Fraud risk refers to the potential for malicious actors to scam, steal, or issue unauthorized transactions. Given the irreversible nature of onchain transactions, thorough verification processes (e.g., Know Your Customer [KYC]) for withdrawals are imperative to ensure transaction authenticity and mitigate potential risks. This policy also focuses on ensuring accurate reporting of tax-deductible activities and the compliant use of our products by users. Effective management of fraud risk is essential to maintain financial integrity, regulatory compliance, and the trust of our stakeholders and donors.
Endaoment is committed to providing secure accounts accessible only to properly KYC’d users and administrators. We strive to guard against tax deductibility-related fraud and misuse of Donor-Advised Funds (DAF). We manage these risks through robust KYC processes during both account creation and significant off-platform transactions (e.g., disbursements, rollovers). Compliance with this policy is mandatory for all employees, contractors, board members, and representatives acting on behalf of Endaoment.
Implement robust KYC procedures during account creation and before any significant financial transactions (e.g., disbursements, rollovers) to verify the identity of users and administrators.
Access Control Measures
Enforce strict access controls to financial systems, ensuring that only authorized personnel can perform sensitive financial operations.
Transaction Verification
Utilize multi-factor authentication and additional verification steps for high-risk transactions to prevent unauthorized activities.
Ensure monthly financials are confirmed through segregation of duties involving one third party, one staff member, and one board member.
Yearly Third-Party Financial Audit
Conduct comprehensive financial audits annually by a third-party entity (e.g., Singer Lewak) and the Chief Operating Officer (COO). Updated audit documents must be publicly available on the Endaoment Docs page.
KYC Processing
Implement documented policies and procedures for customer identification (including name, date of birth, address, and identification number), customer due diligence, and enhanced due diligence when necessary.
Multisignature Wallet Use
Regularly confirm the integrity and operational security of all multisignature wallets used by staff on a monthly basis.
Transaction Monitoring
Regularly audit incoming transactions to identify any suspicious patterns or activities that may indicate fraudulent behavior.
Transaction Review Process
Establish documented policies and procedures for reviewing and approving transactions, ensuring both internal and external compliance requirements are met.
Access Removal Procedures
Implement documented policies and procedures for promptly removing access rights of employees or contractors who no longer require access to financial systems.
Implement stringent controls and regular reviews of vendor relationships to ensure compliance with Endaoment’s fraud prevention and financial integrity standards.
Ensure that critical financial procedures and systems have segregated duties to prevent any single individual from having full control over any process without oversight.
Approval Processes
Maintain segregated claim diligence and approval processes to uphold checks and balances.