Step 5 - Funding Workflows

Overview

From the product and workflow perspective, there are three main (Fully Disclosed) money movement workflows Partners use to fund customers accounts:

1. Individual Funding - Each customer will fund their individual DriveWealth brokerage account. This can be achieved multiple ways; US Customers can use DriveWealth’s Deposit API to initiate ACH transfers from the customer's bank account to the customers individual brokerage account. For non US Partners, customers may fund their accounts via an FX provider, or Wire. Note: For non US partners, all accounts funds must be converted to USD prior to landing in the customers DriveWealth brokerage account.

2. Bulk Funding - Partners that have the ability to send a single daily aggregated payment to DriveWealth can take advantage of the bulk funding APIs. These APIs additionally increase customer buying power upon deposit request which then allows for instant trading.

3. Trade Settlement - Partners can leverage our Net Cash Settlement API to immediately calculate a bulk wire transfer to DriveWealth to net settle across all of their customers accounts, either themselves, or with the assistance of a 3rd party (affiliate or FX broker), at the end of the day with DriveWealth via ACH (US Only), Bulk Wire, and Third Party.

The method a customer utilizes to move money into their DriveWealth brokerage/advisory account is largely determined by the type of licensing the Partner maintains. While it may vary slightly, each jurisdiction generally has two categories of financial companies:

1. Can accept/hold/transmit customer funds (Banks, Money Transmitters, some broker/advisors)

• If the partner has the required licenses to accept/hold/transmit customer funds, they can choose to either any of the 3 options to fund customer accounts.

2. Can NOT accept/hold/transmit customer funds

• If the partner does NOT have the required licenses to accept/hold/transmit customer funds, customers must individually fund their DriveWealth brokerage account, which will be stored in their name. However, if working with a licensed third-party entity that can aggregate funds for single payment, Partners can avail themselves to the bulk funding option as well.

NON-US (INTERNATIONAL) PARTNERS

Foreign registered partners that do not have the ability to hold/transmit customer funds can contract a locally registered F/X Broker as agent to accept funds, convert local currency into USD, and transmit money to DriveWealth’s customer money receipts account.

MOVEMENT OF FUNDS

Earning Interest in Customer Accounts

DriveWealth offers two cash sweep options for customers who hold funds in their brokerage account. Both options carry their own regulatory frameworks and mechanisms used to generate interest. These options include:

• FDIC Bank Sweep
• Money Market Sweep

FDIC Bank Sweep

Under the Federal Deposit Insurance Corporation (“FDIC”) Bank Sweep, a customer’s cash balances are swept into an interest-bearing deposit account held at our program bank, Texas Capital. Customer balances begin accruing interest starting the first day they are deposited into the FDIC Bank Sweep. Interest payments are credited to the customer on the last business day of each month.

Each customer’s cash balance at an FDIC-insured bank, up to $250,000, is protected by FDIC deposit insurance, provided by the U.S. government. Deposit amounts above $250,000 USD are not protected by FDIC insurance.

Customer brokerage assets are also protected by Securities Investor Protection Corporation (“SIPC”) for assets up to $500,000 USD, including $250,000 USD for cash claims.

Money Market Sweep

The DriveWealth Money Market Sweep program invests customers’ free cash into a Dreyfus Money Market Fund (a security). The Fund invests in US government securities and pays monthly dividends. Customers who were invested in the money market fund during a month will receive a monthly pro-rata dividend based on the amount and duration of the investment in the money market.

Money Market sweeps are a good alternative to the FDIC Bank Sweep for partners in a jurisdiction where regulatory requirements do not permit a partner to accept interest payments, or where other restrictions around customer deposits apply.

Customer brokerage assets are also protected by Securities Investor Protection Corporation (“SIPC”) for assets up to $500,000 USD, including $250,000 USD for cash claims.

AML Policies for Customer Deposits and Withdrawals

Effective January 31, 2022, and in accordance with anti-money laundering regulations and DriveWealth internal policies and procedures, all customer deposits must include, at the minimum, the full name of the customer and their DriveWealth account number (or if applicable, virtual account number), or the deposit will be rejected and returned to the sender. As a standard practice, it is expected that deposits will include all payment details received from the customer’s originating source of funds, including originating bank account number, originating bank name, originating bank address, and originating country.

All customer withdrawals must be sent to the account where the funds originated in the name of the account holder. DriveWealth generally prohibits the transfer of funds to and from third-parties and will reject third-party deposits and requests for third-party transfers.

In addition, as part of our Anti-Money Laundering program, cross-border deposits and withdrawals are generally not allowed and will be rejected. However, cross-border transfers are allowed in instances when a third-party payment provider (also referred to as a multi-currency account)* that is located in a different country than the customer is used to facilitate payment to and from the customer’s originating account.

When the third-party payment provider facilitates deposits to a customer’s DriveWealth account, the provider must include, at the minimum, the full name of the customer and their DriveWealth account number (or if applicable, virtual account number), or the deposit will be rejected. As a standard practice, it is expected the third-party provider will include all payment details received from the customer’s source of funds, including originating bank account number, originating bank name, originating bank address, and originating country.

DriveWealth continues to monitor all fund movements facilitated by clients and intermediaries for potentially suspicious activity, and our AML Department will continue to reach out to partners for requests for information regarding the source of customer funds, the business purpose of transactions, employer and annual income details, and other pertinent information.

Providers include but are not limited to Wise, Currencycloud, and Instarem.