Source of Funds / Wealth Procedure

General Overview

As per GAL's AML/CFT policy section 6, there are some circumstances and/or customer behaviour that requires the operator to run Enhanced Due
Diligence on an account. This is normally in the form of a Source of Funds and/or a Source of Wealth request.

What is a Source of Funds Request?

A Source of Funds (SOF) request is a process or a requirement that financial institutions, such as banks or other regulated entities, may use to obtain
information about the origin and legitimacy of the funds being used for a particular transaction or account.

The purpose of a Source of Funds request is to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF)
regulations, as well as to prevent fraud and illicit activities (AML) and counter-terrorism financing (CTF).

When a financial institution requests a Source of Funds, they are seeking documentation or evidence that demonstrates the legitimate source of the
funds being used. This could include bank statements, investment records, salary slips, tax documents, or any other relevant financial records. The
specific requirements may vary depending on the institution and the nature of the transaction or account involved.

The Source of Funds request is typically (but not exclusively) made to individuals or entities engaging in high-value transactions, such as large cash
deposits, wire transfers, or opening new accounts with significant initial deposits. By verifying the source of funds, financial institutions aim to
mitigate the risk of money laundering, illegal activities, or funding of terrorism.

Complying with a Source of Funds request is essential for customers or clients who are involved in such transactions or accounts. Failure to provide
satisfactory evidence or refusal to cooperate with the request may result in the financial institution denying the transaction, freezing the account, or
reporting suspicious activity to the appropriate regulatory authorities.

What is a Source of Wealth Request?

A Source of Wealth (SOW) request is a process or a requirement that financial institutions may use to gather information about the origin and legitimacy
of a person's overall wealth or assets. Unlike a Source of Funds (SOF) request, which focuses on the origin of specific funds used for a particular
transaction, a Source of Wealth request looks at the broader picture of an individual's overall wealth accumulation.

The purpose of the Source of Wealth request is to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF)
regulations, as well as to mitigate the risk of illicit funds entering the financial system.

Financial institutions may request a Source of Wealth when a customer or client is engaging in high-value transactions, such as opening an account
with a significant initial deposit, making large investments, or engaging in complex financial transactions (this list of reasons is not exhaustive).

When a Source of Wealth request is made, the individual is typically asked to provide documentation or evidence that demonstrates how their wealth
has been accumulated. This could include information such as business ownership records, property ownership documents, investment portfolios,
inheritance records, employment history, and other relevant financial records. The objective is to establish that the individual's wealth has been
acquired through legitimate means and is not derived from illegal or fraudulent activities.

Complying with a Source of Wealth request is crucial for individuals involved in high-value financial transactions. Failure to provide satisfactory
evidence or refusal to cooperate with the request may result in the financial institution denying the transaction, freezing the account, or reporting
suspicious activity to the appropriate regulatory authorities.

Please Note

From here on in, the abbreviations for Source of Funds will be "SOF" and the abbreviations for Source of Wealth will be "SOW" , these can be
combined to "SOF/W".

SOF & SOW Documents Guide

1.Introduction & Explanation:

Definition of Source Of Funds (SOF) - "The origin of the funds that are used for a transaction sent from customer`s end to any business" (Any
industry/business - igaming, entertainment, etc).

Example:

If a customer spent 10k in 3 days we need to request SOF, we want to know what is the origin of the funds he spent with us. If he sends us BS that is
used only for gambling and is funded by another bank account we need to continue requesting documents until we got the answer of the fundamental
question - "What is the origin of the funds that the customer spent?"

Definition of Source Of Wealth (SOW) - "The activities that have generated the total net worth of the client, the activities that produced the client's
funds and property".

Example:
If a customer contact us, would like to increase his company monthly net limit he will be questioned how is planning to fund higher limit. If the customer
states that had received large amount as inheritance and provide sufficient documentation the limit can be increased however further monitoring is
required in case he actually starts spending funds that are not funded via the inheritance.

Same example can be given with winnings from other bookmakers, usually with a regular gambler there is a great chance that he already spent this
funds and we need to stay vigilant.

