Voima Account Prospectus
- Version 3.1
Voima Gold Oy Business ID: 2843889-9 Bulevardi 5 voimagold.com 00120, Helsinki 1 Table of Contents
Table of Contents 2 Introduction 5 Glossary 6 Product Characteristics 9 Features of a Voima Account 9 Integrating Physical Gold into a Digital Application 9 Simple and Practical Way of Owning and Holding Physical gold 9 Safe Storage on Behalf of Clients 10 Liquidity 11 Environmental, Social and Governance Priciples (ESG) 12 Environmental 12 Social 13 Governance 14 Voima’s Chain of Integrity 15 Other Products 17 Company Information 19 Voima’s Purpose, Mission and Vision 19 History 19 Financial 21 Profitability 21 Financing 21 Management and Responsibilities 22 Operational Management 22 Advisory Board 24 Board of Directors 25 Shareholders 25
2 Accountants and Auditors 25 Fees and Other Costs 26 Trading 26 Storage 26 Bar Segregation 27 Withdrawal 27 Physical Delivery 27 Gold Deposit and Sourcing 27 Other Fees 28 Operational Management 29 Customer Management 29 Customer Support 29 Customer Data Handling 30 Cash Management 30 Gold Sourcing 33 Gold Trading 33 Funding the Voima Account 34 Placing an Order 34 Trade Settlement 34 Immediate Settlement 35 Delayed Settlement 35 Trade Confirmation 36 Transaction Failure or Cancellation 36 Voima’s Online Platform 36 Data Provider and Reference Price 36 Storage and Withdrawals 37 Safety 37 Voima’s Vault 37 Refinery Partners’ Gold Accounts 37
3 Withdrawal Practices 38 Voima Account Auditing 38 Vault and Account Audit 39 Assaying of Voima’s bars 40 Insurance Policy 40 Gold in Voima’s Vault 40 Gold in Transit 41 Gold at Refinery Partners 41 Reporting 41 Taxation 41 Compliance and Risk Management 43 Compliance & Ethics in General 43 Anti-Money Laundering and Counter-Financing of Terrorism Policies 44 Customer Due Diligence (CDD) 45 Know Your Customer (KYC) 45 Regulatory Compliance 47 Data Protection Compliance 47 Preventing Money Laundering and Terrorist Financing 48 Risk Management 49 Physical Security Risks 49 Liquidity Risk 50 Market Risk 50 Counterparty Risk 51 Outsourcing Risk 51 Information Technology and Cybersecurity Risks 52 Operational Risk 52 Legal and Compliance Risk 53 Wind-Down Planning 53 General 53
4 Roles & Responsibility Areas During Wind-Down Process 54 Wind-Down Scenarios 55 The Wind-Down Process 55 Account Opening Manual 57 1st step - Opening an Individual Account 57 2hd step - Opening an Organization Account 57 3rd step - Transfer Funds to the Voima Account 58 4th step - Submit an Order 58 Disclamer 58
5 Introduction
This document is a guide for Clients who are considering opening a Voima Account through Voima Gold Oy (hereinafter referred to as “Voima”).
Voima Account is an account uniquely integrates physical gold into the digital world, without compromising the security and trust of a physical asset, or user experience enabled by the intelligent software. Voima Account is ideal for savings, and in the future for payments as well - making a “regular bank account” obsolete. A Voima Account consists of a Gold Account to store physical gold, and a Currency Account to hold fiat money.
A Voima Account includes an online platform accessible through a web browser at voimagold.com or via a mobile application. When you use your Voima Account for buying gold you then hold real physical gold stored in Voima’s vault located in Finland, a country globally known for its high-levels of integrity and low-levels of corruption.
Voima Account has been designed so that it combines the ease and flexibility of digital user experience and the advantage of physical gold ownership. A Voima Account enables simple, practical and versatile ways of holding physical gold . Risks have been stripped to bare minimum and benefits such as liquidity and safety have been endorsed to the fullest.
This document is designed to explain Voima Account in detail for making the Client’s due diligence and decision making processes easier. You are strongly encouraged to read this document in its entirety before opening a Voima Account. Should you have any questions about Voima Account, or Voima itself, please do not hesitate to contact us.
Form more information
Voima Gold Oy Mailing Address Bulevardi 5, 00120 Helsinki Finland Bulevardi 5 A 86 [email protected] 00120 Helsinki +358 (0)9 612 1917 Finland
6 Glossary
Definitions for the key terms used in this Document.
Bar Segregation Clients can request their gold bars to be stored separately in Voima’s Helsinki Vault. This request is called bar segregation. Bar segregation specifies the bars which the Client owns on the Voima Account.
Currency Account In this document, Currency Account refers to the side of the Client’s Voima Account to which the Client can deposit Fiat Currency. The Client can also withdraw Fiat Currency from the Currency Account. The Currency Account’s main purpose is to exchange Fiat Currency into gold stored on the Client’s Gold Account side of the Voima Account.
Fiat Currency Means a central bank-issued currency established as the official currency of a nation by the government of that nation.
Fiat Currency Holdings Means all Fiat Currency that you hold on your Currency Account.
Fineness The gold content in a gold bar or gold material expressed in either percentages or promilles.
Gold Account In this document, Gold Account refers to the side of the Client’s Voima Account to which the Client can buy gold, from which the Client can sell gold into Fiat Currency and on which the Client’s Gold Holdings are held and accounted. Additionally, Clients can make physical Gold Deposits to the Gold Account and request Gold Withdrawals from the Gold Account.
Gold Deposit Depositing physical gold to Voima Account. Clients can deposit gold bars, coins, jewellery, mining doré bars and other gold material to their Voima Account.
7 Gold Holdings In this document, Gold Holdings refers to all gold held by the Clients on the Gold Accounts. All of the Gold Holdings are fully backed by physical gold. The majority of the Gold Holdings are stored in Voima’s Helsinki vault in immediate reserves which are in the form of serial numbered 100 grams and one-kilogram 999.9 Voima gold bars. A minority of the gold is held at Voima’s gold refinery partners’ gold accounts, due to liquidity reasons. Voima always holds at least 65 percent of the gold in immediate reserves, meaning that at least 65 percent of all Client Gold Holdings are held in the form of 100 grams and one-kilogram four nine Voima gold bars and doré bars stored in Voima’s Helsinki vault.
Gold Sourcing Voima conducts responsible gold sourcing, meaning the acquisition of gold material, in order to provide liquidity and gold into Voima’s Ecosystem.
Gold Withdrawal Withdrawing physical gold out of Voima Account.
Good Delivery The London Bullion Market Association’s set of criteria that enable the global trade in gold and silver bars. The good delivery standards are currently the standard trusted around the world for precious metals trading.
Investment Grade Gold Gold which meets the requirements set by the European Union in terms of purity, markings and shape. On the Voima Account, this means either 100g or 1 kg gold bars with a purity equal to 999.9 parts per thousand pure gold bars refined by Voima’s LBMA accredited refinery partners.
London Bullion Market Association The London Bullion Market Association (LBMA) is an international trade association for the global over-the-counter (OTC) precious metals market. Members of the LBMA include, e.g., refiners, bullion banks, assayers as well as storage, and transport service providers. The LBMA is currently the world’s largest standard setting organization in the global gold market.
London Bullion Market Though the London Bullion Market gold is internationally traded on a 24-hour basis, mainly through London, in OTC spot and forward transactions. Voima’s Refinery partners often trade spot gold through the London Bullion Market, and Voima uses the price set in the London Bullion Market for its transactions with Clients.
8 Physical Delivery See ‘Gold Withdrawal’.
Purity See ‘Fineness’.
Refinery A service provider whose business is to turn impure gold into pure gold and cast bars.
Voima Account A Product combining both the Gold Account and the Currency Account as well as all other functions and services offered by Voima.
Voima Account Auditing Auditing process that includes both calculating the amount of gold held in Voima Accounts, conducted by a third party auditor PricewaterhouseCoopers (PwC), and measuring the purity of Voima’s gold bars conducted by Eurofins Labtium which is a government accredited precious metals assayer.
