29.02. 2024
Risk assessment
This Risk Assessment is a document that establishes the criteria and actions necessary for proactively identifying and addressing risks of money laundering, terrorist financing, and at 3-102-938781 LIMITED LIABILITY COMPANY, hereinafter referred to as Coinrate.pro Asset Management.
While acknowledging that risks cannot be fully eliminated, effective risk identification, combined with robust client due diligence measures, significantly reduces the likelihood of criminals exploiting Coinrate.pro Asset Management for illicit activities, particularly those related to money laundering, terrorist financing, or proliferation financing.
This Risk Assessment identifies potential risks, evaluates their severity, and establishes criteria for determining each client’s risk profile. The AML/CFT Procedure outlines the specific actions required to mitigate the identified risks based on each client’s risk profile.
This Risk Assessment is aligned with Costa Rica’s legal framework, including:Ley 8204 (Ley contra la Legitimación de Capitales y Financiamiento al Terrorismo, 2002, as amended),Reglamento a la Ley 8204 (Decreto Ejecutivo No. 36979, 2011, and subsequent amendments),Acuerdos del Consejo Nacional de Supervisión del Sistema Financiero (CONASSIF), particularly guidelines for obligated entities under Art. 15 and 15bis of Ley 8204,Normas Técnicas de la Unidad de Inteligencia Financiera (UIF) issued by the Instituto Costarricense sobre Drogas (ICD),Recommendations of the Grupo de Acción Financiera Internacional (GAFI/FATF) as adopted in Costa Rica,Other relevant Costa Rican laws and regulations, including the Código Penal (for penalties related to money laundering and terrorist financing) and Código de Comercio (for corporate obligations).
Risk categories
For the purpose of identification, assessment and analysis of risks of money laundering and terrorist financing related to its activity Coinrate.pro Asset Management shall take into account the following risk categories:
a) risks relating to clients;
b) risks relating to countries, geographic areas or jurisdictions;
c) risks relating to products, services or transactions;
d) risk relating to communication, mediation or products, services, transactions or delivery channels between the obligated entity and clients.
Coinrate.pro Asset Management identifies and assesses the risks which are relevant in the context of Coinrate.pro Asset Management business model within the categories set out in the Act.
a) Risks relating to Coinrate.pro Asset Management clients
b) Risks relating to countries, geographic areas or jurisdictions
c) Risks relating to products, services or transactions
Risk matrix
The «Likelihood» of a risk factor to occur is divided in a 5-level scale comprising «Very unlikely to occur», «Unlikely to occur», «Could occur», «Likely to occur», and «Almost certain to occur».
a) Very unlikely to occur: Less than 10% chance of happening;
b) Unlikely to occur: 10% to 35% chance of happening;
c) Could occur: 35% to 60% chance of happening;
d) Likely to occur: 60% to 90% chance of happening;
e) Almost certain to occur: More than 90% chance of happening.
The «Impact» of a risk factor is also divided in a 5-level scale comprising «Negligible», «Minor», «Moderate», «Major», and «Extreme» impact.
a) Negligible
• Financial loss up to 10 000 USD
• Reportable to the Regulator
• General staff dissatisfaction
b) Moderate
• Financial loss of 50 001 USD up to 100 000 USD
• National short-term Media coverage
• Reportable to the Regulator and potentially need to amend internal processes
• Some staff may decide to leave
c) Major
• Financial loss of 100 001 USD up to 300 000 USD
• National long-term Media coverage
• Reportable to the Regulator and certain need to amend internal processes
• Skilled staff may decide to leave
e) Extreme
• Financial loss of more than 300 001 USD
• International Media coverage
• Activities result in fines from the Regulator and potentially lead to various litigations
Risk scoring (tables)
a) Risks scored 1-5: are considered low risk and therefore are tolerated by Coinrate.pro Asset Management. Action: Accept the risk i.e. do nothing (Tolerate)
b) Risks scoring 6-8: are considered moderate risks and should be managed so that they are made as low as possible. Action: Continue the activity but actively work on mitigating the risk (Treat)
c) Risks scoring 9-12 are considered high risks. These risks must be treated, i.e. an action plan should be developed and implemented that seek to reduce the potential impact of the risk (i.e. reduce the risk score). Action: Move the risk, for example outsource to another organization (Transfer).
d) Risks scoring 15-25 are considered as extreme risks. These risks must be treated, i.e. an action plan should be developed and implemented that seek to reduce the potential impact of the risk (i.e. reduces the risk score). These risks will be added to the risk register and will be reviewed. Action: Preferred action is to stop the activity, as it is too risky. If, in exceptional circumstances, the Management Board can effectively and considerably mitigate the risk then the new reduced risk may be accepted (Terminate).
