GLOSSARY

Due diligence (KYC-KYB): activity consisting of:

• verify the identity of the Client, any Executor and any Beneficial Owner on the basis of documents, data or information obtained from a reliable and independent source;
• acquire information on the purpose and intended nature of the ongoing relationship and, when identified according to a risk-based approach, of the occasional transaction;
• exercise constant control throughout the ongoing relationship.

Senior Executive: a director or general manager or other employee delegated by the management body or the general manager to manage relationships with high-risk customers; the senior manager has adequate knowledge of the level of money laundering risk to which the recipient is exposed and has sufficient autonomy to make decisions that can impact this level of risk.

Risk-based approach: It indicates an approach whereby competent authorities and companies identify, assess and understand the money laundering risks to which companies are exposed and take countermeasures commensurate with those risks.

Single Computer Archive (so-called AUI): an archive, created and managed using computer systems, in which all information acquired in fulfilling customer due diligence obligations is centrally stored, in accordance with the principles set forth in the Anti-Money Laundering Decree and the implementing provisions issued by the Regulators.

Institutional activity: the activity for which the recipients have obtained registration or authorization from a Public Authority.

Bank of Comodo: the bank (or financial intermediary performing bank-like functions) without a significant structure in the country in which it was incorporated and authorised to carry out its activities and not belonging to a financial group subject to effective supervision on a consolidated basis.

Beneficiary of the insurance benefit:

1. the natural person or entity other than a natural person who, based on the designation made by the policyholder or the insured, is entitled to receive the insurance benefit paid by the insurance company;
2. any natural person or entity other than a natural person to whom the payment is made by order of the designated beneficiary.

Client/Customer: the person who establishes ongoing relationships or carries out transactions with exchanges, financial intermediaries, and other entities carrying out financial activities, as well as with other recipients of the obligations set forth in the Anti-Money Laundering Decree, normally also identified with other terms, such as users, investors, insured persons, contractors, buyers, clients, etc.

Compliance Risk: specific compliance required by a given regulation, to avoid incurring judicial or administrative sanctions, significant financial losses, or reputational damage as a result of violations of mandatory provisions (laws, regulations) or self-regulation (e.g., code of conduct, code of self-discipline).

Freezing of funds: the prohibition, pursuant to EU regulations and national legislation, on the movement, transfer, modification, use, or management of funds and cryptocurrencies or tokens in general, or on access to them, thus altering their volume, amount, location, ownership, possession, nature, destination, or any other change that allows the use of the funds, including portfolio management.

Freezing of economic resources: the prohibition, pursuant to EU regulations and national legislation, on the transfer, disposition, or use of economic resources for the purpose of obtaining funds, goods, or services in any manner, including, but not limited to, the sale, leasing, rental, or the creation of security interests.
Correspondent current accounts and similar relationships: accounts held by banks for the settlement of interbank services and other relationships, however named, between credit institutions and financial institutions, used to settle transactions on behalf of the correspondent institutions’ customers.

Payables: cross-border correspondent banking relationships held between banking and financial intermediaries and exchanges, used to carry out transactions in one’s own name and on behalf of customers.

Line controls (so-called “first-level controls”): the set of controls aimed at ensuring the proper execution of operations. They are carried out by the Operating Structures themselves (e.g., hierarchical, systematic, and random controls), including through units dedicated exclusively to control or monitoring tasks that report to the heads of the Operating Structures, or performed within the back office; where possible, they are incorporated into IT procedures.

Risk and compliance controls (so-called “second-level controls”): the set of controls that aim to ensure, among other things:

• the correct implementation of the risk management process;
• compliance with the operational limits assigned to the various functions;
• compliance of company operations with regulations, including self-regulation.

The functions responsible for these controls are distinct from the operational ones; they contribute to the definition of risk governance policies and the risk management process.

Counterparty: natural and legal persons who establish a business relationship with the Exchange (even if they are not subject to the obligations set forth in the Anti-Money Laundering Decree).

Cover Payment (or cover payment): a transfer of funds used when there is no direct relationship between the payment service provider (PSP) of the originator and the beneficiary and it is therefore necessary to use a chain of correspondent relationships between PSPs. A cover payment involves three or more PSPs.

Cryptocurrency: A cryptocurrency is a virtual currency that, according to the Bank of Italy’s definition, is a digital representation of value and is used as a medium of exchange or held for investment purposes. Cryptocurrencies can be transferred, stored, or traded electronically. Typical examples include Bitcoin, LiteCoin, Ripple, Ethereum, Cardano, and Tron.

