Counter Terrorism

1. Purpose & Scope

This policy defines Madhouse Wallet’s commitment to prevent its platform—including investment dashboards, and related services—from being used for money laundering (ML) or terrorist financing (TF).

Scope:

• Applies to all clients (individuals and entities), employees, contractors, affiliates, and agents.

• Covers onboarding, monitoring, transaction review, and ongoing due diligence.

• Addresses compliance with international AML/CFT regulatory frameworks.

2. Regulatory Compliance Framework

This policy aligns with the following laws and recommendations:

• Financial Action Task Force (FATF) Recommendations

• U.S. Bank Secrecy Act (BSA) & USA PATRIOT Act

• European Union Anti-Money Laundering Directives (AMLD 5 & 6)

• U.K. Money Laundering Regulations (MLR)

• UN Security Council Resolutions related to terrorist financing

• FCA, FINCEN, HKMA, or applicable authorities based on geographic operations

3. Key Definitions

• Money Laundering (ML): Concealment of the origins of illegally obtained money.

• Terrorist Financing (TF): Collection or provision of funds with the intention of supporting terrorist acts or organizations, regardless of whether funds are derived from a lawful or unlawful source.

• Counter-Financing of Terrorism (CFT): Policies and controls aimed at identifying, preventing, and reporting activities related to terrorism financing.

• Sanctioned Entity/Person: Individuals or organizations listed by national or international bodies as being involved in terrorism or other illicit activity.

• Politically Exposed Person (PEP): Someone with a prominent public role, including their family members and close associates.

4. CFT-Specific Obligations

4.1 Risk Identification

• Transactions or relationships involving jurisdictions with documented terrorist activity, FATF black/gray-listing, or international conflict zones are flagged.

• Transactions with no clear economic rationale, or involving frequent cross-border movements, especially to/from high-risk jurisdictions, are treated as high-risk.

4.2 Customer Due Diligence (CDD)

• CDD measures include checking customers and UBOs against:

• • UN 1267/1989 Sanctions List

  • OFAC’s SDN List

  • EU Consolidated Sanctions List

  • Interpol watch lists

• Customers must disclose any affiliation with religious, political, or humanitarian entities subject to international sanctions.

4.3 Enhanced Due Diligence (EDD)

• Required when:

• • The customer is from or transacts with a high-risk jurisdiction

  • A customer or UBO is on a sanctions or terrorist list

  • Inconsistencies arise in customer profile vs transaction behavior

EDD includes:

• Source of funds/wealth checks

• Directorial or UBO background checks

• Transaction activity monitoring with velocity and volume tracking

• Senior management approval prior to onboarding or continuation

4.4 Sanctions Screening & Monitoring

• Daily updated automated screening of all customers and counterparties

• Transaction monitoring algorithms specifically trained to detect:

• • Layering techniques

  • Use of informal remittance systems (e.g., hawala)

  • Transfers to/from conflict zones or sanctioned countries

5. Governance & Reporting

5.1 Internal Oversight

• A Designated CFT Compliance Officer shall be appointed to:

• • Oversee implementation of CFT controls

  • Liaise with relevant authorities (e.g., FinCEN, FIU-IND)

  • Conduct annual risk-based CFT assessments

• The Principal Officer retains overall responsibility for SARs, CFT policy updates, and compliance certification.

5.2 Suspicious Activity Reporting (SAR)

• CFT-related SARs must be filed within 7 working days of suspicion.

• SARs may include:

• • Use of funds by a person linked to a terrorist group

  • Multiple small transactions meant to avoid detection

  • Fund transfers with no legitimate business or personal rationale

• Tipping off (informing the customer of the investigation) is strictly prohibited.

6. Record-Keeping & Audit Trails

• All CFT-related data, including:

• • Identification details

  • Transaction logs

  • Investigative notes

  • Sanctions checks will be preserved for a minimum of 5 years.

• Audit logs are encrypted and accessible only to Compliance and designated officers.

7. Training & Awareness

• All staff undergo CFT training annually, including:

• • Terrorist financing typologies

  • Red flags and escalation procedures

  • Legal obligations and reporting framework

• Frontline and risk personnel receive scenario-based workshops on CFT trends.

8. Policy Review and Updates

• This policy is reviewed at least annually, or immediately following:

• • Updates from FATF or the UN

  • Change in business model

  • Red flag incidents or internal investigations

9. Red Flags for Terrorist Financing

Red Flag Category	Examples
Geographic	Transfers to conflict zones or sanctioned states (e.g. Syria, North Korea)
Behavioral	Refusal to provide source of funds; attempts to obscure ownership
Transactional	Donations to unverifiable NGOs; inconsistent with customer’s known profile
Structural	Frequent use of third parties; high volume of small transactions under thresholds

10. Commitment to Global Financial Integrity

Madhouse Wallet acknowledges the global threat of terrorism and pledges to be part of the financial community’s effort to stop terrorist financing. This CFT-integrated KYC/AML policy supports our belief that financial transparency and vigilance are non-negotiable in safeguarding global peace and ethical innovation in finance.