Voima’s Chain of Integrity Chain within Voima’s Ecosystem consisting of Voima’s trusted partners: Voima’s vault facilities, Voima’s online platform, Voima’s LBMA accredited partners such as refineries and logistics firms as well as the London bullion gold market. Voima’s Chain of Integrity includes a due diligence process that trusted partners will have to pass and includes inter alia, Voima ensuring and verifying that all gold is responsibly sourced, that gold held by Voima’s external logistics and refinery partners is real and that no criminal activities take place via Voima’s services.
Voima’s Ecosystem Voima’s integrated system of customers, suppliers, LBMA accredited refineries, LBMA accredited logistics providers, the LBMA bullion market, auditors, and insurance underwriters.
Wind-Down Plan A plan enabling a company to cease its activities and achieve cancellation of its regulatory permissions (if applicable) in an orderly manner, with minimal adverse impact on the company’s customers, counter-parties or the wider markets.
9 Product Characteristics
Features of Voima Account
Integrating Physical Gold into a Digital Application
The functions of Voima Account are accessed via an online platform accessible through a web browser at app.voimagold.com or a mobile application. The Voima Account consists of a Currency Account and a Gold Account.
Voima Account has been constructed so that it is simple to use, robust, and secure. Clients can deposit euros via bank transfers to their Currency Account that can be used to buy gold to the Client’s Gold Account. Clients can also choose to transfer funds directly from their bank account to their Gold Account. This is similar to transferring euros into a dollar based bank account: the euros are automatically exchanged into gold once the transfer has been received and logged. With a Voima Account, exchange of euros into and out of gold takes place simply, swiftly, and efficiently.
Voima Account enables easy custody of the Client’s Gold Holdings. Voima Account can be used as a savings mechanism utilizing the oldest and most trusted store of value known to mankind. Gold Holdings in the Client’s Voima Account are not securitised and the Gold Account is fully backed by gold. In fact, most of the gold is stored as individually identifiable 100g and one-kilo Voima gold bars in Voima’s vault located in Finland, a country often ranked on top of global charts measuring most secure countries and countries with lowest levels of corruption. In addition, Clients can deposit physical gold material to their Voima Accounts and withdraw physical gold from their Voima Accounts.
Simple and Practical Way of Owning and Holding Physical Gold
The Voima Account enables simple, practical and versatile ways of owning and holding physical gold. Thus, it is suitable for each Client’s individual preferences and circumstances no matter if the Client is an individual saving in gold or an institution looking for allocating a part of its assets into physical gold.
When the Clients buy gold to the Gold Account they can fractionally possess physical gold. This means that the Client does not have to choose a specific amount of bars which the Client would like to buy. Instead, the Client can invest in round numbers of cash such as 1.000.000 EUR. This is possible because Voima pools all the gold together, excluding Bar Segregation described below. This way the Clients can own gold with the accuracy of milligrams of pure gold from the pool. This allows for efficient and practical allocation of the Client’s assets into gold.
Voima also offers Bar Segregation for those Clients who wish so. Bar Segregation means that the Client owns individual gold bars stored in Voima’s Helsinki vault. Clients can ask Voima to segregate 100g or 1kg bars on their Voima Account, and by doing so, Voima marks certain gold bars exclusively to that Client only. Voima does this by providing the Client with segregation certificates including a list of serial numbers and photos of each segregated bar to the Client.
10 Clients can also withdraw their gold on short notice if they wish to do so as well as to deposit physical gold to Voima’s vault. Gold is available for withdrawal in the form of 100 grams and one-kilogram gold bars. For more information on gold withdrawals and Voima’s transportation, please refer to the chapter titled “Operational Management” and its subchapter “Storage and Withdrawals”.
Safe Storage on Behalf of Clients
The physical gold backing the Voima Accounts consists of three forms of gold material. These forms are A-bars stored in the Helsinki vault, gold stored on Voima’s Refinery partner’s gold accounts, and D-bars, where the D stands for ‘doré’, stored in the Helsinki vault.
The A-bars are 999.9 pure Voima gold bars stored in Voima’s Helsinki vault. The A-bars are the bars available for withdrawal on 24-hour notice. These bars come in two sizes which are 100g and 1kg bars of which the 1kg bar is the primary size in Voima’s Ecosystem. These bars are refined by Voima’s LBMA accredited Refinery partners in Switzerland.
The gold stored on Voima’s Refinery partner’s gold accounts are also 999.9 pure gold. These gold accounts are used to ensure liquidity of the Voima Accounts and for the fabrication of the A-bars. The accounts are maintained by LBMA accredited Swiss refineries which are among the biggest gold refineries in the world. The gold balance on Voima’s Refinery partners gold accounts is transported to Voima’s vault on an ongoing basis.
The D-bars are the result of Voima’s gold sourcing and gold deposit business’ which includes receiving gold material, such as recycling gold and bars deposited by Clients, and turning it into doré bars by melting or drilling the material. All deposited gold material is properly analysed for its gold content. After this process, gold content is measured and the exact amount of gold is deposited into Client’s Voima Account. Afterwards, D-bars are sent to the Refinery and they will come back to the Helsinki vault as 999.9 A-bars as specified above.
For the Clients who wish so, Voima also offers Bar Segregation in which A-bars can be segregated to the Client on demand.
Gold Holdings are insured by third party insurance providers to cover for unexpected losses and damages. For more information on Voima’s insurance policy, please refer to the chapter titled “Operational Management” and its subchapter “Insurance Policy”.
Liquidity
Clients can buy and sell gold through the Voima Account, and all trades are executed between Voima and the Client. Voima holds gold in its balance sheet, which Voima uses to sell gold to its Clients. Conversely, if the Client wishes to sell gold, Voima buys that gold to its balance sheet and provides the Client with a cash settlement.
Voima has negotiated deals with LBMA accredited Refineries through which Voima has indirect access to the London gold bullion market. The London gold bullion market
11 exchanges roughly 100 billion euros worth of gold each day. The access is provided via gold accounts provided by the Refineries through which Voima can buy and sell physical gold to and from the Refineries that also participate in the London bullion market. Trade between the Refineries and Voima provides significant liquidity to Voima Accounts, which then transfers to liquidity for the Client.
The liquidity provided by the Refinery partners on the sell-side to Voima is roughly five million euros per day. This means that a net buy order of 20.000.000 EUR can be executed in approximately four days. However, on request, the liquidity limit can be increased with ease. Under normal market conditions, Voima’s Refinery partners can buy all gold held on Voima’s gold accounts within one week.
In addition to the Refinery partners, Voima has a growing Client base of both institutional and individual Clients, which have both the interest to buy and sell gold providing additional liquidity to Voima Accounts.
In many cases, Voima Accounts offer more liquidity than traditional mutual funds, which may have long settlement periods. At Voima, most trades are settled on the day of the transaction, on T+0 basis. For more information on Voima’s settlement and trade operations, please refer to the chapter titled “Operational Management” and its subchapter “Gold Trading”.
All of Voima’s gold bars are refined to the globally recognized four nine standards of 999.9 fineness, and Voima’s one-kilogram bars meet the LBMA kilo-bar standards in terms of weight, fineness, and dimensions. Adhering to global standards brings an aspect to the liquidity of Voima’s gold bars as gold bars refined by LBMA accredited Refineries are among the most liquid forms of Investment Grade Gold in the world.
Voima Accounts’s liquidy:
12 Environmental, Social and Governance Principles (ESG)
The ESG principles are a set of environmental, social, and corporate governance considerations that aim to minimize the negative effect of poor management in these management areas. At Voima, ESG principles are taken seriously since the endorsement of these principles are key for long term success in business. Voima has set criteria both to its stakeholders and to Voima’s operations to endorse proper monitoring of key ESG ethics.
