AML & Sanctions Policy

Linera Digital Assets Ltd. (the "Company") is a BVI business company incorporated under the laws of the British Virgin Islands ("BVI").

Although the Company is not a relevant person or engaged in relevant business for the purposes of the BVI AML and Sanctions Regime (as defined below), it seeks to maintain risk-based controls broadly consistent with anti-money laundering ("AML"), counter-terrorist financing, counter-proliferation financing and sanctions compliance best practices. Accordingly, the Company voluntarily maintains this Anti-Money Laundering and Sanctions Policy (the "Policy") to reduce the risks faced by the Company from being exposed to financial crime, sanctioned persons, or being used as a vehicle for money laundering or any other illicit activities, as well as to provide a framework for the detection, prevention and reporting of suspected money laundering / terrorist financing activities where required to do so.

This Policy has been drafted with regard to the following laws and regulations, each as supplemented, updated or amended from time to time:

• BVI Proceeds of Crime Act (as revised) ("PoCA");
• BVI Anti-Money Laundering Regulations (as revised) ("Regulations");
• BVI Anti-Money Laundering Code of Conduct (as revised) (the "Code");
• UK sanctions regulations, including the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") and the Overseas Territories Sanctions Orders; and
• United Nations sanctions measures,

(collectively herein referred to as the "BVI AML and Sanctions Regime").

Money Laundering. Money laundering is the criminal practice of filtering ill-gotten gains or “dirty” money through a maze or series of transactions, so the funds are “cleaned” to look like proceeds from legal activities. Money laundering does not have to involve cash at every stage of the laundering process. Although money laundering is a diverse and often complex process, it essentially involves three independent steps that can occur in sequence or even simultaneously:

• Placement involves physically placing illicit funds into the financial system or the retail economy. Money is most vulnerable to detection and seizure during placement.
• Layering involves separating the illicit funds from its criminal source by layering it through a series of financial transactions, designed to obscure the ownership of the funds and make it difficult to trace the money back to its original source.
• Integration involves moving the laundered proceeds into a seemingly legitimate form. Integration may include the purchase of automobiles, companies, real estate, etc.

Terrorist Financing. The motivation behind terrorist financing is ideological as opposed to profit seeking. Terrorism is intended to intimidate a population or to compel a government or an international organization to do or abstain from doing a specific act through the threat of violence. Terrorist groups develop sources of funding that are relatively mobile to ensure that funds can be used to satisfy the material and logistical requirements to commit terrorist acts.

Terrorists may finance their activities with funds from either unlawful or legitimate sources. Unlawful activities, such as extortion, kidnapping, and narcotics trafficking, may be a source of funding. Other possible activities include smuggling, fraud, theft, robbery, identity theft, use of conflict diamonds, and improper use of charitable or relief funds. In the last case, donors may have no knowledge that their donations have been diverted to support terrorist causes. Terrorists’ use of unlawful sources of funds means that money laundering is often a vital component of terrorist financing.

Other legitimate sources have also been found to provide terrorist organizations with funding; these legitimate funding sources are a key difference between terrorist financiers and traditional criminal organizations. In addition to charitable donations, legitimate sources include foreign government sponsors, business operations, and personal employment.

Although the motivations of traditional money launderers and terrorist financiers differ, the actual methods used to fund terrorist operations can be the same as or similar to those methods used by other criminals that launder funds. Funding for terrorist attacks does not always require large sums of money, and the associated transactions may not be complex.

Proliferation Financing. Proliferation financing refers to the act of providing funds or financial services that contribute to the development, acquisition, manufacture, possession, transportation, transfer, or use of nuclear, chemical, biological, or radiological (CBRN) weapons and their delivery systems. Unlike money laundering, where the primary objective is to conceal the illicit origin of funds, and unlike terrorist financing, where the motivation is largely ideological, proliferation financing is typically state-sponsored or driven by strategic geopolitical objectives, though non-state actors may also be involved. Proliferation financiers often exploit legitimate trade and financial channels to obscure the movement of funds and goods, making detection particularly challenging. Common methods include the use of front companies, false documentation, third-party intermediaries, and the manipulation of trade finance instruments to disguise the true end-use or end-user of transactions. Financial institutions are required to screen transactions and customers against applicable sanctions lists and export control regulations to detect and prevent proliferation financing activity, as even seemingly ordinary commercial transactions can, if left unchecked, contribute to the financing of weapons of mass destruction programs.

