Effective Date: February 1, 2025 Last Updated: February 1, 2025

1. Firm Policy

Cheddar is committed to preventing money laundering and terrorist financing by complying with the Bank Secrecy Act (BSA), the USA PATRIOT Act, and other applicable regulations. This policy outlines the measures we take to ensure compliance and mitigate financial crime risks.

2. What is Money Laundering?

Money laundering is the process of disguising illegally obtained funds as legitimate assets. It typically involves three stages: • Placement: Depositing illicit funds into financial institutions. • Layering: Moving funds through multiple accounts to obscure their origins. • Integration: Using laundered funds to purchase assets or fund businesses.

3. How Cheddar Prevents Money Laundering

Cheddar is committed to preventing illicit financial activities, including money laundering and fraud, through a multi-layered enforcement system that ensures compliance with industry best practices and regulatory expectations. Our anti-money laundering (AML) policies include, but are not limited to, the following measures: Rigorous Transaction Monitoring • We continuously monitor all financial transactions for unusual activity, including frequent small deposits followed by immediate withdrawals, repetitive losses against the same opponent, or other irregular betting patterns. • Any transactions flagged as suspicious trigger an immediate review, and we reserve the right to pause account activity pending further verification. Strict Anti-Collusion Protections • Players are strictly prohibited from intentionally losing a game to transfer funds to another user. • Our system actively detects suspicious win/loss patterns, including repeated matchups between the same users with unnatural score discrepancies. • Accounts found engaging in collusion will face immediate suspension and potential account forfeiture. Controlled Deposit & Withdrawal Processes • Withdrawal Eligibility: Users can only withdraw funds that have been wagered in real-money skill tournaments and won fairly. • Dynamic Withdrawal Limits: Accounts with suspicious betting behavior may be subject to stricter withdrawal limits or extended verification procedures. • Hold Periods: To prevent fraudulent transactions, Cheddar may enforce hold periods on newly deposited funds before they can be withdrawn. Enhanced Identity Verification (KYC & Fraud Prevention) • Before processing a withdrawal, Cheddar may require additional Know Your Customer (KYC) verification, including: • Government-issued photo ID matching the account name. • Proof of residence via a utility bill or other official document. • Live selfie verification to confirm identity against submitted documents. • GPS-based location checks to verify physical presence in an eligible jurisdiction. • Users flagged for suspicious activity will not be allowed to withdraw funds until completing KYC verification. Immediate Account Actions for AML Violations • Accounts engaging in suspected money laundering, collusion, or fraudulent activity may face: • Temporary or permanent suspension. • Forfeiture of all funds associated with suspicious transactions. • A full ban from the Cheddar platform. • Reporting to relevant regulatory authorities. By implementing these stringent AML measures, Cheddar ensures that our platform remains secure, fair, and compliant with anti-money laundering laws.

4. Terrorist Financing Risks

Unlike money laundering, terrorist financing may involve legally obtained funds that are funneled for illicit purposes. While Cheddar's platform is not a common target, we monitor for suspicious activities that could indicate potential terrorist financing.

5. Compliance Officer & Responsibilities

Cheddar has designated Evan Fisher as its Compliance Officer, responsible for enforcing this AML/BSA Policy and ensuring compliance with financial regulations.

5.1 Compliance Officer Duties

The Compliance Officer is responsible for: • Overseeing AML compliance, employee training, and regulatory communication. • Monitoring adherence to all BSA obligations, including those enforced by financial service providers. • Maintaining transaction records and ensuring timely reporting of suspicious activity. • Filing required financial reports with FinCEN, including FBARs where applicable. • Implementing and enforcing Cheddar’s AML policies.

5.2 Contact Information

Compliance Officer: Evan Fisher Address: 2925 Van Ness Avenue #6, San Francisco, CA Email: evan@cheddarapp.com

6. Giving AML Information to Financial Partners

Cheddar complies with FinCEN BSA § 314(a) requests from financial partners (e.g., Venmo, PayPal, or banking providers) by: • Searching records to determine if any transactions involve the requested individual or entity. • Responding within 3 business days unless a different deadline is given. • Reporting relevant records to the requesting financial partner. • Confirming if no match is found and maintaining security & confidentiality.

7. Checking OFAC Listings

Before account creation, Cheddar automatically checks the U.S. Treasury’s SDN (Specially Designated Nationals) list to ensure users are not restricted from using the platform.

7.1 Ongoing Monitoring

Cheddar reviews OFAC’s list of sanctioned countries monthly and before expanding into new regions to ensure compliance.

7.2 Handling Restricted Users

If a user is found on the SDN list or engages in prohibited transactions, Cheddar will: • Reject the transaction. • Block the customer’s assets if required. • File a report with OFAC within 10 days. • Immediately contact the OFAC Hotline (800-540-6322) if necessary.

8. Customer Identification Program (CIP)

Cheddar’s CIP ensures users are verified before making withdrawals to prevent fraud and money laundering.

8.1 Required Customer Information

Before a user can withdraw funds, Cheddar collects: • Full name • Date of birth • Address • Government-issued ID (driver’s license or passport) • Selfie via camera

8.2 Identity Verification

Users must provide a valid, unexpired government-issued ID. Automated KYC checks are conducted before withdrawals are approved.

8.3 Customers Who Refuse Verification

Users who refuse to verify their identity will not be allowed to withdraw funds.

8.4 Failed Verification

If Cheddar cannot verify a user’s identity, withdrawals will be blocked until verification is resolved.

8.5 Recordkeeping

All verification data will be stored securely, including: • Customer identification details • Verification results • Discrepancies and resolutions Records will be retained for at least 5 years to comply with FinCEN regulations.

9. Suspicious Transactions and BSA Reporting

Cheddar monitors user transactions for potential fraud or money laundering. If a transaction involves $5,000 or more and appears suspicious, Cheddar will: • Investigate gameplay history and financial activity. • Report findings to Venmo/Braintree as required. • Retain all relevant documentation for 5 years.

9.1 Reports of Large Cash Transactions

If Cheddar is aware of transactions exceeding $10,000 in one business day, the Compliance Officer will file a report with FinCEN using IRS Form 8300.

10. BSA/AML Recordkeeping Policy

Cheddar maintains AML records as follows: • Suspicious activity reports: Retained for 5 years. • Customer identity records: Retained for 2 years. • Transaction records: Retained for 4 years. • All records are securely stored and compliant with BSA regulations.

11. Training & Awareness

As a solo founder, I will stay up to date on AML compliance by reviewing FinCEN updates and industry best practices. If Cheddar expands, employees will be trained on AML risks, red flags, and compliance responsibilities.

12. Monitoring Transactions & Player Activity

Cheddar continuously monitors all player transactions and wagers for unusual activity. Suspicious transactions will be flagged and reported as needed.

13. Confidential Reporting & Compliance Oversight

As the sole Compliance Officer, I will track and document all compliance-related actions. If Cheddar grows, a formal reporting process will be implemented for employees to escalate AML concerns.

14. Senior Management Approval

As the founder and Compliance Officer, I formally approve this policy to ensure Cheddar remains compliant with BSA regulations and financial partner requirements.