Digital Securities Exchange Limited (DSX), being a registered agent of ePayments Systems Limited, which is authorised by the Financial Conduct Authority (FCA) under the Electronic Money Regulations 2011 (register reference 900172), has certain obligations under the applicable Anti-Money Laundering regulation of the United Kingdom and aims to promote the best industry AML practices.
To comply with the regulation DSX must apply the relevant client due diligence and ongoing monitoring measures.
In some cases, along with the regular identification process, i.e. checking the validity of your ID documents, it might also include a requirement to provide a source of funds, a source of wealth information supported by relevant documents and clarification of a nature of an expected business relationship.
What is a Source of Funds?
The main question you should answer is how the funds you deposit to your account with DSX are generated.
The examples of the source might be as follows: salary, personal savings, business income, property sale, inheritance or, maybe, even a lottery. Once the source is described, you need to gather documents confirming the source you've stated. For example, for the salary, you'll need to provide a signed document from your work establishing your payroll or a bank statement with visible periodic payments that can be identified as salary payments. For personal savings confirmation, you can use a bank statement showing that these funds were taken off your savings account and used for further trading. The same logic applies to the all other sources of funds types.
What is a Source of Wealth?
This is a description of how your initial wealth has been obtained. When answering this question, you need to aim to describe the source which has allowed you to start investing. The main distinction from the source of funds information is the historical perspective, i.e. you do not necessarily use the money generated in the past for funding your account now.
For example, you might have a profitable business and invest part of your profit in digital currencies. Profit is a source of funds.
You have started your business and have paid the share capital by a bank loan or selling your inherited property. In this example, the bank loan or selling the property is your source of wealth.
In some cases, your source of wealth could be the same as the source of funds. For example, you have started to invest part of your salary in digital currencies. Then the salary is the source of the funds and the source of the wealth at the same time.
What is a Nature of business relations?
Effectively, this is a description of the main reason you require our services, what your trading model and the purpose of account opening are. Is it a one-off purchase, HFT and algo-trading, investment in cryptocurrency, arbitrage trading, or, maybe, you exchange your income on a regular basis?
Due to the very nature of that type of trading, please be precise when describing your arbitrage trading strategy. The feature of the strategy is that an exact amount of funds circulates between many exchanges and creates a significant deposit volume, sometimes much higher than the real amount of funds. Please make sure that you can confirm all the path of the funds' flow and the exchanges involved. For that you might need to provide a bank statement (if part of funds is transferred between exchanges via a bank wire) and reports from other exchanges showing that you receive an amount, exchange it and withdraw to another exchange. Additionally, a confirmation of the initial source of funds you start trading with will be required.
What else should I consider?
The information above could be requested either at the stage of your onboarding or at any time after that under our ongoing monitoring programme. Once you have submitted all the information required, we pass it to our on-boarding and compliance team for review. Kindly note that depending on the nature of the information provided, new compliance requests may arise.
Alongside with DSX AML requests, we may pass you requests of ePayments Systems Limited or our upper custodians, i.e. banks. They may have additional questions if it is required by their client due diligence process. The better we fulfil their requirements, the smoother all the non-trading operations are.