Risks and mitigation strategies
Introduction
It is important to recognise and indicate the potential risks associated with the creation and distribution of tokens. This text examines the main risks and the corresponding mitigation strategies to ensure the success and security of the BANGK Coin and compliance with the provisions, in particular, of the European Markets in Crypto-Assets Regulation (MiCAR) regarding the distribution of tokens.
This plan is not exhaustive, because in practice the identification of risks includes AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism), conflicts of interest, cybersecurity risks and other general risks. This means first of all establishing strict user identification procedures, including the collection of valid identification documents. Article L561-1 of the Monetary and Financial Code (CMF) lays down a general obligation to declare sums derived from offences in order to preserve public order. It states that :
Persons other than those referred to in Article L. 561-2 who, in the exercise of their profession, carry out, control or advise on transactions involving movements of capital, are required to report to the Public Prosecutor any transactions of which they are aware and which involve sums that they know to be the proceeds of one of the offences referred to in Article L. 561-15.
Where they have made such a report in good faith, such persons shall benefit from the provisions of Article L. 561-22.
The provisions of Article L. 574-1 shall apply to them when they inform the owner of these sums or the perpetrator of these transactions of the existence of this declaration or provide information on the action taken.
The Public Prosecutor shall inform the department referred to in Article L. 561-23, which shall provide all relevant information.
In addition, section 2 of chapter 1 sets out the persons subject to obligations to combat money laundering and terrorist financing.
KYC + KYB / AML
Transaction monitoring is crucial to detect any suspicious activity. Regulatory compliance with KYC (Know Your Customer), KYB (Know Your Business) and AML (Anti-Money Laundering) standards must be ensured to combat money laundering and the financing of terrorism.
Asset freezing mechanisms are put in place to block funds in the event of suspected fraud or illegal activity. However, these measures must respect the rights of users. Regular audits are carried out to assess the effectiveness of the procedures and identify any loopholes. Communication with the relevant authorities is also essential in order to report suspicious activities and cooperate in investigations.
As part of this consideration and mitigation of potential risks, BANGK's internal policy provides for appropriate training, in particular through AMF sustainable finance certification for staff responsible for managing and monitoring transactions. This certification is intended to ensure the effective application of these security measures[1].
By implementing these provisions, as a token issuer, BANGK will be able to reduce the risks associated with the platform and strengthen the confidence of users and investors.
Potential risks
Price volatility
The volatility of BANGK Coin prices during and after the ICO can lead to significant fluctuations, affecting the perceived value of the token and investor interest. In accordance with MiCA regulations, the company is implementing risk management mechanisms to mitigate these market fluctuations. These mechanisms include the implementation of transparency and accountability policies to ensure a healthy and secure market ecosystem. In addition, BANGK is committed to complying with regulatory provisions on non-disclosure of information and investor protection, in order to promote confidence and legitimacy in ICO, in line with the MiCA regulatory framework.
Transaction security
Tokens and ICOs can be targeted by hacker attacks, compromising the security of transactions and putting investors' funds at risk. However, with the use of blockchain technology, these risks are significantly mitigated. Blockchain provides a decentralised and immutable record of all transactions, making it extremely difficult for hackers to manipulate data or interfere with transactions. By integrating these cutting-edge technologies into its ICO platform, BANGK is committed to guaranteeing the security and integrity of transactions for all participants, thereby reinforcing the trust and credibility of the project.
Mitigation strategies
Strengthening security
BANGK implements advanced security protocols such as blockchain verification and multi-level protection to ensure the security of transactions and the protection of investor funds.
European regulatory compliance Markets in Crypto-Assets Regulation
BANGK is committed to working closely with lawyers, advisors and legal experts to ensure that its token scrupulously complies with current regulations, thereby minimising potential legal risks. Its approach is guided by a desire for absolute compliance with national and European regulations, particularly the most recent, in this case the European Union's MiCAR[2].
A proactive approach is adopted to ensure compliance, with continuous regulatory monitoring and rapid adjustments to practices and technology to keep up to date. Transparency and accountability are priorities, and high standards are maintained in all operations. Collaboration with legal experts helps to forge an environment where trust and legitimacy are paramount to the BANGK Coin project.
Involvement with the investment community
BANGK is committed to transparent and open communication with the investor community, providing regular updates on the progress of the project and responding promptly to investor concerns and questions.
To ensure effective communication, newsletters, online forums and question and answer sessions will be set up. This will maintain a direct link with the investor community, building trust and engagement. Clear updates on project progress and performance information will be shared regularly to build a strong relationship with investors. Feedback from the BANGK community will also be taken into account to improve the project and meet expectations in a transparent manner.
