandcompletesanAML/CTF ComplianceReportbefore31Marchofeachyear. INDEPENDENTREVIEWOFPARTAOFTHE AML/CTFPROGRAM AreviewofPartAoftheAML/CTFProgramwillbe undertakenannually.thereviewwillbe undertakeneither: internally i.e. by a person separate from the AML/CTFComplianceOffice(orhis/herdepartment ordirectcontrol);or byanexternalserviceproviderthatwillberetained toconductthereview. Thepurposesofthereviewwillbeto: assesstheeffectivenessofpartaoftheaml/ctf Program,havingspecificregardtotheML/TFrisks facedbyclm; assesswhetherpartaoftheaml/ctfprogram complieswiththeaml/ctfrules; assesswhetherpartaoftheaml/ctfprogramhas beeneffectivelyimplemented;and assesswhetherclmhavecompliedwithpartaof theaml/ctfprogram. Theresultofthereview,includinganyreportprepared, will be provided to the Board, the Compliance Committeeandseniormanagement. Adraftchecklistentitled IndependentReviewofthe AML/CTFProgram. RecordKeeping: Inaccordancewithmeetinglegislativeobligations,CLM willretainallrecordsrelevanttoitsaml/ctfprogram andpolicies,includingthefollowing: 1. theaml/ctfprogramandallreviewsand addendumstothesame; 2. itsaml/ctfpolicyandallreviewsandaddendums tothesame; 3. transactionalrecords; 4. Customeridentificationandverificationrecords; 5. Auditsandcompliancereviews; 6. Suspiciousmatterreporting(from13December 2008); 7. Thresholdreporting(from13December2008); 8. Seniormanagementapprovals; 9. Customeraccount/relationshiprecords; 10.Annualcompliancereportsandothermanagement reports; 11.Trainingandcompliancemonitoringreports;and 12.Informationrelatingtotheeffectivenessoftraining. Records in respect of customer identification and verification are retained for 7 years after account closure. WhereCLM(oritsagentorintermediary)carriesouta customeridentificationandverificationprocedurewith respect to a prospective customer to whom CLM proposestoprovideadesignatedservice,itmustmake (andretain)arecordof: 14 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets

15 (i) theprocedure(i.e.thechecklist);and (ii) informationobtainedinthecourseofcarryingout the procedure (i.e. supporting documentation to verifytheidentificationofthecustomer);and (iii)suchotherinformation(ifany)abouttheprocedure asisspecifiedintheaml/ctfrules(currentlyno furtherinformationisspecified). Recordsinrespectoffinancialtransactionsaretobe retainedfor7yearsafterthedateofthetransaction. AML/CTFProgramandaddendumstogetherwithany documentationrelevanttothereasonforamendment arealsotoberetainedfor7yearsaftertheadoptionof theaml/ctfprogramand/oramendmentsceaseto beinforce. SYSTEMSTOREJASSESSRISK CLM will review all areas of its business to identify potentialml/tfrisksthatmaynotbecoveredinthe procedures described above. The additional areas of ML/TFrisksareinrespectofnewproducts,services, distributionchannelsanddevelopingtechnologies. AdditionalprocedurestoaddresstheseML/TFrisksare asfollows: 1. The AML/CTF Compliance Officer/ Head of Compliancewillbeconsultedbyanypersonhaving responsibility for a new service or method of deliveryornewtechnology( theprojectmanager ) atdesignstageorpriortotheintroductionofthe newservice,deliverymethodortechnology.hewill be required to advise on the ML/TF risk factors whicharetobeconsideredhavingregardto: 2. thetargetmarket(customertype); 3. theservicefeatures; 4. foreignjurisdictionalfeatures/offerings; 5. anyelectronicaccessto/thedeliverymethodof theservice. 6. The AML/CTF Compliance Officer/ Head of Compliance will, in consultation with the project manager undertake the risk assessment and formulatethecontrolsandsystemstomanageany ML/TFrisks. 7. The AML/CTF Compliance Officer/ Head of Compliance will review the AML/CTF Program, policies and procedures to ensure that any new ML/TFrisksareidentifiedintheAML/CTFProgram and amendments to the AML/CTF Program are made.allamendmentswillbeoverseenbysenior managementandwillrequireboardapproval. 8. The AML/CTF Compliance Officer/ Head of Compliance will formulate staff awareness and training programs in respect of the change to ML/TFrisksandwilloverseethedeliveryoftraining programs. 9. The AML/CTF Compliance Officer/ Head of Compliance will retain all records relevant to the risk assessment, addendums to the AML/CTF Programandthetrainingprograms. 10.The AML/CTF Compliance Officer/ Head of Compliance,underthedirectionoftheBoard,will ensure that any government or FATF findings concerningtheapproachtomoneylaunderingand terrorism financing prevention in particular countries or jurisdictions, is assessed and appropriate amendments made to the AML/CTF Program.Furthermore,allcomplianceprocedures will be made and communicated to all representatives. EXTERNALAUTHORITIES CLMwillcoJoperatewithallexternalauthorities.CLM will comply with any directions or notices received from such bodies and will actively search and retain recordsofanyguidanceissuedorreleasedinrespect ofperceivedml/tfrisks. PRIVACY Customeridentificationandverificationprocedureswill becarriedouthavingregardtotheprivacyact1988. CLM sprivacypolicyanddisclosuredocument/s(e.g. thefinancialservicesguideandproductdisclosure Statements)willbeamendedtoincludethefollowing disclosure: (i) that personal information may be collected because CLM is obliged by Law to collect certain information (for example, the Anti Money LaunderingCounterTerrorismFinancingAct2006 requiresclmtocollectinformationandverifythe identity of its clients / customers. This is often referredtoas knowyourcustomer information); (ii) that information may be collected from other persons or organizations and a listing of those sourcesincludingagents,brokers,publiclyavailable informationanddocuments;and (iii) that where required by Law, the client or customer spersonalinformationmaybedisclosed tootherparties. 15 Anti-Money Laundering and Counter-Terrorism Financing Program Core Liquidity Markets