BSA/AML, CFT and Sanctions Compliance Statement

NOVARC FINANCIAL LTD. is committed to conducting business with integrity and to preventing its products, systems and services from being used for money laundering, terrorist financing, sanctions evasion, fraud, proliferation financing or other criminal activity.

NOVARC maintains a risk-based Bank Secrecy Act and anti-money laundering (BSA/AML), counter-terrorist financing, sanctions and fraud-prevention framework designed for its business model, customers, products, delivery channels, transaction activity and geographic exposure.

Our framework is designed to meet the requirements applicable to NOVARC under United States law, including the Bank Secrecy Act (BSA), the USA PATRIOT Act, the Anti-Money Laundering Act of 2020, regulations administered by the Financial Crimes Enforcement Network (FinCEN), sanctions administered by the Office of Foreign Assets Control (OFAC), and applicable state law.

NOVARC is incorporated in Montana under certified file number D1644130-17257259 and is federally registered with FinCEN as a money services business, MSB Registration Number 31000332452909, for money transmission. Federal MSB registration does not replace any state licence, authorization or exemption that may be required. NOVARC offers Services only where legally permitted.

FinCEN registration does not constitute approval, recommendation, endorsement, verification of information submitted by NOVARC or a guarantee of any customer, transaction, crypto asset or service. This Statement addresses financial crime controls and does not describe every regulatory obligation that may apply to NOVARC.

NOVARC provides or arranges digital asset liquidity and transaction services, including negotiated over-the-counter (OTC), fiat-to-crypto and crypto-to-fiat transactions for approved customers. Services are delivered remotely through digital channels and approved banking, payment, liquidity, technology and compliance providers.

Unless expressly stated in a separate written agreement, NOVARC operates on a non-custodial, transaction-by-transaction basis. It does not maintain customer deposit accounts or store customer private keys and does not accept anonymous cash transactions through physical branches.

The remote, cross-border and virtual asset nature of the business may present elevated financial crime risks. NOVARC therefore tailors its controls to legal entity customers, beneficial ownership and control, wallet activity, source of funds, counterparties and cross-border settlement.

Consistent with the requirements applicable to a money services business, the compliance framework includes:

• a designated BSA/AML Compliance Officer with appropriate authority, knowledge, resources and access to senior management;
• written policies, procedures and internal controls reasonably designed to assure compliance with applicable BSA requirements;
• a documented assessment of money laundering, terrorist financing, sanctions evasion and related financial crime risks;
• risk-based customer due diligence, transaction controls and enhanced due diligence for higher-risk relationships;
• ongoing training for relevant employees, agents, contractors and authorized persons;
• record keeping, transaction monitoring, escalation, sanctions controls and regulatory reporting procedures;
• independent review of the program at a scope and frequency appropriate to NOVARC's size, activities and risk profile.

The level of due diligence and monitoring applied to a relationship or transaction depends on the risks presented. Relevant factors may include:

• customer type, business activity, regulatory status, reputation and expected use of the Services;
• ownership, control, management and organizational complexity;
• countries and states of residence, incorporation, operation, payment, settlement and counterparty location;
• products, crypto assets, networks, delivery channels and use of hosted or unhosted wallets;
• expected and actual transaction value, frequency, velocity, purpose and counterparties;
• source of funds, source of wealth and the economic rationale for activity;
• OFAC sanctions, politically exposed person, adverse-media, fraud, law-enforcement and regulatory indicators;
• use of new technologies, privacy-enhancing tools, mixers, bridges or other high-risk protocols.

Customers and relationships may be assigned risk ratings at onboarding and reviewed throughout the relationship. Higher-risk relationships may be subject to enhanced verification, additional evidence, transaction restrictions, more frequent review and senior approval.

NOVARC applies risk-based procedures designed to identify customers and persons acting on their behalf and to form a reasonable belief that it knows their identity and authority. Verification may involve government-issued identification, reliable electronic methods, trusted identity providers and independent documentary or database checks.

NOVARC will not establish or continue a relationship where identity, authority, intended activity or other required information cannot be adequately verified. Use of a third-party verification provider does not remove NOVARC's responsibility for obligations legally assigned to it.

For corporations, partnerships, trusts and other entities, NOVARC may obtain and verify:

• legal and trade names, registration number, jurisdiction and registered or principal addresses;
• nature of business, intended use, expected activity and regulatory or licensing status;
• directors, officers, partners, trustees, authorized representatives and signing authority;
• direct and indirect ownership and control information, including natural persons meeting thresholds required by law, partner requirements or NOVARC's risk-based procedures;
• corporate records, shareholder registers, organization charts, agreements and other evidence needed to understand ownership, control and authority.

Complex, layered, opaque or multi-jurisdictional structures may require enhanced due diligence. NOVARC may decline a relationship where ultimate ownership, control, authority or the lawful purpose of the relationship cannot be reasonably established.

NOVARC may screen relevant customers, beneficial owners and authorized persons for politically exposed person or senior foreign political figure status, family and close-associate relationships, public corruption indicators and other elevated-risk factors.

Where elevated risk is identified, controls may include additional identity checks, source-of-funds and source-of-wealth evidence, senior management approval, transaction limits, enhanced ongoing monitoring and more frequent review.

NOVARC screens customers, beneficial owners, authorized persons, counterparties and, where relevant, wallet addresses against OFAC sanctions lists and other restricted-party information applicable to the business.

NOVARC also applies geographic restrictions and considers the requirements of banking, payment and liquidity partners.

NOVARC does not knowingly provide Services to blocked persons, prohibited jurisdictions or transactions intended to evade sanctions. It may block, reject, restrict, report or terminate activity where required by law or where sanctions exposure or evasion risk is identified.

