Sanctions Policy and Procedures
Vibranium Venture Capital family of investment vehicles (collectively, “Vibranium”) is committed to compliance with relevant economic and trade sanctions laws of the United States and all other jurisdictions in which it operates.
This Sanctions Policy and Procedures (“Policy”) establishes the policies and procedures for Vibranium’s risk management and compliance with its sanctions obligations including:
• the principles and measures that Vibranium follows to comply with sanctions laws and to identify, mitigate, and manage sanctions risk in the jurisdictions where it operates;
• guidance about applicable sanctions and compliance requirements; and
• the consequences of failing to comply with this Policy.
Vibranium’s senior management is committed to compliance with all relevant sanctions laws and to effective and efficient sanctions risk management. Senior management expects all Vibranium Personnel (as defined below) to be responsible and accountable for their own actions and not to permit acts of non-compliance with sanctions requirements.
3. Sanctions Compliance Officer
Vibranium’s Sanctions Compliance Officer (the “SCO”) shall be appointed by and shall report directly to the Board of Managers of Vibranium Venture Capital GP LLC and shall have the oversight and implementation responsibility for the daily operation of Vibranium’s sanctions compliance program.
The initial SCO shall be Zamir Shukhov. Any questions concerning this Policy should be addressed to the SCO.
This Policy applies to all of Vibranium’s business activities and applies in the United States and extends to any additional jurisdictions outside of the United States where Vibranium may operate.
This Policy applies to all Vibranium employees acting in any capacity, including members, directors, officers, employees, secondees, interns, contractors, authorized representatives, and consultants in all Vibranium businesses, affiliates, and subsidiaries (collectively, the “Vibranium Personnel”). If Vibranium fails to execute its responsibilities under applicable sanctions laws, it could be subject to significant civil regulatory enforcement actions, fines, and criminal charges as well as serious damage to its reputation.
Vibranium Personnel must read and apply this Policy and remain vigilant to ensure compliance with this Policy. Vibranium Personnel who suspect a potential breach of this Policy must immediately report the potential breach or concern to the SCO.
Under no circumstances may any Vibranium Personnel act to evade or avoid sanctions obligations or identification of a prohibited transaction in breach of this Policy. Vibranium Personnel and anyone else acting on behalf of Vibranium cannot advise clients on how transactions should be structured in order to evade applicable sanctions. This prohibition includes, but is not limited to, advising clients and counterparties to amend their transaction documentation or payment instructions to include details that may be false or misleading, or changing, removing, or omitting information from a transaction that would otherwise lead to its detection as a prohibited transaction.
5. Sanctions Objectives
Sanctions are tools used by the United States, other governments, international organizations (such as the United Nations), and supranational bodies (such as the European Union) to:
• identify for the public, and limit the adverse consequences of, individuals, entities, governments, activities, or situations of international concern (for example, by publicly naming malign actors and denying them access to the formal financial system and economy, military or dual-use goods, or goods, technologies, or funding that can enable the pursuit of activities such as terrorism, the proliferation of weapons of mass destruction, and human rights abuses);
• influence those individuals and entities responsible for – or supportive of – malign activities or situations of international concern to modify their behavior (by motivating them to adopt different policies); and
• deter others, including governments and the global business community, from doing business with malign actors and their supporters.
Sanctions are intended to deter a range of activities, including terrorism, the proliferation of weapons of mass destruction, narcotics trafficking, human rights abuses, and corruption. Sanctions affect the operations of businesses, their employees, their counterparties, and their clients by placing restrictions and controls on the movement of goods, services, and funds. Restrictions can include:
• targeted financial sanctions, which include freezing the assets of and prohibiting any dealings with a government, regime, or individuals and entities associated with the activities of concern;
• export bans, import bans, and prohibitions on the provision of certain specified goods and services;
• prohibiting certain commercial activities (such as joint ventures and other investment);
• the transfer of funds to and from a sanctioned jurisdiction; or
• other financial and non-financial restrictions.
Sanctions are subject to frequent and sometimes sudden change. They can be imposed at any time by any country, international organization, or supranational body, and, unless otherwise noted, the effect is immediate.
6. Sanctions Regimes
Vibranium must comply with sanctions laws of the United States and other jurisdictions in which it or its personnel operate (collectively, the “Sanctions Regimes”).
U.S. sanctions are imposed under various laws, including the Trading with the Enemy Act and the International Emergency Economic Powers Act, Presidential Executive Orders, and regulations. U.S. sanctions are primarily implemented and enforced by the Office of Foreign Assets Control (“OFAC”) of the U.S. Treasury Department. In general, U.S. sanctions prohibit “U.S. Persons” (generally defined to cover U.S. companies, U.S. citizens and permanent resident aliens wherever located, and persons located in the United States) from engaging in or facilitating any transaction subject to U.S. sanctions, including with jurisdictions subject to comprehensive sanctions (currently the Crimea region of Ukraine/Russia, Donetsk and Lugansk regions of Ukraine, Cuba, Iran, North Korea, and Syria) (“Sanctioned Jurisdictions”), individuals or entities located in or operating in or from Sanctioned Jurisdictions, and parties on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDNs”). Any entity that is 50 percent or more owned by an SDN is deemed to be sanctioned even if not specifically identified on OFAC’s SDN List.
