7.2 Measures to mitigate illicit activity

AML regulations aim to combat illicit activities such as money laundering from criminal activities or the financing of terrorism. Such regulations require, in particular, that financial intermediaries conduct background checks and verify the origin of assets. Possession and use of SLCT, transactions, and services related to the use of SLCT can be subject to certain requirements, limitations, or additional measures imposed by law for identity verification and detection of money laundering, terrorist financing, fraud, or any other financial crime. Different entities within a (geographical or operational) sector may pose a higher or lower risk depending on a variety of factors, including products, services, customers, geography, business models, and the strength of the entity’s compliance program. Consequently, access to and use of SLCT may be dependent on the third-party service integration of the Polygon Blockchain into their systems and their services, whereby such integration and the utilization of SLCT and the Polygon Blockchain can be subject to different requirements and limitations of use imposed by third-party service providers or by different regulatory standards and restrictions.

Such restrictions and limitations can, for instance, be applicable for third-party cryptocurrency exchanges that enable users to buy or sell SLCT, as they act as gatekeepers to the markets in crypto-assets, including SLCT. Such cryptocurrency exchanges (and other similar third-party service providers) are usually responsible for complying with applicable AML regulations.

As such, cryptocurrency exchanges or similar third-party service providers might reject or cease to provide any use or integration of SLCT due to specific restrictions imposed by the AML regulations.