SparkWell Anti-Money Laundering (AML) Policy

SparkWell Anti-Money Laundering Policy

1. About This Policy

1.1. This policy establishes Anti Entropy's framework for preventing, detecting, and reporting money laundering and financial crimes across its operations and SparkWell fiscal sponsorship program.
1.2. It applies to all financial transactions processed through Anti Entropy accounts, including donations, grants, contractor payments, and international transfers on behalf of SparkWell Projects.
1.3. As a US 501(c)(3) nonprofit, Anti Entropy is subject to applicable anti-money laundering laws including OFAC sanctions regulations, IRS cash reporting requirements (Form 8300), and the USA PATRIOT Act. While nonprofits are not classified as financial institutions under the Bank Secrecy Act, compliance with these laws is mandatory.
1.4. This policy does not form part of any employment or contractor agreement and may be amended at any time.

2. Key Definitions

2.1. Money Laundering: The process of concealing the origins of illegally obtained funds by passing them through a complex sequence of banking transfers, commercial transactions, or other financial activities.

2.2. OFAC: The Office of Foreign Assets Control, a US Treasury agency that administers and enforces economic and trade sanctions. All US persons and entities, including nonprofits, must comply with OFAC sanctions.

2.3. SDN List: OFAC's Specially Designated Nationals and Blocked Persons List. Anti Entropy is prohibited from transacting with any individual or entity on this list.

2.4. Red Flag: An unusual circumstance, inconsistency, or transaction pattern that may indicate money laundering, fraud, or sanctions evasion and warrants further review.

2.5. **Suspicious Activity: **Any transaction or pattern of transactions that raises concern about the legitimacy or source of funds, the identity of the party involved, or the stated purpose of the activity.

2.6. Know Your Donor (KYD): The process of verifying the identity and legitimacy of donors, grantors, and funding sources prior to accepting funds.

3. Roles and Responsibilities

3.1. AML Compliance Officer

The Board President (currently Jeffrey Poche) serves as Anti Entropy's AML Compliance Officer and is responsible for:

• Overseeing the implementation of this policy
• Reviewing and approving unusual or high-risk transactions
• Conducting or delegating due diligence on flagged donors, grantors, or payees
• Maintaining records required by this policy
• Updating this policy as laws or operations change
• Coordinating with legal counsel when necessary

3.2. Anti Entropy Staff and Contractors

All staff and contractors must:

• Comply with this policy in all financial and program activities
• Complete AML awareness training upon onboarding and annually thereafter
• Report red flags or suspicious activity to the AML Compliance Officer promptly
• Refrain from processing any transaction that has not been appropriately screened

3.3. SparkWell Project Leads

Project Leads must:

• Notify support@antientropy.org before accepting any donation, grant, or funding from a new source above $5,000
• Provide reasonable documentation to support Anti Entropy's KYD screening on request
• Immediately report any suspicious donor, contractor, or payment circumstance to their Project Liaison
• Refrain from accepting cash donations or payments on behalf of Anti Entropy

4. Know Your Donor (KYD) and Due Diligence

4.1. Standard Donor Due Diligence

For all new donors or grantors, Anti Entropy will:

• 4.1.1. Collect basic identifying information: name, organization, country of origin for donations over $500.
• 4.1.2. Screen the donor and any associated entities or individuals against the OFAC SDN List and other applicable sanctions lists prior to accepting funds.
• 4.1.3. Verify the donor's identity for donations above $5,000 using available public records, website, or other reasonable means.
• 4.1.4. Document the screening in the relevant Project folder.

4.2. Enhanced Due Diligence

Enhanced due diligence is required for:

• 4.2.1. Donations or grants of $25,000 or more from a new or unknown source.
• 4.2.2. Any funding originating from or routed through a high-risk jurisdiction (FATF grey or black-listed countries).
• 4.2.3. Anonymous or third-party donations where the ultimate source is unclear.
• 4.2.4. Donors or grantors in countries subject to US sanctions or with known elevated financial crime risk.
• 4.2.5. Enhanced due diligence may include requesting additional documentation, reviewing publicly available information, consulting legal counsel, or declining the funds.

4.3. Donor Screening Process

• 4.3.1. Screen all new donors against OFAC's SDN List at: sanctions.ofac.treas.gov
• 4.3.2. Screen using full legal name and any known aliases.
• 4.3.3. For organizational donors, screen both the organization and its primary contact.
• 4.3.4. Document the date and result of each screening in the Project folder.
• 4.3.5. Re-screen donors who are recurring funders at least annually.

5. Transaction Monitoring and Red Flags

5.1. Cash Reporting Requirements

• 5.1.1. Anti Entropy does not accept cash donations or cash payments under any circumstances.
• 5.1.2. IRS Form 8300: If Anti Entropy ever receives more than $10,000 in cash in a single transaction or related transactions, it is required by law to file IRS Form 8300 within 15 days. This requirement applies even though cash transactions are prohibited; it is a legal backstop.
• 5.1.3. Project Leads who are offered cash donations must decline and direct the donor to Every.org or another approved electronic payment method.