As SOF can be accepted:

Payslips;
Bank Statements;
Employment contracts;
Payment Method Statements (PayPal, Skrill etc);
Tax Return (Funds returned to the customer`s bank account and then used on our platform, we need to have the link as evidence);
Dividends (Letter from an accountant and again the link between the Dividends and the bank account)
Other;

We can`t rely only on customer`s explanation (with small exceptions in case it`s well known business individual, sport person etc). The
Regulatory bodies want to see actions and decisions taken based on evidence, not based on assumptions, guessing, customer`s
admissions and unverified information. (Social media evidence is ok again depending where the customer stands at the moment
and if the information is corroborated - total spent/time etc).
The regulators want to see logical approach which lead to customer`s SOF/W evidence been logical(funds flow) and verified.

In addition to the above it`s very important to mention that the starting point of building our conclusion and considering further action should be based
on "Where the customer is standing at the moment?/How much he spent in what period? Risk profile?", from this point we can move to "Is the
information that we gathered trough open searches and documents that we have already on file can justify the spent or we need additional
documentation?"

(To provide example with low spent and large spent/ no template is available, here is the part that is different to the techniques and approach by Fraud
and other departments, we need to stop, think and take rational decision otherwise we might annoy the customer and he walks away if we are
requesting inadequate documents or we are not clear what and why we are requesting.

As SOW can be accepted:

Sale of Property;
Inheritance;
Employment;
Winnings from other bookmakers;
Insurance payments/compensations;
Gifts;

Three steps to follow when establishing source of wealth (not going for extreme levels):

Obtain information on net worth

Obtain information on where that net worth came from
Verify the information

As we can see of the above some of the documents can be accepted in both cases, for example if a customer accumulated large amount of savings
trough employment + recent casino winnings this can justify his recent spent (SOF) and also can justify his statement that can afford more than his
currently monthly limits (SOW).

Example:

SOF can be also requested in cases of consistent large winnings/sport/casino fraud. If a customer is actually professional sport trader with great sport
knowledge or have access to vital information/tools if we request SOF we might see on his BS similar/exact amounts deposited to multiple bookmakers.

In cases where there is pending payout, but we have concerns regarding the source of funds used for the deposits it`s ok the payout
to remain on hold until we are assured about the origin of the funds used for deposits. If the customer fails to provide this information or
the information is not sufficient and we still don`t know where the money are coming from we can raise STR (SAR) to MLRO informing him
about the case and request feedback if it`s ok the payout to be proceeded. This again depends on "Where the customer is standing at the
moment? How big is the payout? How big are our concerns?"

What we are trying to achieve? - We want to keep up with the regulatory requirement which states that we should be assured what funds
the customers are spending on our platforms (No AML/TF/Criminal spent etc). SOF/W request does also cover RG issues in case there is
underage gambling suspicion and other, however for RG the approach is different - since we establish that there are no AML/TF/Criminal
spent issues and still the spent is high we do interact with the customers, apply limits.

How much back in time we should go when requesting document? -There isn`t exact established timeframe/template, we should go back
as much as it`s needed, again depending on where the customer stands at the moment (lifetime spent/activity).

Example:

If a customer spent via his bank card 15k during the last 2 months we should request BS for the card going back at least 3 months back to avoid the
need of requesting additional documents if based on the last 2 months we can`t establish the origin of the funds.

Recycled winnings - Recycled winnings should be considered as SOF with extra careful approach. If we have a customer that had 30k
winnings 3 months ago and since then spent 20k we can conclude that he was recycling winnings, however we can`t be 100% sure so in such
cases we can interact with the customers or request additional documentation or only add the account for further monitoring depending of the
risk for the whole profile.
What to look for when reviewing/analyzing documents received following SOF/W Request? (When reviewing BS it does matter not only
where the funds are coming from but also in some cases where they are spent-for example if are sent to 3rd party individual with adverse
media, we don`t need to proceed with adverse media for every 3rd party outgoing transaction, however when there is concerning pattern we
need to investigate further)