Implementing continuous monitoring and empowering stakeholders
Continuous risk monitoring
In accordance with the provisions of article L561-10-1 of the Monetary and Financial Code, a mitigation plan is not limited to implementing the solutions identified, but must also ensure ongoing monitoring of the situation or project to detect any changes in the risk landscape. This monitoring enables potential developments to be anticipated and mitigation strategies to be adapted accordingly.
A team and a service dedicated to surveillance with Shufti Pro
To ensure effective monitoring of documents and flows, BANGK has set up a dedicated team to continuously monitor the risks identified. This team is responsible for collecting relevant data, analysing trends and reporting any significant changes in the level of risk.
To reinforce its commitment to compliance and security, BANGK has set up a dedicated monitoring team in partnership with Shufti Pro, a leading identity verification and anti-fraud platform. This skilled team will use Shufti Pro's advanced tools to actively monitor transactions and activities related to our token, quickly identifying suspicious behaviour and potential risks. By working with Shufti Pro, renowned for its expertise in security and regulatory compliance, BANGK is strengthening its ability to protect its investors and maintain the integrity of the project. This initiative demonstrates its ongoing commitment to maintaining high standards of security and compliance throughout our journey.
Regular feedback
Communication is essential in the risk monitoring process. BANGK will provide regular feedback to inform stakeholders of developments identified, actions taken and adjustments made to the mitigation plan. This feedback promotes transparency and enables informed decision-making.
Empowering the players
It is crucial to involve and empower the people concerned in risk monitoring. The company raises awareness and trains employees who are in daily contact with risks to recognise early warning signs and report any anomalies or risk situations. Their active involvement strengthens the risk management culture within the organisation and helps to prevent potential crises.
The asset freeze mechanism
The asset freeze mechanism is an essential component of the risk mitigation measures taken when a token is created, in accordance with article L561-2 of the French Monetary and Financial Code. Its purpose is to freeze funds in the event of suspected fraud, illegal activity or non-compliance with established policies. However, it is crucial that these measures respect the rights of users and are implemented in a transparent manner.
BANGK is aware of the provisions of article L.562-3-1 of the Monetary and Financial Code which allows the Minister responsible for the economy to freeze, for a renewable period of six months, all or part of the funds, financial instruments and economic resources held with the organisations and persons mentioned in article L. 562-3 which belong to natural or legal persons who commit, or attempt to commit, acts of terrorism, facilitate or participate in them and to legal persons owned or controlled, directly or indirectly, by these natural persons.
In accordance with the provisions of art. L. 562-4-1 of the cmf (Ord. n° 2020-1342 of 4 Nov. 2020, art. 4)
I. - The persons referred to in Article L. 561-2 shall put in place an organisation and internal procedures for the implementation of the measures for freezing assets and prohibiting the making available or use of funds or economic resources provided for in this chapter, (Ord. no 2022-230 of 15 Feb 2022, art. 4) "in Articles L. 712-4 and L. 712-10" and by European regulations on restrictive measures taken pursuant to Articles 75 or 215 of the Treaty on the Functioning of the European Union, as well as the prohibition of circumvention of these measures. They shall ensure that these provisions are applied in their branches established outside national territory.
II. - The parent undertaking of a group within the meaning of Article L. 561-33 established in France shall define, at group level, an organisation and procedures for implementing the measures for freezing assets and prohibiting the making available or use of funds or economic resources referred to in I. This organisation and these procedures are implemented by the entities of the group mentioned in Article L. 561-2 established in France as well as by their branches abroad or any other form of free establishment.
III. - Parent [parent] persons and undertakings of a group referred to in I and II respectively shall also put in place internal control measures to ensure compliance with obligations relating to the freezing of assets.
To ensure compliance with these provisions and the effectiveness of the asset freeze, BANGK implements robust monitoring systems to detect early warning signs of suspicious activity that may warrant an asset freeze. This includes transaction thresholds, unusual patterns of behaviour or other risk indicators.
Regulatory compliance is a crucial aspect of the asset freeze. Compliance with applicable KYC, KYB and regulatory requirements is essential to ensure that freezing decisions are taken in accordance with applicable laws and regulations.
Transparent communication with the relevant authorities is planned in order to report suspicious activities and cooperate in investigations. In addition, and as mentioned above, adequate training of the staff responsible for implementing these measures is essential and planned to ensure consistent and effective application of the asset freezing scheme.
[1] Certification in sustainable finance: the AMF specifies the conditions for certifying bodies
Acting on a proposal from the Haut Conseil Certificateur de Place (HCCP), the AMF has decided to create a new module for testing professionals' knowledge of green and responsible finance. Instruction DOC 2021-03 specifies the characteristics of the examination, the contents of the certification application and the obligations of certified organisations.
[2] Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (Text with EEA relevance)
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