ANTI-MONEY LAUNDERING (AML) AND COUNTER-TERRORISM FINANCING (CTF) POLICY

1. INTRODUCTION

Nxg Markets Ltd (“the Company”) is steadfastly committed to maintaining the highest standards of compliance with all applicable Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws, regulations, and guidelines. This policy supports the Company’s obligation to assist governmental and regulatory authorities in the detection and prevention of money laundering, terrorist financing, and other illicit financial activities.

The Company acknowledges that money laundering is a criminal offense involving the processing of criminally-derived funds to disguise their illegal origin and integrate them into the legitimate financial system. Terrorist financing involves providing financial support to terrorist organizations or acts. Both present significant risks to the integrity and reputation of the financial sector.

2. SCOPE AND OBJECTIVE

This AML/CTF Policy governs all employees, directors, agents, and clients of Nxg Markets Ltd. Its primary objective is to establish a robust framework for the identification, assessment, management, and mitigation of money laundering and terrorist financing risks consistent with international standards, including but not limited to the Financial Action Task Force (FATF) Recommendations.

3. DEFINITIONS AND MONEY LAUNDERING STAGES

Money laundering is a multifaceted process involving the concealment and manipulation of illicit proceeds to evade detection and regulatory scrutiny. It generally comprises three principal stages:

• Placement: The initial phase wherein illicit proceeds are introduced into the formal financial system. This often involves the conversion of cash or other illegal assets into monetary instruments or financial assets, employing techniques such as structured deposits, layering of smaller transactions (commonly referred to as smurfing), and the use of intermediaries to circumvent reporting thresholds and evade Anti-Money Laundering (AML) controls and Suspicious Activity Reporting (SAR) requirements.
• Layering: The intermediary phase characterized by a series of complex, often cross-border, financial maneuvers intended to sever the transactional linkage between the illicit origin and the destination of funds. This includes sophisticated methods such as wire transfers through multiple accounts, trade-based money laundering, use of shell companies, and complex corporate structures to obfuscate the audit trail, hinder forensic accounting efforts, and frustrate regulatory oversight and transaction monitoring systems.
• Integration: The final stage where illicit funds are assimilated back into the legitimate economy, presenting as lawful capital. This is achieved through investments in real estate, luxury assets, business ventures, or financial instruments, thereby legitimizing the proceeds and facilitating their unrestricted use without arousing suspicion, effectively completing the money laundering cycle and undermining the integrity of financial markets.

4. AML/CTF COMPLIANCE FRAMEWORK

Nxg Markets Ltd adopts a risk-based approach to AML/CTF compliance, implementing stringent controls designed to prevent the Company from being used to facilitate criminal conduct.

• Governance: Oversight is provided by the Board of Directors and Compliance Committee, ensuring adequate policies, procedures, and resources for effective AML/CTF risk management.
• Compliance Officer: A designated Money Laundering Reporting Officer (MLRO) is responsible for ensuring ongoing compliance, conducting investigations, and liaising with regulatory and law enforcement agencies.

5. CUSTOMER DUE DILIGENCE (CDD) AND KNOW YOUR CUSTOMER (KYC)

Nxg Markets Ltd adheres to rigorous CDD and KYC procedures before establishing business relationships or conducting transactions:

• Verification of identity and legal status through reliable, independent source documents, data, or information.
• Enhanced Due Diligence (EDD) for high-risk customers, including politically exposed persons (PEPs), clients from high-risk jurisdictions, or those with complex ownership structures.
• Ongoing monitoring of transactions and periodic reviews to detect unusual or suspicious activity.

Individual Clients:

• Submission of valid government-issued identification (passport, national ID, or driver’s license).
• Proof of residential address (utility bills, bank statements), dated within the last three months.
• Verification documents requiring notarized translations for non-Latin scripts.

Corporate Clients:

• Verification of company registration documents, memorandum and articles of association, beneficial ownership details, and authority to operate accounts.
• Board resolutions authorizing account operations.
• Identification and verification of directors, beneficial owners, and authorized signatories per individual KYC standards.

6. TRANSACTION MONITORING AND REPORTING

Nxg Markets Ltd employs advanced automated systems combined with manual reviews to monitor client transactions continuously. The monitoring program aims to detect and flag transactions that are inconsistent with a customer’s profile, business activities, or known transaction history.

Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs) will be filed promptly with relevant Financial Intelligence Units (FIUs) in compliance with jurisdictional requirements.

All staff are trained to recognize and escalate AML/CTF concerns to the MLRO without delay.

7. RECORD KEEPING

Nxg Markets Ltd implements robust record-keeping protocols to ensure full compliance with applicable Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and regulatory obligations. The Company systematically retains comprehensive and verifiable records of all customer identification and verification documentation, transaction histories, due diligence assessments, risk profiles, and ongoing AML monitoring activities.

These records are securely maintained and readily accessible for audit, regulatory inspection, and investigative purposes for a minimum retention period of five (5) years following the termination or expiration of the business relationship, or for such longer duration as mandated by prevailing jurisdictional laws and regulatory authorities.

All archived data is preserved in a manner that guarantees integrity, confidentiality, and non-repudiation, employing appropriate technological safeguards and data protection measures in line with international standards and internal governance frameworks.

8. RISK MITIGATION MEASURES

• Client risk profiling and periodic reassessment.
• Enhanced scrutiny for clients from jurisdictions identified by credible international bodies as deficient in AML/CTF controls.
• Immediate suspension or termination of accounts where suspicious or illicit activity is reasonably suspected.
• Full cooperation with law enforcement and regulatory authorities, including providing documentation and transactional information as legally mandated.

9. STAFF TRAINING AND AWARENESS

Nxg Markets Ltd is committed to delivering ongoing AML/CTF training that ensures all staff understand their regulatory duties, internal policies, and evolving compliance requirements. This program equips employees to identify, prevent, and report suspicious activities in line with current laws and best practices, fostering a culture of vigilance and accountability.

10. POLICY REVIEW AND UPDATING

This AML/CTF Policy undergoes a formal review process at a minimum on an annual basis, with additional interim reviews triggered by changes in regulatory mandates, emerging operational risks, or shifts in the legal and compliance landscape. Such rigorous oversight ensures continuous alignment with prevailing statutory requirements, regulatory expectations, and industry best practices.

11. NON-COMPLIANCE AND SANCTIONS

Any violation of this AML/CTF Policy shall be subject to disciplinary measures, up to and including termination of employment or contractual agreements. Nxg Markets Ltd reserves the unequivocal right to decline or discontinue client relationships where there is reasonable suspicion or evidence of involvement in money laundering, terrorist financing, or other illicit activities, in accordance with applicable laws and regulatory obligations.

12. CONTACT AND REPORTING

All employees and relevant third parties are mandated to promptly escalate any suspicious transactions or activities to the Money Laundering Reporting Officer (MLRO). The MLRO shall conduct a thorough assessment and, where warranted, initiate timely reporting to the appropriate regulatory and law enforcement authorities in strict compliance with applicable legal and regulatory frameworks.