Environmental
The biggest source of environmentally hazardous emissions during the lifecycle of gold comes from mining. Mining and milling of gold ore accounts for close to 60 percent of all emissions in the lifecycle of gold.1 However, it is important to note that the total amount of gold in the market increases on average by just 1.5% percent per year through gold mining. Because Voima is not a mining company, but does engage in selling gold, we see it as an important contribution to source recycled gold by adhering to responsible principles. Voima buys gold from reputable sources where environmental aspects are taken seriously. Voima is investing and researching options to increase the amount of recycled gold material in Voima’s ecosystem.
Most of the gold in Voima’s ecosystem is sourced from the company’s LBMA accredited Refinery partners, which, as members of the LBMA, are required to adhere to their set of rules on responsible sourcing principles.
Voima’s Refinery partners deal only with professional large scale miners and gold recyclers such as Voima. Large scale miners are mostly publicly listed companies, which have high environmental responsibility standards. Large scale miners have a responsibility to take care of the mine site even after mining has ceased. This responsibility also includes transferring, processing, and recycling hazardous materials and debris. Large scale miners have a responsibility to return the mine site as close as possible to its original environmental state, and many of the mining companies have their ESG principles available on their website.
Voima has also made a commitment toward gold recycling in the Nordic market. Voima’s sourcing division trades with recycling gold brokers who act as intermediaries between individuals and Voima. These “sourcers” are called Voima Miners. Voima’s Due Diligence reaches this segment as well. All sourcing Clients also go through Voima’s Know Your Customer (KYC) process and background checks as other Clients.
Voima aims to source most of the gold it sells from recycling and Nordic region mining output. By responsible sourcing recycling gold from the local market, Voima contributes to the environmental aspect of the ESG principles. In 2019, over 25 percent of all gold sold
1 https://www.gold.org/download/file/8306/gold-and-climate-change-report.pdf
13 by Voima originated from Finnish recycling gold. The rest was sourced by Voima’s Refinery partners and their reputable sources.
From the beginning of 2021 Voima will start to direct one percent of the charged storage fees to a program called Voima Earth Fund. The exact name of the program will be announced later. The concept includes directing funds towards restoring old mining sites left in bad condition.The first project will be launched after the fund has gathered adequate funds.
Social
Social factors of the ESG discuss how the company takes care of the relationships between the company and its key stakeholders. Voima’s key stakeholders include its employees, suppliers, customers, communities around the business as well as regulators and policy-makers.
On the employee side, Voima aims to generate jobs through various research and development (R&D) projects as well as scaling up the business itself. So far, Voima has undergone two successful R&D projects, including building the Helsinki vault location and creating the software version 2.0.
Voima provides both local and global audiences with educational material and cutting edge market research through Voima’s online publication Insight, which is available for free on Voima’s website. Insight aims to educate the public about gold, markets, and economics by providing easy access to premium articles for everyone interested.
As the gold market is facing disruption by fintech and standardization of the market, cooperation with regulators and officials plays an important role in Voima’s business. As the largest gold-focused fintech company in the Nordics, Voima has taken a proactive stance towards regulatory bodies and government officials, by informing and educating them on the developments in the gold market.
Governance
Corporate governance in the scope of ESG principles for Voima covers company leadership, internal controls, and shareholder protection. Strong industry knowledge and solid governance practices have been considered throughout the company’s history.
Company leadership has been selected with experience, expertise and good standing in mind. Currently Voima’s Founder & CEO, Marko Viinikka, is also the largest shareholder of Voima via his holding company Voima Capital Ltd. With nearly ten years of asset management experience, Viinikka enjoys a crucial understanding of the financial markets.
Voima’s corporate leadership is further strengthened by an extremely experienced advisory board, comprising Tapani Järvinen, former CEO of Outotec, Aleksi Pursiainen, former head of Compliance at Nokia, and Pentti Pikkarainen, former leader of the Ministry of Finance (Finland) and head of several departments at the Bank of Finland. Together the advisory board has experience in corporate leadership, compliance, and monetary policy.
14 Internal controls are one of the core fundamentals of sound corporate practices. Internal controls include e.g. Voima’s internal policies for combating money laundering, fraud, security or cyber threats relevant to its operations. Internal controls are enforced by training employees regularly, mainly due to the efforts of internal compliance and legal departments, as well as outsourced verification and monitoring services.
One of the most important governance processes is the independent vault auditing process (Voima Account Auditing) performed by PricewaterhouseCoopers in which PwC verifies Client’s Gold Holdings, which Voima oversees. For more information on Voima’s auditing processes, please refer to the chapter “Operational Management” and its subchapter “Voima Account Auditing”. Additional measures are taken to keep internal compliance in order. For instance, Voima applies the four-eyes principle to all internal processes relating to the handling of Client’s transactions, meaning that each process is performed and supervised by at least two Voima employees.
Today, Voima has over one hundred shareholders, which are heard through investor relations and shareholder meetings, which take place one to four times a year.
Voima’s Chain of Integrity
Voima’s Chain of Integrity is a concept created by Voima to ensure the quality and soundness of the Client’s Gold Holdings overseen by Voima. Originally presented by the LBMA, the chain of integrity is a set of rules defining an ecosystem under which the origin, storage, and qualifications of gold bars can be trusted. Voima’s Chain of Integrity mirrors the LBMA’s chain of integrity. The standards set by the LBMA are Voima’s benchmark for its own internal standards.
Voima’s Chain of Integrity sets standards for gold sourcing, bar specifications, vaulting and logistics rules, refinery requirements, and trading norms. These standards are designed to be solid and trustworthy so that Clients can rest assured knowing that certain requirements are met when purchasing and storing gold through the Voima Account.
Voima’s Ecosystem:
15 Starting from gold sourcing, the gold in Voima’s Ecosystem must be responsibly sourced in accordance with Voima’s ESG principles. This is expected not only from Voima itself but also from all stakeholders, including Refineries and other suppliers. Voima’s main source of gold is the trading between Voima and Voima’s LBMA accredited Refinery partners who are full members of the LBMA and thus required to adhere to the LBMA’s responsible sourcing standards and the LBMA’s chain of integrity.
No matter what is the form of gold received by Voima, it must be analyzed before entering the Chain of Integrity. This means that even if the Client delivers gold bullion in certified packaging and supposedly refined by a credible Refinery, Voima will analyze and verify the gold content of the bars or coins. The analysis is done by melting and/or drilling the gold material, after which Voima checks the gold content through its assaying process.
After the gold material has been analyzed and Voima has confirmed its gold content, the material is integrated into Voima’s Chain of Integrity. Once in the chain, all gold material is shipped to one of Voima’s LBMA accredited refinery partners. At the refinery, the gold material is remelted and refined into Voima’s 100 grams and one-kilogram 999.9 fine gold bars. Accordingly, regardless of the form of gold coming into Voima’s ecosystem, it can only leave in Voima’s 100 grams or one-kilogram gold bars or, in the case of industrial use, gold granules.
Inside of Voima’s Chain of Integrity, the gold can be held in three stages, which are the Helsinki vault, transit, and Refinery. All stages must be fully insured at all times, in accordance with Voima’s Chain of Integrity. The Helsinki vault holds only Voima’s Clients’ Gold Holdings in their Voima Accounts and nothing else. Sourcing gold is stored separately from the pure gold bars inside Voima’s vault.
Safety is a key concern in Voima’s Chain of Integrity, and all stakeholders are expected to adhere to high standards in all safety aspects. Voima’s vault location in Helsinki was built with this in mind. Logistics inside the chain are operated by Voima’s carefully selected logistics partner.
Although Voima’s Refinery suppliers are a part of the LBMA chain of integrity, Voima has also negotiated an agreement with a government accredited precious metals assaying company Eurofins Labtium for random assaying sampling. The samples are selected from Voima’s Helsinki vault by the Eurofins Labtium and analyzed in their laboratorium for purity.
Voima performs thorough background checks for all of its Clients, including individuals, corporations, institutions, and suppliers who are allowed to participate in Voima’s ecosystem. During the account registration process, Clients are required to go through Voima’s KYC and CDD process as further described in chapter “Compliance and Risk Management”, subchapter “Due diligence”. Voima also performs background checks that are meant to keep Voima’s Ecosystem free of money obtained from illegal sources.