Identification data of the Client, the Beneficial Owner, and the Executor: first and last name, place and date of birth, registered residence and, if different, domicile, and, if assigned, the Client’s tax code, and, where assigned, the Beneficial Owner and the Executor. In the case of entities other than natural persons, the name, registered office, and registration number in the company register or in the register of legal entities, if applicable. In both cases, at the time of payment of the service, the registered residence and, if different, domicile, and tax code of the Beneficiary and, where assigned, the Beneficiary and the Executor.

Cash: banknotes and coins, in euros or foreign currencies, that are legal tender. (Tesora does not accept cash payments.)

DeFi: an acronym for Decentralized Finance, it refers to a digital system exchange protocol, managed independently of regulators, without intermediaries, using blockchain platforms, keeping transactions anonymous while tracking their history without tracing it back to a beneficial owner.

Employee: all Tesora employees, whether they belong to organizational units and/or territorial structures and/or central structures.

Executor: the person delegated to act in the name and on behalf of the Client or who is otherwise granted powers of representation that allow him to act in the name and on behalf of the Client.

Risk factors: indicate the variables that are likely, individually or in combination, to increase or reduce the risk of money laundering arising from individual ongoing relationships or occasional transactions.

Financial Advisors: Tesora’s financial advisors are authorized to provide off-site services. They provide independent consulting services and advice on tokenization systems, blockchain traceability processes, digital certification processes for businesses and raw materials and services supply chains, and feasibility studies on corporate asset digitization processes with integration into centralized blockchain platforms. Financial Advisors operate independently with respect to their clients.

Funds: financial assets and utilities of any nature, held even through a third party, whether natural or legal, including, but not limited to:

• cash, cheques, pecuniary credits, bills of exchange, money orders and other payment instruments;
• deposits with financial institutions or other entities, account balances, credits and obligations of any nature;
• publicly and privately traded securities as well as financial instruments;
• interest, dividends or other income and increases in value generated by the assets;
• credit, right of set-off, guarantees of any kind, sureties and other financial commitments;
• letters of credit, bills of lading and other documents representing goods;
• all other export financing instruments;
• all other export financing instruments;
• Crypto Currency (Bitcoin, Ethereum, ecc.);
• Stable Coin (Tether, USC, ecc.);
• Equity token;
• Utility Token;
• NFT – Non-fungible Token;
• Security Token.

Anti-Money Laundering Function: the function, an integral part of the second-level internal control system, responsible for preventing and combating money laundering and terrorist financing operations.

Corporate Control Functions: the Compliance Function, the Risk Management Function, the Anti-Money Laundering Function, the Internal Audit Function.

Compliance Function: The function specifically responsible for overseeing, using a risk-based approach, the management of compliance risk with respect to company operations, ensuring that procedures are adequate to prevent such risk, which consists of the violation of external regulatory (laws and regulations) and self-regulatory (codes of conduct, codes of ethics) standards applicable to the Exchange. This function is an integral part of the internal control system.
Control Functions: the Company Control Functions, the Manager in Charge, the Director in Charge of Controls, the personnel responsible for managing customer identification.

Internal Audit Function: The function entrusted with the task of overseeing, with a view to third-level controls, including on-site inspections, the proper functioning of operations and the evolution of risks, and assessing the completeness, adequacy, functionality, and reliability of the organizational structure and other components of the Internal Control System. It also brings potential improvements to the attention of corporate bodies, particularly regarding the Risk Appetite Framework (RAF), the risk management process, and the risk measurement and control tools. Based on the results of its audits, it formulates recommendations to corporate bodies.

FATF: Financial Action Task Force, a body established within the OECD and specialized in the prevention and combating of money laundering, the financing of terrorism and the proliferation of weapons of mass destruction.

Anomaly indicators: situations representing anomalous operations or behaviors by customers, aimed at facilitating the assessment by obligated entities of any suspected money laundering or terrorist financing.

Payment methods: cash (not accepted for transactions by Tesora), bank and postal checks, cashier’s checks and other similar or equivalent checks, postal orders, credit or payment orders, credit cards and other payment cards, transferable insurance policies, pledges, and any other available instrument that allows for the transfer, movement, or acquisition, including electronically, of funds, securities, or financial assets.

Electronic Money: refers to coins that refer to legal tender currencies accepted by Tesora such as EUR, USD, CHF, etc.

Digital currency: Tokens are understood in a generic sense.

Remote trading: Trading conducted without the physical presence of the client and Exchange personnel. When the client is not a natural person, the presence of the executor is considered to be present.

Transaction: the activity consisting of the movement, transfer, or transmission of cryptocurrencies, tokens in general, means of payment, or the performance of financial transactions; the stipulation of a financial transaction within the scope of a professional or commercial activity also constitutes a transaction.

Related transactions: transactions connected to each other for the pursuit of a single legal and financial objective.