Risk appetite
Introduction
The Risk Appetite, together with the Risk Assessment, establishes the approach through which risk appetite is established, communicated, and monitored, including risk appetite statement, risk thresholds and limits for the material risks, and an outline of the roles and responsibilities of those overseeing the implementation and monitoring of the risk appetite of Coinrate.pro Asset Management.
The Risk Appetite is the basis for risk management principles and risk-taking activities and establishing vision and strategy of risks of Coinrate.pro Asset Management is prepared to accept and manage in pursuit of its business objectives.
The objective of the Risk Appetite is to establish appropriate and consistent links between Coinrate.pro Asset Management business strategy, the risk strategy, and the risk mitigation measures. The Risk Appetite is based on the Coinrate.pro Asset Management strategy.
Development, approval and maintenance of the Risk Appetite
The Risk Appetite is approved by the Management Board. The Risk Appetite will thereafter be reviewed at least once a year, taking into account changes in applicable laws and regulations and the Coinrate.pro Asset Management strategic plans. In the event of changes in applicable laws and regulations, the Risk Appetite will be revised as soon as possible or within the timeframe for applicability of the new requirements.
Definitions
«Risk appetite» means the aggregate level and types of risk that Coinrate.pro Asset Management is willing to assume within its risk capacity, in line with its business model, to achieve its strategic objectives.
«Risk capacity» means the maximum level of risk that Coinrate.pro Asset Management is able to assume given its capital base, its risk management and control capabilities, and its regulatory constraints. Risk capacity means the maximum level of risk that Coinrate.pro Asset Management can assume given its current level of resources before breaching constraints determined by regulatory capital and liquidity needs, the operational environment (e.g. technical infrastructure, risk management capabilities, expertise) and its obligations to depositors, shareholders, fixed income investors, as well as other clients.
«Risk Profile» means point in time assessment of Coinrate.pro Asset Management gross and, as appropriate, net risk exposures (after taking into account any mitigating factors) aggregated within and across each relevant risk category based on forward looking assumptions.
General Statement
a) Coinrate.pro Asset Management vision
Coinrate.pro Asset Management overall risk appetite approach is risk tolerant related to mission and vision and risk averse for all other risks.
b) Coinrate.pro Asset Management clients
Coinrate.pro Asset Management does not enter into business relationship with persons with the following characteristics:
• Citizens or residents of high-risk / prohibited countries;
• Obtaining further appropriate information regarding the Coinrate.pro Asset Management client’s background;
• Requesting relevant financial information, such as financial statements, source of health/funds, net worth, or similar;
• Obtaining more detailed information about a Coinrate.pro Asset Management client’s source and structure of wealth
• Conducting internet or media searches.
Operational Risk:
a) Operational risk of Coinrate.pro Asset Management is due to the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Due to the planned activities, operational risk is one of the most material risks for Coinrate.pro Asset Management.
Key elements of risk appetite framework
The Management Board establishes the general principles and risk appetite by approving this risk appetite statement and other internal documents and strategies, and revising the same on a regular basis, taking into account, inter alia, changes in the activities and operating environment or strategy of Coinrate.pro Asset Management.
The ultimate responsibility for the proper management of the risks appetite and risk profile lies with the Management Board and shall comply with the following conditions:
• Risk appetite framework shall consider all material risks to which Coinrate.pro Asset Management is exposed, and the Management Board shall establish risk limits, tolerances and thresholds for all risks considered as material;
• Risk appetite and risk strategy are consistent, and both are implemented accordingly;
• Risk appetite framework is forward-looking and in line with the strategic planning horizon, and regularly reviewed;
• Risk strategy appropriately considers the financial resources of Coinrate.pro Asset Management;
• Risk appetite is documented in writing;
• Risk appetite is communicated to the staff of Coinrate.pro Asset Management.
It is the responsibility of the Management Board to introduce routines to Coinrate.pro Asset Management that are based on sound sourcing management practices and requirements to ensure that routines are adhered to and to ensure the monitoring and compliance with risk appetite.
The Risk Management monitors risk profile through internal procedures developed and implemented by the Management Board.
Annex 1 Risk Appetite Scale