The Chain of Integrity is broken once a Client withdraws the gold bar. The gold bars which are withdrawn are no longer covered by Voima’s insurance, liquidity, due diligence process, or safety measures. Even if those same gold bars were to return to Voima through sourcing or other channels, the bars will be assayed and remelted before returning to Voima’s Helsinki vault as brand new gold bars. Voima does not differentiate
16 its own bars from other gold material meaning that the process and costs are always the same and the offer is based solely on the purity and the amount of pure gold in the material.
Voima’s Chain of Integrity is designed to make sure that the Clients always receive the finest and soundest gold bars that are always in mint condition if the Client decides to withdraw the bars. One of the key values of the Voima Account is based on the Chain of Integrity - the gold inside of the chain is liquid, safely stored, easy to manage, and pure at all times.
Other Products
In addition to the Voima Account, Voima has two lines of products which take part of Voima’s Ecosystem and function through the Voima Accounts. The products are called Voima Miners and Voima Waymaker. These products are open to all Clients who meet the requirements set by Voima.
Voima Miners
Voima Miners is Voima’s brand through which Voima acts as a wholesale buyer of gold and sources gold into Voima’s Ecosystem. Voima Miners is designed to suit large scale operators such as mining companies, gold smelters, and refineries but also individuals and small businesses such as smaller recycling gold traders. The gold material is sourced from companies that buy smaller amounts of gold from private individuals and other companies. The idea behind the concept is that Voima Miners “mine” gold into Voima’s Ecosystem by supplying recycling gold to Voima, which melts and assays the material before it enters the Voima’s Chain of Integrity.
The form of Voima Miners’ sourcing gold varies greatly. Gold sourced through the Voima Miners program originates from gold jewellery, gold coins, and bars as well as other gold artefacts. By acting as a local buyer in recycling gold, Voima can lower the average buy- in cost of the gold resold to investors who receive the refined pure Investment Grade Gold.
The service is designed to suit Clients of all sizes but the common denominator of all gold sourced is that the miners need to be able to specify the origins of the gold material in great detail and the means of acquiring the gold. Voima also performs heavy due diligence checks for all Voima Miners Clients in order to ensure that only legally obtained gold enters Voima’s Ecosystem.
Clients may enquire the opportunity of becoming a Voima Miner by contacting the Miners division via email [email protected] or phone +358 (0)9 612 1917.
Voima Waymaker
Voima Waymaker is a product which is designed to share Voima’s mission to the public. The idea behind Voima Waymaker is that the Clients, who are selected as Waymakers, act as the vanguards and waymakers of Voima’s mission and vision by encouraging people and organisations to open a Voima Account and thus expanding its reach. The Waymakers may spread the word among the general public, corporate decision makers,
17 the Waymaker’s own clients or simply through word of mouth in events and other circumstances. In order to become a Waymaker, and to enjoy the privileges the status offers, the Client must express an interest in promoting Voima’s mission and vision.
Company Information
Voima Gold Ltd. is a limited liability company whose business is governed by the laws and regulations of Finland and the European Union. Voima is not supervised by a financial regulator since its services, namely selling, buying, and storing bullion gold and gold material, are not under financial markets regulation in the EU nor in Finland.
This chapter provides information on Voima’s financial figures, business strategy, management, board of directors, shareholders as well as accountants and financial auditors.
Voima’s Purpose, Mission and Vision
Purpose We believe that your future matters. Hard work and doing the right things matters. We do it by delivering gold-based safe Voima Accounts for everyday banking needs for those who want their money to endure today, tomorrow and for the generations to come.
Mission Our mission is to offer reliable and secure banking products and services. These services will bring direct, measurable value to the user through value innovation. They are safe from burglars, hackers, money-launderers, bankruptcies, deceitful monetary policies and banks’ trick terms of making you an unsecured creditor.
Vision Our vision is to oversee and manage capital for generations to come
History
Voima was founded by Marko Viinikka in July of 2017.
The initial business idea was born from the struggles of taking care of other people’s money and investments while working in the financial industry. The root cause of this struggle is caused by the financial system itself, and how it has been built. Most of the clients who use financial services are not looking for ways to get rich, but rather to keep
18 their purchasing power high and leave an inheritance to the next generation. These people are victims of the financial system, as they have been forced to take and carry all sorts of liabilities which are complicated to understand. Because of that, they may lose their savings and their hard labour in vain.
Here are just a few example of these risks:
• Unrighteous way of managing nations wealth and budget has led to the excessive money printing, and therefore causing the weakening of money itself
• Regular banking clients are being forced to lend their savings to the bank without properly understanding it, and therefore, they carry the cost if the banks fail to pay their debts to these clients
Why is gold needed to provide the solution?
Gold has an unbeatable track record as a store of value, and it is inherent to its nature that it cannot be printed. Gold itself is a scarce element, and no human hand has ever manufactured even a milligram of it. Gold is the international standard of wealth, recognized by every person, nation and culture on earth. Throughout human history, civilizations have used gold to display their status, honor and accomplishments. Like wisdom, gold never loses its value. Instead, it appreciates over time and is passed on from one generation to the next.
The reason why Voima Account was created
The initial business idea of the company was formed after noticing inefficiencies and old- fashioned operation models in the physical gold market. Some of these issues included a lack of standards in trading units, poor customer experiences, lack of storage options and the lack of transparency in pricing, vaulting audits, and that it was impossible to manage gold efficiently without securitising the gold itself.
Voima Account was created to provide a turnkey solution for the Client to own gold with all necessary verifications. The company’s seed capital came from Mr. Viinikka, and soon further funding was acquired from individual investors. In early 2018, Voima’s office and vault location in Helsinki was officially opened. In the summer of 2018 the first mobile and online applications were launched, providing Clients an easy to use interface to buy and sell physical gold.
We are currently developing the Voima Account into the next phases, in order to achieve our vision.
Currently, Voima employs ten people. We are in the process of recruiting three to ten additional employees for various positions.
19 Financial
Profitability
Voima’s fiscal year of 2019 (1.10.2018 - 31.12.2019) resulted in a loss of 1,1 million euros. Fiscal year 2019 was extended to 15 months in order to normalize the fiscal year of Voima to be inline with the calendar year. The losses amounted from heavy investments in both physical and digital infrastructure as well as human resources. These investments include among others significant updates to the mobile and online applications as well as improved back office systems for transaction management. The fiscal year of 2019 posted 6,7 million euros in revenue, up 325 percent from 2018, resulting in a negative profit margin of -16 percent versus -74 percent in 2018.
The projection for the fiscal year 2020 is that the company will continue to post losses. Profit margin is expected to improve significantly, closer to 0 percent, due to significant growth in revenue. Revenue for the fiscal year 2020 is expected to grow on a similar or higher rate than what it grew in the fiscal year 2019. Cash flow is expected to turn positive by the end of 2020 from growth in both storage and trading fees. For fiscal year 2021 Voima is expected to post a positive profit margin.
Financial Figures for Fiscal Year 2019
Balance Sheet Total Assets: 2,3 MEUR Revenue: 6,3 MEUR Profit/Loss: -1,1 MEUR
Financing
In total, Voima has raised roughly 3.600.000 euros in the form of shareholder equity since its incorporation in 2017. Voima has also received over 530.000 euros from a Finnish government agency, Business Finland, in the form of research and development funding. In addition, Voima has strengthened its balance sheet by issuing close to 1 000 000 euros in subordinated debt of which close to 600.000 euros has been issued to selected investors in the first quarter of 2020.
Voima has an excellent financing environment because of a number of factors including a wide existing investor base of both local equity investors and debt financiers. Voima has also established cooperation with government funded financial entities such as Business Finland.
From the equity investor’s viewpoint Voima is seen as an interesting and disruptive fintech company. Amongst many aspects, the reason for this is that Voima’s whole team has an excellent track record of getting things done with the bar for standards set high. The management of the company is very committed towards the mission and purpose of the company. Voima’s continuous investments in physical safety and software development are assets that have the ability to scale up quickly, as well.