OFAC also implements various targeted sanctions programs. For example, OFAC’s sectoral sanctions prohibit U.S. persons from engaging in certain debt and equity transactions with entities identified as subject to sectoral sanctions (or 50 percent or more owned by parties subject to sectoral sanctions). Other OFAC sanctions prohibit U.S. persons from the purchase or sale of certain securities of identified entities. Parties subject to sanctions under OFAC or any applicable Sanctions Regime are referred to as “Sanctioned Parties.”
7. Screening Requirements
The principal means of mitigating sanctions risk for Vibranium is to ensure it does not engage in transactions with Sanctioned Jurisdictions or Sanctioned Parties by undertaking appropriate screening. The SCO shall designate one or more persons (which may be the SCO) as responsible for screening all employees, vendors, or other counterparties against the relevant sanctions lists, including the SDN List, as well as against Sanctioned Jurisdictions. Know Your Customer protocols shall be followed to ensure that screening is also undertaken against the beneficial owners of all corporate counterparties to ensure that such owners are not Sanctioned Parties.
In the event the screening reveals a potential match to a Sanctioned Jurisdiction or Sanctioned Party, the SCO shall undertake a detailed review to determine if the transaction or party involved is one subject to sanctions and if so whether the transaction is permissible. Appropriate documentation shall be maintained to evidence that the relevant screening was undertaken and detail the resolution of any false positive matches.
8. Asset Blocking, Rejecting, and Reporting Requirements
In the event there is a match with a Sanctioned Party, the matter should be immediately reported to the SCO. After Vibranium has determined the match is not a false positive, it will take appropriate steps to withdraw from the transaction, investment, and/or contractual relationship consistent with its compliance obligations. Vibranium is required to block any property in which an SDN has an interest, and report such blocking to OFAC within 10 business days. If a transaction involves a Sanctioned Jurisdiction, Vibranium may be required to reject the transaction back to the originator and report such rejection to OFAC within 10 business days.
In the event that a transaction has occurred that may violate a Sanctions Regime, the SCO should be notified immediately, and the SCO shall conduct a thorough investigation to determine whether such violation has in fact occurred, and determine whether any remedial action is required, including a voluntary self-disclosure to OFAC (or other relevant governmental authority).
9. Record Keeping
All relevant sanctions-related records shall be retained for a period of at least five years and otherwise in accordance with Vibranium’s record retention policy. Such documentation shall include Sanctioned Jurisdiction/Party screening results and risk assessments.
10. Compliance Principles
The following key principles govern Vibranium’s approach to sanctions. All other requirements in this document are to be read in the context of these principles.
(a) Vibranium maintains a rigorous sanctions policy to meet its obligations under the Sanctions Regimes, and will forego any business opportunity that would breach any Sanctions Regime.
(b) Vibranium may decide not to invest or to withdraw from any current transactions or investments even where such transactions/investments are permitted by law. These decisions may be guided by risk preference, corporate social responsibility, business efficacy, and reputational risk.
(c) In carrying out its compliance obligations, Vibranium relies on information provided to it by counterparties, advisors, consultants, and business partners unless it is reasonably aware, should be aware, or suspects that such persons are unreliable or dishonest, or the information provided is unreliable or false.
(d) Where Vibranium is unsure as to whether or not a conflict exists under any Sanctions Regime, the SCO may seek advice from outside counsel and/or the relevant government agency prior to commencing or continuing the business activity.
Vibranium shall exercise due care in designing and refining business rules and processes to ensure that no transaction involves a breach of applicable sanctions or this Policy.
11. Policy Governance
This Policy will be reviewed annually by the SCO and the Board of Managers to ensure the Policy is up to date. In addition, this Policy will be reviewed following any substantive changes to sanctions laws and regulations, legislation, or internal and external factors, including regulatory feedback.
12. Policy Breaches
Non-compliance with this Policy could have serious consequences for Vibranium, including civil/criminal penalties, injunctions, loss of clients, and reputational damage. All Vibranium Personnel are responsible for understanding how this Policy applies to their role. No part of this Policy or its supporting processes should be interpreted as contravening or superseding any other legal or regulatory requirements imposed upon Vibranium.
Examples of situations that will be considered as non-compliance with this Policy include but are not limited to the following:
• Entering into any transaction with a Sanctioned Party or involving a Sanctioned Jurisdiction or otherwise in violation of this Policy.
• Adjusting a business undertaking to avoid detection of prohibited transactions. This includes, but is not limited to, advising counterparties to amend their instructions to include details that may be false or misleading, or changing or omitting information from a transaction that would otherwise lead to detection (“stripping”).
All potential incidents of violations of Sanctions Regimes or breaches of this Policy must be promptly reported to the SCO. Vibranium will take appropriate action after consideration of all the relevant details.
The SCO will involve outside counsel as required for potential sanctions violations.
Effective: September 2023