AML/KYC Policy

FluxPay, a trade name of Ideation House Financial Services Limited (CBCA Corporation No. 1419582-5, FINTRAC MSB Registration No. M22512329), is committed to the highest standards of Anti-Money Laundering (AML), Know Your Customer (KYC), and Counter-Terrorist Financing (CTF) compliance. As a registered Money Services Business (MSB) with FINTRAC, we maintain comprehensive policies and procedures to detect and prevent financial crime.

Our registered MSB services include Foreign Exchange Dealing and Money Transferring.

FluxPay operates in compliance with the following Canadian federal legislation and regulations:

• Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
• Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR)
• FINTRAC Guidance and Directives
• Criminal Code of Canada (Part II.1 — Terrorism)
• United Nations Act (UNA)
• Special Economic Measures Act (SEMA)
• Justice for Victims of Corrupt Foreign Officials Act (JVCFOA)

Money laundering typically involves three distinct stages. Understanding these stages is critical to FluxPay's ability to detect and prevent the misuse of its payment processing services.

3.1 Placement

The introduction of criminal proceeds into the financial system. Common placement techniques include:

• Structuring deposits below reporting thresholds to avoid detection
• Purchasing monetary instruments (money orders, prepaid cards) with illicit cash
• Commingling criminal proceeds with legitimate business funds
• Using cash-intensive businesses to disguise the origin of funds

3.2 Layering

Separating the proceeds from their criminal source through complex layers of financial transactions designed to obscure the audit trail:

• Wire transfers between multiple accounts across jurisdictions
• Converting funds between currencies to create distance from the source
• Transactions through shell companies and nominee accounts
• Use of complex corporate structures to hide beneficial ownership

3.3 Integration

Re-entering laundered funds into the legitimate economy so they appear to come from lawful sources:

• Real estate purchases and property investments
• Acquisition of luxury goods and high-value assets
• Business investments and capital infusions into legitimate enterprises
• Loan-back schemes using laundered funds as collateral

3.4 Techniques Relevant to Payment Processing

FluxPay is specifically vigilant for laundering techniques that exploit payment processing infrastructure:

• Rapid movement of funds through multiple payment channels in a short time period
• Use of multiple merchant accounts to structure transactions below monitoring thresholds
• Unusual refund patterns, such as processing payments and immediately issuing refunds to different accounts
• Transaction volumes or patterns inconsistent with a merchant's stated business type and size
• Round-dollar transactions or repetitive identical amounts with no commercial rationale

4.1 Know Your Business (KYB) Procedures

Before onboarding any merchant, FluxPay conducts comprehensive due diligence:

• Verification of business registration and legal status
• Confirmation of Existence using the Confirmation of Existence Method as prescribed by FINTRAC
• Collection and verification of beneficial ownership information
• Assessment of the nature and purpose of the business relationship
• Verification of authorized signatories

4.2 Identity Verification

We verify the identity of all directors, officers, and beneficial owners through:

• Government-issued photo identification (passport, driver's license, or equivalent)
• Independent electronic verification methods
• Dual-process verification for high-risk relationships
• Ongoing verification as required by FINTRAC guidelines

4.3 Business Relationship Assessment

For each merchant relationship, we assess:

• Expected transaction volumes and patterns
• Geographic risk factors
• Industry and business model risk
• Source of funds and wealth where applicable

4.4 Beneficial Ownership Identification

Per PCMLTFA requirements, FluxPay identifies and verifies beneficial owners for all merchant relationships:

• Identify all individuals who directly or indirectly own or control 25% or more of a corporation
• For entities where no individual holds 25% or more, identify the directors of the corporation
• Verify the identity of each beneficial owner before establishing the business relationship
• Re-verify beneficial ownership information when changes are detected or at least every five (5) years

For each beneficial owner, FluxPay records:

• Full legal name
• Date of birth
• Residential address
• Nature and extent of ownership or control (e.g., percentage of shares, voting rights, or other means of control)

4.5 Third-Party Determination

FluxPay must determine whether a client is acting on behalf of a third party. When a reasonable suspicion exists that a merchant is processing payments for an undisclosed third party, FluxPay will:

• Request written confirmation of all third-party relationships
• Identify and verify the third party using standard CDD procedures
• Document the nature, purpose, and scope of the arrangement
• Apply enhanced monitoring to the relationship for the duration of the arrangement

Enhanced measures are applied in higher-risk situations including:

5.1 High-Risk Business Categories

• Cannabis-related businesses (where legally permitted)
• iGaming and online gambling operators
• Money services businesses and payment facilitators
• Businesses operating in high-risk jurisdictions