Despite the young age of the company, Voima has proven the business model by attracting paying clients from countries such as Finland, Sweden, Germany, the
20 Netherlands and the United States of America. The overall market conditions are favourable to Voima as central banks are pushing liquidity to the market, further weakening their currencies. The demand for gold has also been rising throughout the 21st century. These factors are seen to radically increase the demand for Voima Accounts making Voima an attractive company for investments.
Management and Responsibilities
Operational Management
Voima’s current management team includes the following persons with the following responsibility areas:
Marko Viinikka, Chief Executive Officer
Marko is the founder and CEO of Voima Gold. Before founding Voima Gold, he worked over 10 years in asset management and gained valuable skills in sales, financial markets, wealth management, and the regulatory environment. Marko has acted as an active investor on behalf of different groups of investors.
These experiences provided him a deep understanding of the financial world, and made him able to cope with stressful and complicated situations.
As the founder of Voima Gold, he built everything from scratch. An amazing journey so far. Through trial and error - from a personal and corporate perspective - Marko is eager to learn. Above all, he strives for more wisdom and understanding in order to be a better manager, father, husband, and a citizen.
Marko is currently doing an executive MBA at Hanken & SSE for its never ending professional development.
Samuli Keränen, Chief Operating Officer
Samuli has been at the core of Voima's operations since the beginning and has played a key role in building a stronger team of individuals at Voima.
Equipped with an analytical mindset and a tendency to see causal connections all around, Samuli’s personal interests lay in law and order, as well as operations and security management. His desire is to develop his critical mindset into a driver for growth, change, and improve efficiency.
At Voima, Samuli has learned that an environment of growth and constant change is not only a threat to security and a risk-based approach, but also an excellent opportunity to create order where it did not exist before.
As a foundation for his work, Samuli has a Specialist Vocational Qualification for Security Officers.
21 Sam Laakso, Business Controller
Sam works as a Business Controller at Voima, being responsible for key partnerships including, for example, refineries, banks, mining companies, and trade partners. Sam is also actively involved in Voima’s business development looking for new opportunities and partnerships.
Previously, Sam has worked as a derivatives and equities broker in Amsterdam and Helsinki consulting both individuals and companies in trade and hedging solutions. Sam has specialized in trading platforms, exchange traded derivatives, alternative investments, and since 2016 gold.
Sam holds a degree in Finance and Economics and has studied business in Universities in Helsinki and Hong Kong. As his thesis, Sam wrote a 199-page long research paper titled ‘The Future of Gold from 2019 to 2039’ in which he discusses future developments for gold.
Joonas Ilmasti, Legal Counsel
Joonas is responsible for legal & compliance affairs at Voima. He designs and implements Voima’s compliance & internal controls policies while overseeing contractual matters and identifying legal issues in all departments.
Joonas has been working in the alternative finance industry, with digital currencies and fintech initiatives, since 2015. He previously worked as the Head of Legal at Prasos, the largest cryptocurrency broker in the Nordics and one of the first cryptocurrency companies being granted the EU payment institution license. Joonas has also worked as the Chief Compliance Officer at LocalBitcoins, the world’s largest P2P bitcoin trading platform where he oversaw regulatory issues while founding and managing the compliance & financial crimes investigations teams of the company. This was during a time that witnessed major regulatory changes affecting the crypto industry when the 5th Anti-Money Laundering Directive of the EU was implemented into national legislation.
Having a multidisciplinary background, Joonas holds a Postgraduate Diploma in Accounting & Finance from the London School of Economics and a Master of Laws degree from the University of Turku.
Advisory Board
Voima has further strengthened its internal expertise via an Advisory Board to which Voima seeks experienced and top-level professionals from a wide range of sectors.
Aleksi Pursiainen
Mr. Pursiainen is an experienced professional in trade compliance, AML/KYC regulations, and is specialized in international sanctions regulation. Mr. Pursiainen provides AML, KYC, CDD, and sanctions education to Voima’s employees as well as specialist guidance and expertise to Voima’s compliance department. In the past, Mr. Pursiainen has, among
22 other things, served as the Head of Trade Compliance at Nokia and as the team leader in the Ministry for Foreign Affairs of Finland. Mr. Pursiainen is also a shareholder of Voima.
Pentti Pikkarainen
Mr. Pikkarainen has made a long career in the public sector, serving as the Head of Department at the Bank of Finland and as the Director General of Financial Markets in the Finnish Finance Ministry. At Voima, Mr. Pikkarainen provides monetary and economic insight to Voima’s business development and business strategy decision making. At the moment Mr. Pikkarainen work as Professor of Practice (Economics and Finance at Oulu Business School which is a part of the University of Oulu).
Tapani Järvinen
Mr. Järvinen was the first to join Voima’s advisory board and provides expertise in both corporate governance and mining-related operations. Among many positions, Mr. Järvinen has previously served as a CEO of Outokumpu Copper S.A., CEO of Compania Minera Zaldivar and as a CEO of Outotec and as a member of it’s board. Mr. Järvinen helps Voima’s administration in strategic decision making as well as corporate structuring and corporate governance questions. Mr. Järvinen is also a shareholder of Voima.
Board of Directors
Mr. Marko Viinikka acts as the sole member of Voima’s board of directors as well as the managing director while also being the largest shareholder of Voima through his holding company Voima Capital Ltd. Mr. Pasi Tasanen is a supplementary member of the board, and also acts as the accountant to Voima through his company Valjas Services Ltd. Voima is looking to add 1-3 new board members in the coming years.
Shareholders
Voima is owned by over one hundred independent shareholders, which include both individuals and organizations. All of Voima’s shareholders are Finnish citizens or companies owned by Finnish individuals. Ten largest shareholders of Voima owned 85 percent of all shares as of 31st of December 2019.
Accountants and Auditors
Voima’s accountant is Valjas Services Ltd, a local accounting and financial management firm. Valjas has been Voima’s accountant since the incorporation of Voima. Since the incorporation, Hill Audit Ltd. has been Voima’s financial auditor. Hill Audit Ltd’s partner Petteri Lagus, auditor authorized by the Finland Chamber of Commerce, has been designated as the main auditor of Voima’s financial statements.
23 Fees and Other Costs This chapter presents all fees included in the use of the Voima Account. Additional third party fees may apply from deliveries but Voima itself does not charge any additional fees apart from the ones mentioned in this chapter.
Trading
Fee: 2,99 EUR + 1,99% per settled transaction
The trading fee consists of a fixed 2,99 EUR fee per order and a percentage based 1,99% fee which is calculated of the total value of the transaction. The trading fee is the fee for both buying and selling gold. The reference gold price for both buying and selling gold is the gold price as quoted by Voima’s data provider. As the reference price for both buying and selling is the same, there is no spread other than Voima’s trading fee. For more information on Voima’s trade operations and settlement process, please refer to chapter titled “Operational Management” and its subchapter “Gold Trading”.
* Please note that a fixed service fee of 100 EUR applies if the Client wishes to submit an order via phone or email.
Storage
Fee: 0,99% per annum
Storage fee is 0,99% per annum and is withheld from the Client’s Gold Holdings each day of the year. The actual charging of the storage fee takes place once in the end of month. The storage fee is charged from the Client’s gold account. The first storage withholding takes place T+1 at 15:00 Helsinki time (EET), meaning that if the Client wishes to buy gold and withdraw it fully and immediately, the withdrawal request must be placed before the first storage withholding occurs. Gold under storage charge withhold is not available for withdrawal. The storage fee covers the cost of providing safe storage, insurance, third party auditing and administration.
Bar Segregation
Fee: 50 EUR per bar
If the Client wishes to have his bars segregated, a fee of 50 EUR per bar applies. If the Client fails to meet storage fees on segregated bars, Voima will revoke the segregation of a single gold bar and the due storage fees are then charged from the unsegregated Gold Holdings on the Voima Account. This means that in order to maintain the segregation the Client must own more gold than what is segregated on his Voima Account.