Sanctions imposed by the United Kingdom under SAMLA, together with relevant United Nations sanctions measures, are extended to and implemented in the BVI through applicable Overseas Territories Orders. As a result, individuals and entities in the BVI must comply with sanctions measures that apply in the BVI, including financial sanctions, asset-freezing measures and restrictions relating to dealings with designated persons, entities, jurisdictions and activities.

BVI persons, such as the Company, are generally prohibited from dealing with funds or economic resources owned, held or controlled by designated persons, making funds or economic resources available directly or indirectly to designated persons, or engaging in activities prohibited under applicable sanctions legislation. Persons subject to BVI law may also have reporting obligations where they identify sanctioned persons, frozen assets or potential sanctions breaches. Failure to comply with applicable sanctions measures may constitute a criminal offence and may expose individuals and entities (such as the Company) to regulatory action, fines and other penalties.

Accordingly, this Policy sets out certain sanctions screening procedures designed to identify designated persons and transactions involving sanctioned jurisdictions and to ensure compliance with applicable sanctions obligations.

This Policy is built to align with global AML and sanctions best practices, including the concepts as laid out in the BVI AML and Sanctions Regime. This Company will apply this Policy to its dealings with its service providers, contractors or any person with whom it has a material commercial relationship by applying a risk-based approach (together, "Relevant Persons").

An effective AML and sanctions compliance policy must be commensurate with the risks posed by the location, size, nature, and volume of the services (if any) provided by the Company and is designed to prevent the Company from being used to facilitate financial crime and/or breaching sanctions laws.

Therefore, this Policy includes the following 'pillars' of AML and sanctions best practice:

• Internal Controls: A system of policies, procedures and internal controls reasonably designed to ensure consistency with the BVI AML and Sanctions Regime;
• Compliance Officer(s): The Company may (but, for the avoidance of doubt, shall not be under any obligation to) appoint AML compliance officer(s) (the "AML Officers") to be responsible for ensuring the Company's day-to-day compliance with this Policy, and implementation and monitoring of the operations and internal controls of the AML and sanctions program. Where no such appointment has been made, references to AML Officers in this Policy shall mean the directors of the Company; and
• Periodic Review: periodic review of this Policy is expected at least every 12-18 months.

This Policy represents the Company’s internal controls designed to: (a) detect, prevent, limit and control money laundering, proliferation financing and terrorist financing risks, and to detect and report transactions and activity, if required by applicable law; and (b) ensure compliance with applicable sanctions laws.

Risk assessment. The Company's risk assessment serves as the road map for guiding the implementation of this Policy. At a minimum, the Company will complete an enterprise level risk assessment on an annual basis. However, the Company may update its risk assessment to identify changes in its risk profile as necessary and modify this Policy to reflect those risks.

Contracting parties. The Company shall apply a risk-based approach to screening individuals and legal entities that contract directly with the Company. Where applicable, screening shall include checks with respect to the sanctions and anti-terrorism lists provided by various government agencies, including the United States' Office of Foreign Assets Control ("OFAC"), the United Kingdom's His Majesty's Treasury ("HMT"), and the United Nations' Security Council ("UNSC").

The Company may, on a risk-based approach, collect, verify, and maintain specific identifying information for individuals and legal entities with whom it contracts.

As at the date of the adoption of this Policy, the Board has determined that, overall, the inherent money laundering risk posed by the Company's contracting parties is currently considered to be standard or low.

The Company will not typically enter into commercial relationships with parties who are located in or operate in jurisdictions which provide for a higher risk of money laundering or which are associated with sanctions. In particular, the Company will not engage with any person, entity or wallet address that is subject to sanctions applicable in the BVI and may additionally screen against OFAC and other internationally recognised sanctions lists as a matter of risk management and best practice. The Company may use blockchain analytics and other technologies and/or resources to determine whether an individual or wallet is sanctioned.