Type of documents, dates, amounts, names, information makes sense and does not seem that is manipulated etc.
Employment/Business income (Weekly, monthly, net, gross, start of employment, year to date, occupation, company any other relevant
information).
3rd party funding (Who is the 3rd party? Does he/she has an account with us? Is there adverse media? How large is the 3rd party funding? Is
it obvious funding (funds directly spent for gambling? etc)
Transactions from own business - What type is the business? What is the customer`s role within the business?(owner, director, shareholder
etc), How is the business performing? Are there previous closed directorships due to concerns? Adverse media for the business? Letter from
an accountant (as per Neil advice) etc.
Business vs personal bank accounts - Makes huge difference when a customer funds his gambling activity trough his personal bank account
or trough his business bank account, business payment methods are not allowed for any of our brands. If a customer is funding his personal
bank account trough business bank account we can request documentation confirming that the funds were extracted from the business in
legal manner.
Cash funding - This issue is fading away however still exists and we need to be vigilant.
Large movement of funds with unknown source - We always need to question such transactions and interact with the customer explaining why
we are contacting and what we are looking for.
Activity funded by benefits could be in some cases also criminal spent (Covid19 support scheme in UK).
Cryptocurrencies - Extremely hard to track down, however there could be also genuine cryptocurrency transactions used in genuine manner
(crypto profits).
Corroboration/Verifying the documents with external sources. When documents on file are corroborated with external sources it does helps a
lot, however always the weight should be given to documents on file/official public databases. (social media, public tax records etc).
The level of corroboration (proof/evidence) should reflect the client’s risk profile and be able to resolve any red flags.

Additional examples of appropriate information and/or supporting documentation required to establish Source
of Wealth and Funds:
 Examples of poor practice

• SOW requirements, particularly around verification, are not risk-based - applying the same inadequate measures to clients of varying risks.

• Always accepting a client’s explanation for SOW at face value – no further investigation is performed, even where multiple red flags are present.

• Unverified information. (Different opinions what can be verified and what not).

2. Examples and Exercises:

Companies House - https://find-and-update.company-information.service.gov.uk/company/10653490

Things to look for: Status, type, address, incorporation date, nature of business, recent financial statements, active directors, shareholders
(persons with significant control)
Financial Statements / Full accounts / Micro-account statements:

What are company accounts? - Company accounts are a summary of an organization's financial activity over a 12 month period. They are
prepared for Companies House and HM Revenue & Customs every year and consist of the Balance Sheet, the Profit and Loss Statement, and
the Cash Flow Statement.

The Balance Sheet Explained:

1. The Balance Sheet is a financial statement which will give you a snapshot insight into your business’s assets, liabilities and the shareholders’
equity at a specific point in time. It’s an indication of the financial health of your company at the time the accounts were generated being a
comparison of what is owned versus what is owed.

The balance sheet deals with two categories: assets and liabilities.

An asset is something which is owned by your organization or that you get a benefit from.

An asset will be either a:

Fixed asset - which are things that will be kept long-term such as land, factories, and vehicles.

Current asset - which are things that have a shorter life-span such as stock items, petty cash and cash in the bank.

A liability is an obligation, most likely a debt arising which will need to be repaid.

A liability will be either a:

Long-term liability - money which is not due to be repaid within the next year.

Current liability - money that is due to be repaid within a year.

2.
Documents To Review:
Dividend voucher/statement: https://support.freeagent.com/hc/en-gb/articles/115001222964-The-dividend-voucher
Tax Declarations: When reviewing Tax Declarations we are looking for the total gross/net income and also if there is business involvement.
Procedure

As per our AML Policies & Guidelines, for any account which had a manual risk score assigned by an AML analyst of Medium-High or above, SOF/W
will be requested.

1. The Analysts will write clearly in the conclusion of the review as to why the SOF/W will be requested, what the concerns were that dictated
SOF/W to be requested and furthermore a detailed hidden note will be left on CMS (only visible to the AML team to avoid tipping off) relaying
the same information.
2. The Analysts will determine which SOF/W documents are required, they will note them down on the CMS Hidden note and proceed to send
the customer an email through Novomind with the SOF/W request (View here for confluence page about Sending SOF Emails).
3. The Analyst will apply a Deposit restriction immediately on the account (this varies depending on the Jurisdiction and/or the severity of the
case).
4. The Analyst will then add the account to the SOF/W Review log (View here for confluence page about SOF/W Review Log) for monitoring.
5. In the event that the customer submits SOF/W documents, customer service will receive the initial email and they will escalate the documents
via Jira to the AML team for review.
6. Depending on the outcome of the SOF/W process for a particular customer, the appropriate follow up action will be taken by the analyst/s.