1. OBJECTIVE AND SCOPE OF THE POLICY

 The purpose of Policy on The Prevention of Laundering Proceeds of Crime and Financing of Terrorism is;

• To obtain information and develop employee awareness on the prevention of laundering proceeds of crime and financing of terrorism,
• To comply with the obligations regarding local regulations,
• To evaluate customers, transactions and services offered with a risk based approach and to mitigate those risks.

This policy sets the duties of Law No. 5549 on Prevention of Laundering Proceeds of Crime and relevant legislation and international regulations.

This policy is composed of the following measures;

1. • Know your customer principle
   • Monitoring and control activities
   • Suspicious transaction reporting
   • Training
   • Internal audit
2. KNOW YOUR CUSTOMER PRINCIPLE

2.1. IDENTITY VERIFICATION

The Bank accordingly adopts a policy in line with the international standards and the applicable legislation and practices on know your customer principle.

Under the “Know Your Customer” principle, necessary measures shall be adopted subject to the applicable legislation, and the Bank Policy and Procedures in order to:

• Verify the customer identity
• Take measures to confirm the beneficial owner
• Obtain satisfactory information about the purpose and nature of the requested transaction
• Monitor the customer and transactions throughout the relations with customer and comparison of customer profile
• Monitor the high risk customers/transactions and other customers/transactions that require special attention.

Customer identification shall be completed before the business relationship is established or the transaction is conducted. When establishing permanent business relationship, information on the purpose and intended nature of the business relationship shall be received. Customer identification process shall be conducted for below given cases;

• Regardless of the monetary amount when establishing permanent business relationships
• When the amount of a single transaction or the total amount of multiple linked transactions is equal to or more than twenty thousand American Dollar
• When the amount of a single transaction or the total amount of multiple linked transactions is equal to or more than two thousand American Dollar in wire transfers
• Regardless of the monetary amount in cases requiring suspicious transactions reporting
• Regardless of the monetary amounts in cases where there is suspicion about the adequacy and the accuracy of previously acquired identification information

In cases where customer requesting the transaction declares that customer is acting for the benefit of someone else, the identity of the person requesting the transaction and the identity of the person for the benefit of whom the transaction is conducted shall be identified.

In cases where there is a suspicion that the person is acting in his/her own name but for the benefit of someone else although he/she has declared that he/she is not acting for the benefit of someone else, measures for the identification of the beneficial owner shall be applied.

The Bank shall retain documents, books and records, identification documents and records kept in all forms regarding their transactions and obligations for ten years starting from the last transaction date respectively and submit when requested.

2.2.INDIVIDUALS, ENTITIES AND COUNTRIES WITH WHICH BUSINESS RELATIONSHIP SHALL NOT

BE ESTABLISHED

According to “Know Your Customer Principle” Sardis Markets do not accept the following categories of customers;

• Customers who want to open with anonymous or fictitious names
• Customers who refuse to provide the required information and documentation
• Customers who are included in lists published by international institutions and organizations on the subject of laundering of crime income and terrorism (OFAC, EU, UN, HMT, etc.)
• In circumstances where identity verification not be undertaken or not receive sufficient information about the purpose of the business relation
• Customers who has a negative record in the bank's internal intelligence system for money- laundering, financing of terrorism, and financial crimes related thereto (fraud, counterfeiting, organized offenses, etc.)
• Shell banks
• Illegal bet, gambling transactions and any persons and entities involved in these sectors
• Persons and entities involved in drug trafficking and entartainment industry such as casinos, bar, – Companies with bearer shares
• Any persons or entities involved in nuclear, atomic sector
• Persons and entities involved in payment system without licence

2.3.INDIVIDUALS AND ENTITIES FOR WHICH ENHANCED MEASURES SHOULD BE TAKEN AT ESTABLISHMENT OF BUSINESS RELATIONSHIP

On the basis of a risk based approach the following categories of customers identified as high-risk and may require enhance due diligence.

• Politically exposed persons (PEPs)
• Non-profit organizations (Associations, Foundations, Charities etc.)
• Off-shore/tax haven banks
• Correspondent banks
• Real or legal entities located in countries or region “non-cooperating countries and regions”
• as published by FATF and risky countries published by international organizations
• Non face - to - face transactions and customers who are accepted from non face - to - face channels.
• Exchange offices, precious mining sector
• Businesses dealing with high amounts of cash
• Defense industry/weapons equipment manufacturers, dealers and agents
• Customers with negative media news, cases and trials
• Notary, accountants, lawyers or other financial professionals holding accounts at a financial institution, acting on behalf of their clients
• Any persons and entities involved in cryptocurrency and digital money sectors

Before establishing new correspondent relationships, approval shall be received from a senior manager. It has to be ensured that financial institutions have combat system against laundering and terrorist financing is appropriate and efficient via sending relevant questionnaires and information should be obtained from public resources on whether the financial institutions have gone through an inquiry related to laundering or terrorist financing and have been imposed a penalty; their field of business; reputation; and adequacy of audits performed in that bank.

Required controls are applied to determine whether the customer is a politically exposed person and business relationship is made according to enhanced approval mechanism.