NOVARC may request information and evidence regarding the origin of fiat currency or crypto assets, the customer's source of wealth, the purpose and expected nature of the relationship, and the economic rationale for a transaction.

Evidence may include bank statements, audited accounts, tax documents, sale agreements, investment records, payroll records, wallet history, exchange statements or other reliable documentation. Failure to provide satisfactory evidence may result in delay, restriction, rejection or termination.

NOVARC may collect wallet addresses, determine whether a wallet is hosted or unhosted, request proof of ownership or control, and use blockchain analytics to assess transaction history and exposure.

Particular attention may be given to:

• blocked, sanctioned, illicit, stolen or otherwise restricted addresses, assets and services;
• mixers, tumblers, darknet markets, ransomware, scams, fraud and illicit marketplaces;
• rapid, circular, layered or unexplained movement through multiple wallets or platforms;
• cross-chain bridges, privacy-enhancing technologies, unsupported assets or high-risk protocols;
• activity inconsistent with the customer profile, stated purpose or expected transaction pattern;
• exposure to jurisdictions, counterparties or services presenting unacceptable risk.

Where concerns are identified, NOVARC may pause, reject, return, restrict or terminate a transaction or relationship and may make any report or disclosure required or permitted by law.

Customer relationships and transaction activity may be monitored throughout the relationship to identify activity inconsistent with the customer's known profile, stated purpose, expected activity, risk rating or prior behaviour.

Reviews may consider transaction value, frequency, velocity, counterparties, geography, wallet exposure, changes in ownership or control, OFAC updates, adverse media, regulatory status and requests from Service Providers or authorities.

Customer information and risk assessments are updated periodically and when material changes, trigger events or new risk information arise.

Where the BSA funds transfer recordkeeping rule, Travel Rule or related information requirements apply, NOVARC collects, retains and transmits prescribed originator, beneficiary and transaction information. NOVARC may delay, reject or return a transfer where required information cannot be obtained, verified or transmitted.

NOVARC maintains procedures to identify, assess, escalate and report suspicious or otherwise reportable activity. Where the applicable legal threshold is met, NOVARC may file Suspicious Activity Reports, Currency Transaction Reports where cash activity occurs, OFAC blocked or rejected transaction reports, or other prescribed reports with FinCEN, OFAC or another competent authority.

NOVARC may respond to subpoenas, court orders, FinCEN Section 314(a) requests, regulatory examinations, sanctions obligations and law-enforcement requests. Applicable law may restrict or prohibit disclosure of a Suspicious Activity Report or the existence of a report, review or investigation.

NOVARC retains customer identification, ownership and control, transaction, due diligence, monitoring, reporting, training and compliance records for the periods prescribed by law. Many BSA records must be retained for at least five years, and longer retention may apply due to an investigation, litigation hold, audit or other legal requirement.

NOVARC prohibits or restricts customers, transactions and activities presenting unacceptable legal, sanctions, fraud, financial crime or reputational risk. This may include:

• anonymous, fictitious, inadequately verified or impersonated customers;
• undisclosed third-party, pass-through, nested or unapproved money transmission activity;
• criminal proceeds, terrorist financing, proliferation financing, sanctions evasion and tax evasion;
• fraud, scams, ransomware, trafficking, illicit gambling, corruption and stolen assets;
• mixers, darknet markets and high-risk anonymity- or privacy-enhancing services;
• counterfeit goods, unauthorized financial services, deceptive practices and prohibited sectors;
• any transaction lacking a credible lawful purpose or adequate supporting information.

NOVARC may use qualified third parties for identity verification, screening, blockchain analytics, payment processing, banking, liquidity, technology and other operational functions. Outsourcing does not remove NOVARC's responsibility for obligations that remain legally assigned to NOVARC.

NOVARC applies risk-based vendor due diligence, contractual controls, information-security requirements, access limitations, monitoring and oversight appropriate to the function, data sensitivity and regulatory risk.

Relevant personnel receive ongoing training appropriate to their duties and exposure to financial crime risk. Training may cover customer identification, ownership and control, OFAC screening, suspicious activity, reporting, record keeping, wallet risk, fraud, escalation and confidentiality.

The BSA/AML program is independently reviewed at a scope and frequency commensurate with NOVARC's risk profile and applicable requirements. Findings are documented, reported to senior management and addressed through proportionate corrective action plans.

Customers must provide accurate, complete and current information, cooperate with due diligence and monitoring requests, use only approved accounts and wallets, disclose any person for whom they act, and promptly report material changes or suspected unauthorized activity.

Providing false information, structuring transactions to evade reporting or controls, refusing required information or attempting to circumvent compliance measures may result in refusal, restriction, termination and reporting to competent authorities.

Personal information processed for BSA/AML, sanctions and fraud prevention is handled in accordance with the NOVARC USA Privacy Policy and applicable law. Information may be shared with Service Providers, financial institutions, FinCEN, OFAC, regulators, law enforcement and other competent bodies where required or permitted.

NOVARC does not publish or disclose confidential monitoring thresholds, investigation methods, alert logic, internal risk models, Suspicious Activity Reports or other protected regulatory information where disclosure could compromise controls or violate law.

Senior management supports the compliance function, and the BSA/AML Compliance Officer has authority to escalate concerns, restrict activity and recommend termination. The framework is updated to reflect changes in law, guidance, products, technology, risk exposure and operational arrangements.

This Statement may be updated from time to time. The current version will be made available on the NOVARC USA website.

Compliance: compliance@novarc.global

Legal inquiries: legal@novarc.global

Website: https://novarc.global/usa

Business address: 1001 S. Main St. #7006, Kalispell, Montana 59901, United States

This Statement is informational only and does not create rights beyond those provided by applicable law or a written agreement with NOVARC.