Fractional transaction: a unitary transaction in terms of economic value, of an amount equal to or greater than the limits established by the Anti-Money Laundering Decree, carried out through several transactions, individually lower than the aforementioned limits, carried out at different times and in a limited period of time set at seven days, without prejudice to the existence of the fractional transaction when there are elements to consider it as such.

Occasional transaction: a transaction not attributable to an ongoing, ongoing relationship; an intellectual or commercial service, including those performed instantly, rendered to the Customer also constitutes an occasional transaction.

Suspicious Transaction: a transaction which, due to its characteristics, size, nature, or connection with other transactions or its division or any other circumstance known by virtue of the functions performed, also taking into account the economic capacity and activity carried out by the individual to whom it refers, based on the information acquired pursuant to the Anti-Money Laundering Decree, leads one to believe, suspect, or have reasonable grounds to suspect that money laundering or terrorist financing operations are underway or have been carried out or attempted or which, regardless of their size, originate from criminal activity.

Corporate bodies: the set of bodies with strategic supervision (Board of Directors), management (Chief Executive Officer or other body assigned the management function) and control (Board of Statutory Auditors) functions.

Supervisory Body: The body that verifies the proper functioning of the Company’s administrative activities and the adequacy of its organizational and accounting structures. The Board of Statutory Auditors, the Supervisory Board, and the Management Control Committee are, in the various models, the Supervisory Bodies (or Supervisory Bodies).

Body with management function: Company body or members of it who are responsible for or delegated management tasks, i.e. the implementation of the guidelines resolved in the exercise of the strategic supervision function. The general manager represents the top of the internal structure and as such participates in the management function.

Strategic Supervisory Body: The body responsible for all guidance and/or supervision of the Company’s management (e.g., through the examination and approval of business or financial plans or strategic operations carried out by the Company).

Origin of funds: indicates the origin of the funds specifically used in an ongoing relationship or in an occasional transaction.

Origin of assets: indicates the origin of the Client’s total assets, including both securities and real estate. A conscious Exchange operating in a market where the primary activity is conducted anonymously has integrated specific parameters into its control systems to activate additional checks in the presence of cryptocurrency exchanges or deposits that require additional information on provenance. At Tesora, anyone activating their Virtual Account must, in any case, pass all KYC-KYB and AML procedures before starting operations.

Community countries: Countries belonging to the European Economic Area.

Third countries: Countries outside the European Economic Area.

High-risk third countries: non-EU countries whose legal systems have strategic deficiencies in their national regimes for the prevention of money laundering and terrorist financing.

Personnel: employees and those who in any case operate on the basis of relationships that determine their inclusion in the organisation of the obliged party, even in a form other than the employment relationship, including Financial Advisors qualified to provide independent advice.

Politically Exposed Persons (PEP): natural persons, i.e. “natural persons who occupy or have ceased to hold important public offices for less than one year, as well as their family members and those who are known to have close ties with the aforementioned persons, as listed below:

1. Natural persons who occupy or have occupied important public offices are those who hold or have held the office of:

1.1. President of the Republic, Prime Minister, Minister, Deputy Minister, and Undersecretary, President of the Region, Regional Councilor, Mayor of a provincial capital or metropolitan city, Mayor of a municipality with a population of at least 15,000 inhabitants, and similar positions in foreign countries;
1.2. Member of Parliament, Senator, Member of the European Parliament, Regional Councilor, and similar positions in foreign countries;
1.3. Member of the central governing bodies of political parties;
1.4. Judge of the Constitutional Court, magistrate of the Court of Cassation or the Court of Auditors, Councilor of State, and other members of the Council of Administrative Justice for the Sicilian Region, and similar positions in foreign countries;
1.5. Member of the governing bodies of central banks and independent authorities;
1.6. Ambassador, chargé d’affaires, or equivalent positions in foreign countries, senior officer of the armed forces, or similar positions in foreign countries;
1.7. Member of the administrative, management, or control bodies of companies controlled, even indirectly, by the Italian State or a foreign State, or owned, predominantly or wholly, by the Regions, provincial capitals and metropolitan cities, and municipalities with a total population of at least 15,000 inhabitants;
1.8. Director General of Local Health Authorities (ASL), hospitals, university hospitals, and other entities of the National Health Service;
1.9. director, deputy director and member of the management body or person performing equivalent functions in international organisations.

2. family members of politically exposed persons are: parents, spouse or person related in a civil union or de facto cohabitation or institutions similar to the politically exposed person, children and their spouses as well as persons related to children in civil union or de facto cohabitation or similar institutions;

3. The following are subjects with whom politically exposed persons are known to have close ties:

3.1. Natural persons related to the politically exposed person by virtue of joint beneficial ownership of legal entities (including trusts and similar legal arrangements) or who have close business relationships with the politically exposed person;
3.2. natural persons who only formally hold total control of an entity known to be established, in fact, in the interest and for the benefit of a politically exposed person.