1. MONITORING AND CONTROL ACTIVITIES

The purpose of monitoring and control activities is to protect the Bank against risks and to monitor and control on a permanent basis whether the Bank's operations are carried out in accordance with the Law and other arrangements issued as per the Law as well as the Bank's policies and procedures. Monitoring and control activities are executed by the Compliance Department under responsibility of Compliance Officer.

Monitoring and control activities include the following topics;

• Monitoring and control of customers and transactions in the high risk group
• Monitoring and control of complex and extraordinary transactions
• Monitoring and control of transactions conducted with high risk countries
• Controlling, through sampling method, whether the transactions exceeding a pre - determined limit by Bank’s risk-based approach are consistent with the customer profile
• Controlling, completing and updating the information and documents about the customer which have to be kept in writing and the obligatory information which have to be included in electronic transfer messages
• Monitoring whether a transaction conducted by the customer is consistent with the information about the customer's business, risk profile and fund resources on a permanent basis throughout the term of the business relationship
• Controlling transactions conducted by using systems which enable non - face - to - face transactions

1. SUSPICIOUS TRANSACTION REPORTING

Where there is information or matters that would arise suspicions, indicating that a transaction which was or is to be executed by or through the Bank upon an application is associated or related with laundering of criminal proceeds or terrorism financing, necessary investigation to the extent permitted by the applicable means shall be carried out and any transaction concluded to be suspicious shall be reported to The Financial Crimes Investigation Board (FCIB) within such term and subject to such conditions defined in the applicable legislation.

Suspicious transactions shall be reported to FCIB regardless of the amounts.

Natural and legal persons, their compliance officers, legal representatives of the obliged parties, their managers and personnel complying with the obligation of reporting suspicious transaction, shall not be held responsible judicially and criminally in any way.

While fulfilling their tasks employees shall be alerted and act in accordance with legal obligations about identifying and reporting suspicious transactions against the following cases;

• Operations without any apparent legal and economical purpose
• Operations not related or not in proportion with the customer’s occupation and income
• Transactions in which the customer is evasive or reluctant in providing the documents and information required by the obligations defined under law
• Transactions in which the customer is suspected of evading the reporting and record keeping procedures
• Transactions in which the customers gives misleading and unverifiable information,
• Transactions related to credit requests the purpose of which is not economical and is not declared
• Transactions consisting of unusual transfers with large amounts to risky geographical regions and countries

1. TRAINING

The purpose of training is ensuring compliance with obligations imposed by Law and the regulation and communiques issued in accordance with Law, creating an institution culture by increasing the sense of responsibility of staff on policy and procedures of institution and on risk-based approach and updating of staff information.

Education programs are prepared by Compliance Unit and classroom trainings can be given by the Compliance Unit’s staff. Training activities are organized by the coordination and cooperation of Compliance Unit and Education Unit.

It is essential to train the new employees about the subject during the basic banking training period. The bank’s existing personnel shall regularly be trained with classroom and e-learning methods.

The trainings to be given to staff by obliged parties shall at least cover the following subjects;

• Laundering proceeds of crime and terrorist financing
• The stages, methods of laundering proceeds of crime and case studies on this subject
• Legislation regarding prevention of laundering proceeds of crime and terrorist financing
• Risk areas
• Institutional policy and procedures
• In the framework of Law and related legislation
• Principles relating to customer identification
• Principles relating to suspicious transaction reporting
• Obligation of retaining and submitting
• Obligation of providing information and documents
• Sanctions to be implemented in violation of obligations
• The international regulations on combating laundering and terrorist financing

Necessary information and statistical data in relation to the training courses in progress regularly keeping subject to the applicable legislation, and shall report through Compliance Officer to FCIB at such times and in such manner to be defined.

1. INTERNAL AUDIT

The internal audit management is responsible to audit periodically on a risk sensitive basis whether the activities of the Bank related to anti-money laundering law, regulations and communiques thereunder are conducted in compliance with the aforementioned legislation and policies and procedures of the Bank.

Necessary information and statistical data in relation to the internal audit activities in progress regularly keeping subject to the applicable legislation, and shall report through Compliance Officer to FCIB at such times and in such manner to be defined.

1. COMPLIANCE UNIT AND COMPLIANCE OFFICER

Compliance Unit has been established and Group Head of Internal Systems has been assigned as Compliance Officer for ensuring compliance with obligations established with Law and regulations and communiques issued.

Duties, powers and responsibilities of compliance officer are;

• To evaluate the information and findings obtained through researches that he/she has carried out to the extent of his/her power and the possibilities regarding possibly suspicious transactions which were forwarded or detected by his/her initiative and to report the transactions which he/she considered to be suspicious to FCIB
• To act bona fide in an objective and independent will, acceptable and honest manner in evaluation of suspicious transactions and reporting of them to FCIB, to take necessary measures for ensuring the confidence of reporting
• To request all kinds of information and documents necessary from all units within obliged parties in the scope of evaluation of suspicious transactions
• To carry out obliged party’s training, research, development, observance, monitoring and control workings for ensuring compliance with obligations established with Law and regulations and communiques issued in accordance with Law and to provide necessary communication and coordination with FCIB

1. EFFECTIVENESS

Compliance Officer is responsible to the Board of Directors for implementing this policy.

This Policy shall be effective upon its approval by the Board of Directors.