Withdrawal
Fee: 20 EUR per bar
24 In order to facilitate the cost of a physical vault transaction, Voima charges a fixed fee of 20 EUR per bar for gold withdrawals. Thus if the Client wishes to withdraw, for example, 200 one-kilogram gold bars from Voima, the Client must pay 10 000 EUR (50 EUR x 200) prior to pickup.
Physical Delivery
As the value of shipments varies depending on the quantity of the Client’s request, all shipments are individually contracted using Voima’s logistics partners. This means that all physical deliveries are subject to third party pricing. For more information on delivery pricing, please contact Voima’s customer service via email [email protected] or phone +358 0(9) 612 1917.
Gold Deposit and Sourcing
Fee: 100 EUR per deposit
In addition to buying gold from Voima, Clients can also deposit their existing gold bullion to Voima. For the handling, Voima charges a fixed analysis fee of 100 EUR per deposit which is charged in milligrams of pure gold from the Client’s Voima Account.
Other Fees
Service fee 50 EUR per starting fifteen (15) minutes
Voima’s product is designed to be used online. This means that Voima’s product is built so that it provides all necessary information and documentation online with as little human interference as possible. However, if the Client wishes to have additional service, such as setting up an API connection, assisting with a bullion transfer from or to another vault operator or providing paper documents via mail, a service fee of fifty (50) euros per starting fifteen (15) minutes applies unless otherwise agreed between Voima and the Client. The service fee does not apply to regular customer service enquiries.
Currency Exchange
Voima’s primary business currency is the euro. If the Client wishes to perform a cash deposit in a currency other than euros, exchange fees may apply. Voima does not set these fees, and Voima does not make any profit from currency exchange. Voima has foreign client asset accounts in USD, GBP, CHF, SEK, NOK, and DKK. These accounts are provided by Osuuspankki. The fees are subject to the pricing schedules of account provider Osuuspankki.
Operational Management
25 This chapter discusses Voima’s internal operations in detail, including customer management, cash management, gold sourcing, gold trading, storage and withdrawals. It also discusses physical security, vault auditing, insurance policies, reporting and taxation.
Operational safety and efficiency are at the core of Voima’s business and the process of generating trust among Voima’s Clients. Thus Voima takes an extra cautious approach to operations management and processes, ensuring that at all stages of the customer lifetime, Client assets are secured from all foreseeable risks.
In all of Voima’s transactions, whether that is a deposit, withdrawal, or a Client order, Voima adheres to a so-called ‘four-eyes principle,’ which means that all transactions are monitored and approved by at least two employees Voima. The four-eyes principle also applies to all vault and logistics operations.
Customer Management
Despite Voima’s product being online oriented, Voima serves its Clients on a constant and ongoing basis by handling their customer data, managing their holdings, and making sure the company is available at a time of need. Customer management can be divided into two core segments, namely front office and back office operations.
Front office operations include, for example, all the customer service, technical support and answering general questions which Clients may have. Back office operations are focused on transaction processing as well as compliance and fraud prevention, for example ensuring that all Client documents adhere to Voima’s own and legal standards.
Customer Support
Voima operates customer support through email and phone channels. Clients are also welcome to visit Voima’s office in Helsinki. Meeting reservations can be made via email [email protected], phone +358 9 612 1917 or through Voima’s application. Customer support via phone is available from Monday to Friday between 09:00 and 17:00 Helsinki time (EET).
Customer Data Handling
In order to provide services to Voima’s Clients securely and sustainably, Voima collects and handles, among other aspects, personal and formal identification information on private and legal persons. This information is primarily collected during the sign-up process.
Legal bases for the processing of Client information is in compliance with legal obligations that Voima is subject to, namely in order to comply with anti-money laundering and anti-terrorist financing laws, and the legitimate interests of Voima, namely to provide Voima’s services, to prevent, detect and investigate fraud, money laundering, criminal activity or other misuse of the services.
Voima ensures that it only collects the minimum necessary personal data from its Clients in order to provide its services and comply with laws and Voima’s own Chain of Integrity principles described above. The personal data of Voima’s Clients is only used by utilizing
26 encrypted channels and personally identifiable information is pseudonymized whenever possible.
Client’s personal data is handled mainly by Voima as the data controller. However, Voima uses external data processors, in certain situations for processing the Client’s personal data on behalf of Voima. Where the processing is carried out by a processor, Voima uses methods in line with the Regulation (EU) 2016/679 (General Data Protection Regulation), thus ensuring the protection of the rights of the data subjects.
Voima stores Client information primarily within the European Economic Area (EEA). However, some features and requirements of the service may involve transferring Client information to third-party service providers outside of EEA. When service providers operate outside the jurisdiction of Regulation (EU) 2016/679, standard data protection clauses adopted by the European Commission or the Privacy Shield Framework will cover the data transfers.
More information on Voima’s personal data handling policies can be found in the ‘Privacy Policy’ on Voima’s website. Inquiries related to Voima’s Privacy Policy, Client’s rights, and Voima’s data handling practices may be directed to Voima’s Data Protection Officer available via email: [email protected].
Cash Management
As Voima allows Clients to have positive currency positions over the long term, Voima has arranged segregated cash accounts to Osuuspankki and Nordea to store Clients’ cash separate from Voima’s own cash positions. As a result, the assets held on the segregated Client asset accounts do not appear on Voima’s balance sheet. The segregated Client asset accounts are not used for any other purposes besides Client’s asset storage and management.
The segregated Client asset accounts are provided by tier 1 banks, namely Osuuspankki and Nordea. The Client asset accounts are pooled accounts meaning that the EU’s 100.000 EUR deposit guarantee scheme is shared among all cash assets on the account. Cash transfers can be made both to and from the accounts.
Voima accepts both wire and SEPA transfers to the Client asset accounts. Once Voima has received the cash transfer from the Client, Voima will fund the Client’s Voima Account with the equivalent amount of euros that the Client deposited. Voima processes cash transfers both to and from Client accounts twice a day as a part of Voima’s settlement process.
27 The instructions for bank transfers are as follows:
Osuuspankki Nordea Recipient: Voima Gold Client Asset Recipient: Voima Gold Client Asset Account Account IBAN: FI23 5000 0120 4566 44 IBAN: FI65 1544 3000 1583 08 BIC/SWIFT: OKOYFIHHXXX BIC/SWIFT: NDEAFIHHXXX
POHJOLA BANK PLC NORDEA BANK FINLAND PLC Teollisuuskatu 1 B Aleksanterinkatu 36 00510 Helsinki, 00100 Helsinki, Finland Finland
Client’s must include their personal reference code into the bank transfer. Please note that the reference code for deposits to Currency Account and Gold Account is different.
More information about Osuuspankki is available at www.op.fi/op-financial-group/about- us. More information about Nordea is available at www.nordea.com/en/about-nordea/. For further information on bank transfers to a Voima Account, please contact Voima’s customer support via email [email protected] or phone +358 (0)9 612 1917.
SEPA transfers submitted prior to 16:00 Helsinki time (EET) can be expected to arrive on the same day. European wire transfers can be expected to arrive within three business days from submitting the transfer, and intercontinental wire transfers can be expected to arrive within five business days, but depending on the sending institution the transfer time can be more than two weeks.
Client’s cash transactions happen only between the segregated Client asset accounts and the Client’s bank account. Once the Client has submitted a buy order, the funds will be transferred to Voima’s trading account from the segregated Client asset account during the settlement process. Voima’s trading account is used to settle orders between
28 Voima and the refinery partners. Cash movements in Voima’s Ecosystem are described in the chart below.
The arrangement has been managed so that under no situation will the Client’s cash holdings be exposed to a potential bankruptcy risk of Voima. Client assets are transferred to Voima’s trading account during the settlement process in order to settle the deal with Voima’s trade partners and to charge fees from the Client.
The trading account is always emptied at the end of the trade settlement process. Consequently, the Client assets are never held overnight on Voima’s trading account or outside the settlement process.