5.2 Politically Exposed Persons (PEPs)

Per the PCMLTFA, FluxPay applies enhanced due diligence to the following categories of politically exposed persons:

Foreign Politically Exposed Persons

A person who holds or has held one of the following positions in or on behalf of a foreign state:

• Head of state or head of government
• Member of the executive council of government or member of a legislature
• Deputy minister or equivalent
• Ambassador, or attaché or counsellor of an ambassador
• Military officer with a rank of general or above
• President of a state-owned company or bank
• Head of a government agency, court, or tribunal
• Judge of a supreme court, constitutional court, or other court of last resort

Domestic Politically Exposed Persons

A person who holds or has held one of the following positions in Canada:

• Governor General, Lieutenant Governor, or head of government
• Member of the Senate or House of Commons, or member of a provincial legislature
• Deputy minister or equivalent
• Ambassador, or attaché or counsellor of an ambassador
• Military officer with a rank of general or above
• Mayor, judge of a federal or provincial court
• Head or president of a Crown corporation, government agency, or government body

Heads of International Organizations (HIOs)

A person who is the head or deputy head of an international organization established by the governments of states, including but not limited to:

• United Nations and its specialized agencies
• World Bank, International Monetary Fund (IMF)
• World Trade Organization (WTO)
• North Atlantic Treaty Organization (NATO)
• Other treaty-based international organizations

Family Members and Close Associates

• Family members: Spouse or common-law partner, child, child's spouse or common-law partner, sibling, parent, mother or father-in-law
• Close associates: Persons who are known to be closely connected to a PEP for personal or business reasons

Enhanced PEP Measures

• PEP status monitoring continues for a minimum of five (5) years after the person has left office
• Senior management approval is required before establishing or continuing any business relationship with a PEP, HIO, or their family members and close associates
• Source of funds and source of wealth must be established and documented
• Enhanced ongoing monitoring is applied for the duration of the relationship

5.3 High-Risk Jurisdictions

• Countries identified by FATF as having strategic deficiencies
• Jurisdictions subject to Canadian sanctions
• Countries with elevated corruption or terrorism financing risk

6.1 Transaction Monitoring

• Automated monitoring of all transactions for unusual patterns
• Risk-based thresholds calibrated to merchant profiles
• Real-time alerts for transactions exceeding prescribed thresholds
• Review of large cash transactions and electronic funds transfers

6.2 Business Relationship Review

• Periodic review of all merchant relationships
• Ongoing monitoring triggers per FINTRAC guidance (two or more transactions within a five-year period)
• Update of KYC documentation at regular intervals
• Reassessment of risk ratings based on transaction history

7.1 Reporting Obligations

FluxPay is required to file Suspicious Transaction Reports with FINTRAC when there are reasonable grounds to suspect that a transaction is related to money laundering or terrorist financing. STRs must be filed within 30 calendar days of the determination that reasonable grounds to suspect exist.

7.2 Tipping-Off Prohibition

7.3 Internal Reporting

• All employees must report suspicious activity to the Compliance Officer immediately
• The Compliance Officer reviews and determines whether to file an STR with FINTRAC
• Attempted suspicious transactions must also be reported, even if the transaction was not completed
• Reports are filed within the prescribed timeframe (30 calendar days)
• All reports are documented and retained in accordance with record-keeping requirements

FluxPay maintains all records as required by the PCMLTFA and PCMLTFR:

• Client identification records: minimum 5 years from date of last transaction
• Transaction records: minimum 5 years from date of transaction
• Suspicious transaction reports: minimum 5 years from filing date
• Large cash transaction reports and electronic funds transfer reports
• Compliance program documentation including policies, risk assessments, and training records

8.1 Screening Requirements

FluxPay screens all merchants and transactions against Canadian sanctions lists including:

• Criminal Code of Canada (Part II.1) listed entities
• United Nations Act (UNA) regulations
• Special Economic Measures Act (SEMA) regulations
• Justice for Victims of Corrupt Foreign Officials Act (JVCFOA) regulations
• Consolidated Canadian Autonomous Sanctions List

8.2 Screening Process

• Screening at onboarding and on an ongoing basis
• Real-time screening of transactions where applicable
• Immediate escalation of potential matches
• Prohibition of transactions involving sanctioned parties or jurisdictions

9.1 Training Program

• All employees receive AML/KYC/CTF training upon hiring
• Annual refresher training for all staff
• Specialized training for compliance and operations teams
• Training records maintained as required

9.2 Compliance Program Effectiveness Review

• Independent review of the compliance program every two years as required by PCMLTFA
• Assessment of policies, procedures, risk assessment methodology, and training
• Recommendations implemented and tracked
• Results reported to senior management