Enhanced due diligence may be applied to high-risk jurisdictions, complex ownership structures, sanctions-sensitive industries and higher-risk counterparties.

Contracting parties that do not or cannot demonstrate that they are an acceptable transaction counterparty from an AML and sanctions compliance perspective in respect of AML or sanctions matters will be unable to use the Company's services or contract with the Company.

Monitoring of Activity and Internal Conduct. While the Company does not conduct customer transaction monitoring, it maintains appropriate oversight of its trading activity and internal operations to identify unusual or suspicious conduct that may give rise to financial crime or sanctions exposure.

In particular, contractors or other persons who are engaged to support the Company’s operations should remain alert to:

• trading activity that is inconsistent with the Company’s stated strategies or risk profile;
• unexplained sources of capital or movements of funds into or out of the Company;
• instructions or behaviours that lack a clear commercial rationale; or
• any activity that may indicate market abuse, sanctions exposure, or other financial crime risk.

Any such concerns must be promptly escalated to the AML Officers.

Escalation of Suspicion. Where contractors or other persons who are engaged to support the Company’s operations become aware of, or have reasonable grounds to suspect, that any activity, transaction, or individual connected with the Company may involve criminal conduct, including money laundering, sanctions breaches, or market abuse, the matter must be reported without delay to the AML Officers.

To the extent available, the report should include:

• the identity of the relevant individual(s) or entities;
• details of the activity or circumstances giving rise to the suspicion; and
• any information regarding funds, accounts, or jurisdictions connected to the concern.

The AML Officers will determine whether further action is required, including consideration of any applicable reporting obligations.

Prohibited Conduct and Internal Restrictions. The Company prohibits any conduct that may expose it to financial crime risk or sanctions risk, and reserves the right to take appropriate action, including restricting access to systems, suspending trading activity, or terminating employment or engagement. The Company shall not knowingly enter into or continue relationships that would result in a breach of applicable sanctions restrictions.

Without limitation, this includes where any individual:

• attempts to circumvent, undermine, or interfere with the Company’s compliance or control processes;
• provides false, misleading, or incomplete information in relation to identity, source of funds, trading activity, or internal reporting;
• engages in trading or other conduct that is assessed as presenting an unacceptable financial crime, regulatory, or reputational risk; or
• is identified as a sanctioned or otherwise prohibited person under applicable sanctions regimes.

The Company may take such action the board considers necessary without prior notice, where it considers it necessary to manage or mitigate legal, regulatory, or reputational risk.

Record retention. Generally, records relating to this Policy must be retained for a period of five (5) years from the date of the transaction. The Company retains all necessary documents under all laws and regulations and governed by its Policy. The Company may, from time to time, rely on third party service providers to perform such record keeping activities.

Reliance on Service Providers. The Company may, whilst maintaining a risk-based approach to AML and sanctions compliance, rely on suitably qualified third-party service providers to perform certain material AML and sanctions procedures on its behalf. The Company will consider and continuously assess the suitability of such service providers on a case-by-case basis.

Responsibility of directors. The Company’s directors are ultimately responsible for ensuring that the Company maintains this Policy and a culture of compliance.

The Company may decide to offer training for Relevant Persons on the Company's AML and sanctions procedures.

Training may be conducted internally or by a third-party consultant, vendor, or recognized conference provider through presentations at a meeting, web seminar, circulation of memoranda or other written materials, or any other appropriate manner.

A review of this Policy should be conducted every 12–18 months or on a material change to the Company’s business. The review will test the overall integrity and effectiveness of the systems, controls, and technical compliance with all applicable laws and regulations. Moreover, the review shall:

• determine whether the Company is following all applicable laws and regulations as well as the Company’s policies and procedures,
• assess the policies, procedures, processes, and overall compliance with requirements and best practices for monitoring and detecting unusual activities;
• assess the adequacy of the implementation of corrective actions and recommendations from the prior year’s independent review; and
• provide recommendations on how the Company can improve its internal control procedures to comply with AML and sanctions regulations, emerging trends and best practices.