It is also important to note that currently Voima does not handle physical cash transactions.
Gold Sourcing
Voima’s sourcing operations are divided into two segments, which are sourcing performed by Voima’s LBMA accredited refinery partners and sourcing performed by Voima through the Voima Miners program. For more information on Voima’s gold sourcing, please refer to the chapter above “Product Characteristics” and its subchapters “Other Products - Voima Miners” and “Environmental, Social and Governance Principles (ESG)”.
Gold Trading
Voima offers its Clients access to a gold spot market. Trading takes place on Voima’s online platform accessible through a web browser or through Voima’s mobile application. Voima’s Clients are granted access to Voima’s online platform through which they can send buy and sell orders, and manage their Voima Accounts. Voima quotes prices to Clients 24 hours a day, seven days a week. During weekends Voima’s quote is based on Friday’s closing price.
The price of gold on Voima’s online platform is updated 23 hours a day from 01:00 Monday to 23:00 Friday Helsinki time (EET). Between 00:00 and 01:00 (EET), the price does not update. Even when the global gold spot markets may be closed, Voima’s Clients can place orders. This applies to weekends as well. The price of gold is updated once every fifteen (15) seconds on Voima’s online platform.
The price of gold is set once the Client places an order. However, under extreme market volatility Voima may update the transaction price to reflect the current market price.
Clients can buy gold in two ways. One, is to transfer funds from a Clients’ bank account directly to its Gold Account. This way the funds are automatically exchanged for gold. Two, the Client can transfer funds to its Currency Account, to decide thereafter how much to exchange for gold, or to hold in its Currency Account.
29 Voima’s trade process consists of four steps, which include funding the Voima Account, placing an order, trade settlement, which can take place either as an immediate settlement or a delayed settlement and trade confirmation.
Clients can also choose to transfer funds directly from their bank account to their Gold Account. This way the Client only needs to place a wire transfer from their bank account to Voima’s Client asset account with their personalized reference number in order to buy gold. After Voima has received the wire transfer, Voima exchanges the Client’s euros into gold on the Client’s behalf at the current market price which is determined during the trade settlement.
This subchapter focuses on gold trading in which the Client places the buy and sell orders. For more information on direct gold purchases through a wire transfer please refer to chapter titled ‘Account Opening Manual’.
Funding the Voima Account
Clients can only submit orders if they have enough funds on their Currency Account to fulfil the order requirements. Accordingly, Clients cannot, for example, short sell gold or trade on margin via the Voima Account. Funding the Voima Account takes place via a wire or SEPA transfer. Voima handles funds transfers and withdrawals at least twice a per business day during the settlement process at 11:00 and 16:00 Helsinki time (EET/UTC +3). In normal circumstances Voima handles transfers continuously outside the settlement process.
For more information on funding the Voima Account please refer to the subchapter titled “Cash Management” under “Operational Management”.
Placing an Order
After funding the Currency Account, Clients can place orders. Although orders are placed primarily through Voima’s online platform, Clients can also ask Voima’s trade desk to place an order for them via either phone or email.
Orders can be placed around the clock through Voima’s online platform. Orders submitted via phone or email are processed during Voima’s business hours, which can be found on Voima’s website.
All orders are market orders, meaning that the Client accepts the prevailing market price for trade execution. However, the Client will always see the up to date price quote from Voima while placing the order. Once the Client has placed an order, it is forwarded to Voima’s back office, and it cannot be canceled anymore.
Trade Settlement
Once the Client has submitted an order, the order status will be pending until approved and settled by Voima. Orders of smaller quantities may be settled automatically and instantly but orders of more than one kilo are often settled during the settlement process. Settlement takes place twice a day during business days. All trades are always settled between the Client and Voima, which means that Voima acts as the counterparty in each
30 trade. Larger orders submitted before 16:00 Helsinki time (EET) on business days can be settled on T+0 basis.
At the beginning of the settlement process, Voima checks inbound cash transfers from the designated Client asset accounts and logs the transfers to the Clients’ Voima accounts. After checking inbound cash transfers, Voima executes the Clients’ trade orders by purchasing and selling gold both to and from Clients, in the order best seen to ensure liquidity.
Voima’s balance sheet plays a modest role in the total liquidity of Voima Accounts, as was explained in the subchapter “Liquidity” under the chapter “Product Characteristics”.
After all trades and inbound cash deposits have been settled, Voima settles the Clients’ cash withdrawals from the designated Client asset accounts.
Settlement takes place twice a day at 11:00 and 16:00 Helsinki time (EET/UTC +3)
There are two possible ways of settlement: immediate settlement and delayed settlement.
The time between placing an order and receiving gold on the Client’s gold account depends on the settlement method used. In immediate settlement the gold is transferred during the next settlement round. In delayed settlement the transfer of gold takes place once the delayed settlement process is finished.
Immediate Settlement
Immediate settlement applies most of the time. The word immediate refers to settlement that takes place either instantly once the Client has placed the order or during the next settlement round. Since Clients need to fund their account before they can buy gold to their Voima Account, immediate settlement is available for buy orders as long as Voima has access to the Refinery partners’ gold accounts or as long as Voima has enough gold on its own balance sheet to fill the Client’s orders.
In order to provide immediate settlement efficiently to the Clients Voima holds a maximum of 35 percent of the total amount of gold stored on the Voima Accounts at Voima’s LBMA accredited refinery partners. For sell orders the amount of gold eligible for immediate settlement is limited to the total amount of gold on Voima’s gold accounts at the LBMA accredited Refinery partners.
Delayed Settlement
Delayed settlement refers to a settlement that does not occur during the next settlement round but is instead delayed to a later settlement round. It is important to note that the delayed settlement applies only if the amount of net sell orders received by Voima exceeds the total amount of gold on Voima’s gold accounts at the Refinery partners’ vaults. In such a case, Voima needs to ship gold stored in the Helsinki vault location to Voima’s Refinery partners in Switzerland in order to settle the trades.
Under delayed settlement, the Client’s order will be pending for approval until Voima is able to settle the trade. Even if delayed settlement applies to the Client’s order, the transaction price is set once the Client has placed the order. Voima ensures its solvency
31 and eliminates the market risk posed by the Client’s order by hedging the risk on the gold derivatives market.
Delayed settlement affects the transition of gold to the Client’s Voima Account by delaying the transition by a maximum of thirty (30) business days. The Fiat Currency is transferred to the Client’s Voima Account once Voima has settled the trade.
Trade Confirmation
After Voima has settled the trade, the Client will receive an automated trade confirmation via email and through Voima’s online platform. At this point, the gold transfers from Voima to the Client’s Voima Account, and as of then the gold becomes withdrawable.
Transaction Failure or Cancellation
Voima may refuse to execute trade orders for many reasons including but not limited to market liquidity, extreme volatility, restrained access to Voima’s Refinery partners’ gold accounts, network, technical, or server malfunction. If transaction failure or cancellation occurs, Voima may provide the Client with an appropriate explanation for the failure or cancellation.
There have not been any cases of transaction failure or cancellation since Voima began offering online services in 2018.
Voima’s Online Platform
Voima’s online platform serves several functions, of which most important ones are the management of the Client’s Gold and Currency Accounts. Through the platform, Clients can place both buy and sell orders, request gold and cash withdrawals, and update account information. The platform can be accessed online from app.voimagold.com. A mobile application is also available for download for Android and iOS devices.
Bar Segregation is managed through Voima’s customer service.
Data Provider and Reference Price
For setting the price of gold, Voima has an open-end agreement with nFusion Solutions, in partnership with Six Financial Ltd, to use and forward the Last Price, Current Bid and Ask Offers quoted by Six Financial. Voima’s online platform updates the price of gold once every 15 seconds and the data comes to Voima’s online platform through an API connection between Voima and nFusion Solutions.
Storage and Withdrawals
Safety
In Voima’s business, the safety of Client assets and the people involved in the processes is uncompromisable. Therefore, Voima has established safety standards that go above and beyond regular vault operators. Safety consists of a combination of physical security and surveillance, the use of carefully chosen technology solutions and closely monitored
32 internal processes. For security reasons, Voima cannot fully explicate all of Voima’s safety measures.