5.2. Red Flags to Report

The following circumstances must be reported to the AML Compliance Officer immediately:

• A donor requests that funds be returned or redirected to a third party shortly after donating
• A donation is made from a jurisdiction subject to US sanctions (Cuba, Iran, North Korea, Russia-related OFAC programs, Syria, etc.)
• A donor or grantor refuses to provide identity information when reasonably requested
• Funds appear to be structured to avoid reporting thresholds (e.g., multiple donations just under $10,000 from the same source)
• A contractor or vendor requests payment to an account in a different country than where they are located
• A contractor or vendor requests payment to an unusually large number of accounts
• A third party offers to fund a Project in exchange for redirecting a portion of funds elsewhere
• Any donor, contractor, or payee matches a name on the OFAC SDN List or appears in negative news related to financial crime
• Unusual urgency around accepting or transferring funds without clear explanation

6. OFAC and Sanctions Compliance

6.1. Anti Entropy is a US-based entity and is legally required to comply with all OFAC sanctions programs. This applies to all transactions, regardless of amount.

6.2. Anti Entropy may not receive funds from, send funds to, or engage in any financial activity with any individual or entity on the OFAC SDN List or subject to a comprehensive OFAC sanctions program.

6.3. All prospective donors, grantors, contractors, and vendors must be screened against the OFAC SDN List before Anti Entropy enters into any financial relationship with them.

6.4. If a screening produces a potential match, do not proceed with the transaction. Refer the matter to the AML Compliance Officer immediately for review.

6.5. OFAC screening tool: https://sanctionssearch.ofac.treas.gov

6.6. Documentation of all OFAC screens (date, name screened, result) must be saved to the relevant Project folder.

7. International Payment Controls

Given SparkWell's international operations across the UK, Philippines, Vietnam, Netherlands, Ecuador, Uganda, and India, the following additional controls apply.

7.1. All international contractors must complete a W-8BEN form before receiving payment. Payments may not be initiated until the form is on file.

7.2. OFAC screening must be conducted on all international contractors and vendors before engagement and at least annually thereafter.

7.3. Payments to new international payees require AML Compliance Officer review if the payment exceeds $5,000 or if the payee is located in a country with elevated financial crime risk.

7.4. Country-specific risk considerations apply. Refer to the FATF grey and black lists for current high-risk jurisdictions. Payments to payees in high-risk jurisdictions require enhanced due diligence regardless of amount.

7.5. All international payments are processed through Mercury Bank (primary) or Wise (fallback). No international payments may be made via cash, money order, or informal transfer methods.

7.6. Payment routing must match the contractor's documented bank account. Changes to banking details require written confirmation from the contractor and AML Compliance Officer review before processing.

8. Suspicious Activity Escalation

8.1. Any staff member, contractor, or Project Lead who identifies a red flag or suspicious activity must report it to the AML Compliance Officer at support@antientropy.org as soon as possible and no later than 48 hours after identification.

8.2. Reports should include: a description of the activity, the parties involved, amounts and dates, and any supporting documentation.

8.3. The AML Compliance Officer will review the report and determine appropriate next steps, which may include: declining or reversing a transaction, requesting additional documentation, or consulting legal counsel.

8.4. While nonprofits are not required to file Suspicious Activity Reports (SARs) with FinCEN under the Bank Secrecy Act, Anti Entropy reserves the right to voluntarily report suspicious activity to FinCEN or other authorities when appropriate.

8.5. No individual who reports a red flag in good faith will face any adverse consequence for doing so. Retaliation against a good-faith reporter is a serious policy violation.

8.6. Do not alert the subject of an investigation or screening that a review is underway.

9. Recordkeeping

9.1. Anti Entropy will maintain records sufficient to demonstrate compliance with this policy, including OFAC screening logs, KYD documentation, and records of any escalated matters.

9.2. Records must be retained for a minimum of five years.

9.3. Documentation should be stored in the relevant Project folder in Google Drive and, for Anti Entropy-level matters, in the AE compliance folder.

9.4. If Anti Entropy is required to file IRS Form 8300, copies must be retained for five years from the date of filing.

10. Training

10.1. All Anti Entropy staff and contractors will receive AML awareness training as part of onboarding.

10.2. Training records will be maintained by the AML Compliance Officer.

11. Policy Violations

11.1. What Constitutes a Violation

• Accepting cash donations or payments on behalf of Anti Entropy
• Failing to screen a new donor, grantor, contractor, or vendor against the OFAC SDN List
• Processing a payment to a sanctioned party or high-risk entity without AML Compliance Officer review
• Knowingly ignoring or failing to report a red flag or suspicious activity
• Alerting a subject to an AML review in progress
• Retaliating against any individual who reports a concern in good faith
• Submitting false or misleading documentation to satisfy due diligence requirements

11.2. Consequences

Violations will be handled in accordance with Anti Entropy's Misconduct and Discipline Policy. Consequences may include:

• 11.2.1. Minor violations (unintentional, promptly corrected): Coaching, additional training, and enhanced oversight of future transactions.
• 11.2.2. Moderate violations (repeated failures or lapses involving meaningful risk): Written warning, temporary suspension of transaction authority, and remediation plan.
• 11.2.3. Serious violations (intentional misconduct, sanctions evasion, fraud): Immediate suspension or termination of employment or contract, required repayment of improperly processed funds, potential referral to law enforcement or regulatory authorities.

Knowingly processing a transaction involving a sanctioned party or engaging in money laundering is a federal crime under US law and may result in criminal prosecution.

12. Policy Review

12.1. This policy will be reviewed annually by the AML Compliance Officer and updated as needed to reflect changes in law, operations, or organizational risk.

12.2. Significant changes will be communicated to all staff, contractors, and active SparkWell Project Leads.

12.3. Questions about this policy should be directed to support@antientropy.org.