Centralized platform: This is a platform managed by an owner who independently determines its rules and functions. Banks, insurance companies, etc., can be considered centralized platforms. Not all exchanges operate with centralized systems. In the case of Tesora, in order to comply with AML and KYC and KYB regulations, it decided to operate centrally, aiming to track every transaction performed within it.

Decentralized platform: also called DeFi, it aims to execute operations digitally without any intermediary. This kind of platform reflects another risk as it is impossible to trace the beneficial owner of the operation.

Anti-Money Laundering Policy or Policy: the document defined by the body with a management function and approved by the body with a strategic supervision function pursuant to the Provisions on organisation, procedures and internal controls aimed at preventing the use of intermediaries for money laundering and terrorist financing purposes.

PSP: Payment Service Provider.

Account Information Service Providers (AISPs): is a Payment Service Provider that provides account information services, i.e. online services that provide consolidated information regarding one or more payment accounts held by the payment service user with another Payment Service Provider or with several payment service providers.

Crypto-asset service provider: a legal person or other enterprise whose occupation or business consists in providing one or more crypto-asset services to clients on a professional basis and which is authorised to provide crypto-asset services in accordance with Article 59 of the MiCAr.

Digital wallet service providers: any natural or legal person who provides third parties, on a professional basis, including online, with services for safeguarding private cryptographic keys on behalf of their Clients, for the purpose of holding, storing, and transferring virtual currencies.

Virtual currency service providers: any natural or legal person who provides third parties, on a professional basis, services related to the use, exchange, and storage of virtual currency, and its conversion from or into legal tender.

Continuous relationship: a relationship of duration, falling within the exercise of the activity of the institution carried out by the obliged parties, which does not end in a single transaction.

Distance relationships or transactions: means any transaction or relationship in which the client is not physically present, i.e. not in the same physical location as the firm or a person acting on behalf of said firm. This includes situations where the customer’s identity is verified via video link or similar technological means.

Risk appetite: the level of risk (overall and by type) that the Company intends to assume in the pursuit of its strategic objectives.

Money laundering risk: the risk deriving from the violation of legal, regulatory and self-regulatory provisions functional to the prevention of the use of the financial system for the purposes of money laundering, terrorist financing or financing of weapons of mass destruction development programmes, as well as the risk of involvement in episodes of money laundering and terrorist financing or financing of weapons development programmes of mass destruction. mass destruction.

Inherent risk: in the logic of the so-called “potential” risk, the probability for the Company to suffer direct or indirect damage of a sanctioning, criminal, financial or reputational nature without considering the organization and functioning of its organizational controls and the more general Internal Control System.

Residual risk: summary judgment that takes into account the assessment of the suitability of the organisational, procedural and control measures in place, with the consequent identification of the corrective initiatives to be taken for the purpose of mitigating it.

Economic resources: assets of any kind, tangible or intangible, and assets, movable or immovable, including accessories, appurtenances and fruits, which are not funds but which can be used to obtain funds, goods or services, owned, held or controlled, even partially, directly or indirectly, or through an intermediary natural or legal person, by designated persons, or by natural or legal persons acting on behalf of or under the direction of the latter.

Internal control system: the set of rules, functions, structures, resources, processes and procedures that aim to ensure, in compliance with sound and prudent management, the following purposes:

• verification of the implementation of company strategies and policies;
• containment of risk within the limits indicated in the reference framework for determining the Exchange’s risk appetite (Risk Appetite Framework – “RAF”);
• safeguarding the value of assets and protecting against losses;
• effectiveness and efficiency of business processes;
• reliability and security of company information and IT procedures;
• prevention of the risk that the Exchange is involved, even unintentionally, in illicit activities (with particular reference to those connected with money laundering, usury and terrorist financing);
• compliance of operations with the law and supervisory regulations, as well as with internal policies, regulations and procedures.

Beneficial owner: the natural person or persons, other than the Client, in whose interest or in whose last instance the ongoing relationship is established, the professional service is rendered or the transaction is performed.

Tokens: tokens are compared to cryptocurrencies, while maintaining different functions and attributes depending on the case, which are not just part of the mere exchange activity, but can provide specific rights to the holders who hold them. In any case, they are managed digitally through a dedicated wallet.

Virtual currency: the digital representation of value, not issued by a central bank or public authority, not necessarily linked to a legal tender currency, used as a medium of exchange for the purchase of goods and services and transferred, stored and traded electronically.

Virtual Account: A virtual account held by an Exchange customer, capable of storing tokens and cryptocurrencies for the purpose of enabling normal exchange and transfer operations of the tokens held. The Exchange determines the types of tokens and cryptocurrencies to be managed within it.

Wallet: Wallet or digital account capable of holding tokens and digital crypto.