Anti-Money Laundering (AML) Policy

Anti-Money Laundering (AML) Policy

Updated: June 11, 2025

Introduction and Purpose

Botanic, LLC (the “Company”) is committed to complying with all applicable laws and regulations designed to combat money laundering, terrorist financing, and other financial crimes. As a wellness company specializing in plant-powered supplements, including hemp-derived products compliant with the 2018 Federal Farm Bill (containing less than 0.3% delta-9 THC by weight), the Company recognizes the importance of preventing its operations from being used for illicit activities.

This Anti-Money Laundering (AML) Policy outlines the Company’s procedures to detect, prevent, and report suspicious activities. It applies to all employees, officers, directors, contractors, and agents of Botanic, LLC. The policy is designed to ensure compliance with the Bank Secrecy Act (BSA), USA PATRIOT Act, and guidance from the Financial Crimes Enforcement Network (FinCEN), including specific considerations for hemp-related businesses as outlined in FinCEN Guidance FIN-2020-G001.

Money laundering is defined as the process of disguising the origins of illegally obtained funds to make them appear legitimate. It typically involves three stages: placement (introducing illicit funds into the financial system), layering (separating the funds from their source through complex transactions), and integration (using the “clean” funds for legitimate purposes). Terrorist financing involves concealing the source or destination of funds intended for criminal activities. The Company prohibits and will actively prevent any involvement in money laundering or terrorist financing. Violations of this policy may result in disciplinary action, up to and including termination, and may lead to civil or criminal penalties.

AML Compliance Officer Designation and Duties

The Company designates the Chief Operations Officer as the Anti-Money Laundering Compliance Officer (AMLCO), with full responsibility for the Company’s AML program. The AMLCO must be qualified by experience, knowledge, and training in AML regulations, financial crimes, and the Company’s operations.

The duties of the AMLCO include:

• Implementing and overseeing the AML program, including monitoring compliance by employees and third parties.
• Updating the program as necessary to reflect changes in laws, regulations, or business risks.
• Ensuring appropriate training for employees.
• Reviewing and investigating potential suspicious activities.
• Filing required reports, such as Suspicious Activity Reports (SARs) or Form 8300 for cash transactions over $10,000.Coordinating with law enforcement or regulatory authorities as needed.
• Maintaining records related to the AML program.

The AMLCO reports directly to senior management and the Board of Directors (if applicable) on AML matters.

Risk Assessment

The Company will conduct a periodic risk assessment to identify and mitigate AML risks associated with its operations, products, customers, geographies, and distribution channels.

Factors considered include:

• The nature of hemp-derived products, which may attract higher scrutiny under FinCEN guidance.
• Online sales through shopbotanic.co, including potential for international customers or high-value transactions.
• Payment methods (e.g., credit cards, digital wallets, or any cash transactions).
• Supplier relationships to ensure ethical sourcing and compliance with hemp regulations. High-risk indicators may include customers from high-risk jurisdictions, unusual transaction patterns, or involvement with restricted entities.

Customer Due Diligence (CDD) and Know Your Customer (KYC)

The Company will implement risk-based procedures to identify and verify customers, particularly for high-value or high-risk transactions. While retail e-commerce typically involves low-risk transactions, enhanced due diligence may be required for:

• Large orders (e.g., exceeding [Insert Threshold, e.g., $5,000]).
• Repeat customers with unusual patterns.
• International shipments to high-risk countries.
• Hemp product purchases requiring age verification (customers must be 21+).

Required Customer Information

For relevant transactions, the Company will collect:

• Name
• Shipping and billing address
• Email and phone number
• Payment details
• For high-risk cases: Government-issued ID (e.g., driver’s license or passport) for verification

Verification

The Company will verify identity using:

• Documentary methods (e.g., scanning ID for age-restricted products).
• Non-documentary methods (e.g., cross-checking with public databases, credit reports, or third-party verification services).
• Age verification tools for hemp products to ensure compliance with federal and state laws. If a customer refuses to provide information or provides misleading details, the transaction will be rejected, and the AMLCO will be notified for potential reporting.

Notice to Customers

Customers will be notified via the website (shopbotanic.co) privacy policy or checkout process that information is collected to verify identity and comply with federal laws, such as:

“To help the government fight the funding of terrorism and money laundering activities, federal law requires us to obtain, verify, and record information that identifies each person who engages in certain transactions. We may ask for your name, address, and other information to allow us to identify you.”

Checking Sanctions Lists

Before processing transactions, the Company will screen customers against:

• The Office of Foreign Assets Control (OFAC) Specifically Designated Nationals and Blocked Persons List (SDN List).
• Embargoed countries and regions listed on the OFAC website.

Screening will occur at checkout and on an ongoing basis for repeat customers. If a match is found, the transaction will be rejected, assets blocked if applicable, and a report filed with OFAC. The Company will subscribe to OFAC updates and use automated tools for efficiency.

Transaction Monitoring and Detection of Suspicious Activity

The Company will monitor transactions for red flags indicating potential money laundering or terrorist financing. Monitoring includes automated systems for e-commerce platforms and manual reviews for anomalies.

Red Flags

Examples include:

• Unusual concern about privacy or reporting requirements.
• False or misleading information about fund sources.
• Large, unexplained cash payments or structured transactions to avoid $10,000 reporting thresholds (e.g., multiple orders totaling just under $10,000).
• Sudden high-volume purchases from new customers.
• Shipments to high-risk jurisdictions or mismatched billing/shipping addresses.
• Use of multiple payment methods or accounts in a short period.
• Inflows of funds beyond known customer income (if identifiable).
• Attempts to purchase products as a front for other activities.
• For hemp products: Transactions suggesting non-compliance with licensing or THC limits, or commingling with marijuana-related activities (prohibited under federal law).

Response to Red Flags

Upon detection, the AMLCO will investigate, gathering additional information internally or from third parties. If suspicion persists, the transaction will be halted, and a SAR filed with FinCEN if warranted. For cash receipts over $10,000 in a trade or business, Form 8300 will be filed within 15 days.

Reporting Obligations

• Suspicious Activity Reports (SARs): The AMLCO will file SARs with FinCEN for any transaction over $5,000 suspected of involving illegal funds, per BSA requirements. No disclosure of SAR filings to involved parties.
• Currency Transaction Reports: Not typically applicable for e-commerce, but monitored for any cash elements.
• FinCEN 314(a) Requests: The Company will respond promptly to information requests from FinCEN regarding accounts or transactions.
• Form 8300: For cash payments over $10,000.

Employee Training

All employees will receive annual AML training tailored to their roles, covering:

• AML laws and Company policy.
• Recognizing red flags.
• Reporting procedures.
• Hemp-specific compliance (e.g., FinCEN guidance on avoiding marijuana commingling).

Training records will be maintained for five years.

Recordkeeping

The Company will retain records of customer identification, verifications, transactions, investigations, and reports for at least five years, in compliance with BSA requirements. Records will be secure and accessible for audits.

Independent Testing and Review

The AML program will be independently audited annually by an internal auditor or qualified third party to assess effectiveness. The audit scope will align with business risks. Results will be reported to senior management, with deficiencies addressed promptly.

Program Updates and Approval

This policy will be reviewed annually or as needed due to regulatory changes, business expansions, or risk assessments. Updates require approval from senior management.