Voima’s Vault
Voima’s vault has been built by the highest classification standards. Neither Clients nor Voima’s staff alone have access to the Vault’s interior space. Voima’s auditors are allowed inside the vault under heightened supervision measures. The policies have been created to ensure maximal safety and minimal exposure towards both expected and unexpected hazards. The basis of planning and constant reviewing of processes is dictated by known industry standards taking into account the different aspects of security.
The vault is safeguarded and monitored around the clock, both internally and externally, via an independent security services contractor.
Voima’s vault is located in Finland at Bulevardi 5, 00120 Helsinki. Finland has never confiscated gold and has a proven record of being relatively stable and steady, remaining mostly unaffected by political effects and turmoil both in the EU and between the relations between east and west. Thus, storage in Finland may be considered solid for keeping gold in an environment unshaken by political affairs and market collapses.
Refinery Partners’ Gold Accounts
As was mentioned earlier, Voima holds, for liquidity reasons, a part of the Gold Holdings on the Voima Accounts at Voima’s Refinery partners. As the total amount of gold on the Voima Accounts increases, Voima brings some of the gold stored on these gold accounts to the Helsinki vault in the form of Voima’s 100g and one-kilogram gold bars. All of Voima’s Refinery partners adhere to the LBMA standards on refinery security requirements, which are some of the highest in the world.
Withdrawal Practices
Voima has a minimum of 65 percent immediate reserve ratio to be held, for quick access, at Voima’s Helsinki vault. Thus, if Voima’s Clients have a total of one ton of gold on their Voima Accounts, Voima has at least 650kg of gold in the Helsinki vault ready for withdrawal, excluding potentially segregated bars.
If more than 65 percent of the Clients request withdrawal of their gold holdings at the same time the withdrawal time is a maximum of 30 days as the gold needs to be cast and shipped from Voima’s Refinery partners in Switzerland. Despite the potential delay in physical delivery, Clients have always entitlement to the full amount of gold on their Voima Account.
Following the industry standard, Clients may request Bar Segregation for their Gold Holdings on the same day as the initial buy transaction occurs. After Bar Segregation, the bars are withdrawable on the next business day. Even if the Client does not hold segregated bars on their Voima Account, Voima allows withdrawals on a 24-hour notice within the reserve confines.
Gold bars available for withdrawal include:
33 100g Voima 999,9 pure gold bar refined by LBMA accredited refiners 1kg Voima 999,9 pure gold bar refined by LBMA accredited refiners
Normally, Clients pick up their gold from the Helsinki vault location. Standard insured mail delivery is available within Finland for quantities not exceeding 15 000 euros in value. However, individual delivery arrangements may be made for deliveries of quantities exceeding 15 000 euros in value. Voima’s liability ends once gold leaves Voima’s premises. The liability for insurance and security transfers to the logistics company once Voima delivers, and hands over the material.
Voima only delivers pure Investment Grade Gold to its Clients. Even in the case of Voima’s bankruptcy, the Clients will be delivered either a full cash settlement for the market value of the gold or a full physical Investment Grade Gold based on their holdings at Voima. For more information on Voima’s Wind-Down Planning, please refer to the chapter titled “Compliance and Risk Management” and its subchapter “Wind-Down Planning”.
Voima Account Auditing
In addition to Voima’s real time accounting of Voima Accounts, Voima has included external verifications to the Voima Account. These verifications include a quarterly vault and account audit performed by PricewaterhouseCoopers and a semiannual assaying of Voima’s gold bars performed by a government accredited precious metal assayer Eurofins Labtium.
The PwC audit and the Eurofins Labtium assay are designed to provide the Clients with further assurance concerning the soundness of the Voima Account, and that Voima has taken proper measures to manage Client assets. At its core, Voima’s Chain of Integrity is designed to ensure the amount, purity and general safety of the assets.
Vault and Account Audit
PricewaterhouseCoopers (PwC) performs an independent three month rolling audit to Voima’s Helsinki vault and Voima Account accounting system. During the auditing process, PwC’s auditors verify that Voima’s Client asset account balances at Osuuspankki and Nordea, Voima’s Refinery partners’ gold accounts, and Voima’s Helsinki vault’s balances are in line with the Voima Account accounting system. Client asset account balances should be in line with Clients’ cash holdings. Also, Voima should always oversee more gold than what the Clients hold on their Voima Accounts. After the audit, PwC’s partner Jari Viljanen signs a statement verifying these facts, after which the signed statement is brought available to Voima’s Clients.
The PwC’s statement reads as follows:
34 We state that the amount of gold recorded under the ownership of Voima Gold Oy’s customers in the customer and accounting system of the company has been duly verified through the measures described below.
Inventory Verification Process
The accounting of the gold accounts of the Voima Gold service has been verified through the real time electronic customer and accounting system.
Auditors have observed the counting of gold carried out in the vault. In the counting process, the accompanying letter of the refinery was compared with the markings stamped on the bars.
If consignments to be checked were in shipment while checking was being carried out, or if consignments were awaiting shipment, the documents of the consignments were checked, as were the deposit documents of the consignments awaiting shipment.
The ownership accounts managed by Voima Gold Oy in the system of Voima Gold’s refinery partners have been verified using written confirmations provided by the partners, and have been taken into account in the counting process.
The amount of gold recorded in the electronic customer and accounting system has been compared with the gold bars in the vault of the company, and consignments in shipment or consignments awaiting shipment have been compared with the shipment documents and the deposit documents, and the gold in possession of the refinery partners have been compared with the written confirmations supplied by the partners. Through this process, it has been found that the amount of gold managed by Voima Gold Oy and stored in Voima Gold Oy’s vault amounts, at least, to the amount of gold in grams in possession of the customers. PricewaterhouseCoopers Oy does not take a stance on the purity, quality or exact weight of the gold.
Assaying of Voima’s Bars
As was explained in the subchapter titled “Voima’s Chain of Integrity”, Voima has negotiated an independent assaying agreement with Eurofins Labtium who assay the gold stored in Voima’s Helsinki vault through random samples. The assay is performed semiannually and several bars of both 100g and 1kg sizes are assayed. Voima takes no part as to which bars are selected for assaying and the assaying process itself is performed at Eurofins Labtium’s laboratorium.
Insurance Policy
Voima has taken significant measures to insure Client assets at all times. Client assets are not only separated from Voima’s balance sheet to ensure entitlement even in the case of Voima’s bankruptcy, but Gold Holdings are also insured by third party insurance providers to cover for unexpected losses and damage. This chapter discusses Voima’s insurance policies in all stages of the gold’s lifetime within Voima’s Ecosystem.
35 Gold in Voima’s Vault
Voima’s vaulting premises have been inspected and insured by Liberty Mutual Insurance Europe SE, based in London and operating from Köln. The type of Insurance is a General Specie Insurance, under which Liberty Mutual insures numerous art and precious metals holdings globally.
The insured interest covered by the Liberty Mutual insurance includes gold stored and handled in Voima’s premises. The insurance period is annually revised, and the limit of liability covered by the insurance is currently not disclosed publicly. Revisions to the insurance contract can be made throughout the year. The limit of liability may be and is raised as the amount of Gold Holdings overseen by Voima rises. The limit of liability is set to cover all gold stored in Voima’s Helsinki vault location to the full market value.
Gold in Transit
Gold in transit, meaning material transfers between Voima and the Refinery partners, are handled and forwarded by Voima’s logistics partners under the terms described in the contract signed between Voima and the logistics partner.
The logistics partner’s liability for the gold in transit under the terms of the contract are limited according to the chosen service type and the declared value of the shipment, which is individually selected for each shipment. Although the logistics partner is not the insurer of the transit, the logistics partner is directly responsible for any losses during transit, as is limited and subject to the terms in the contract.
Segregated Bars stored on the Voima Account are not affected by Voima’s logistics partners’ insurance policies. Voima’s own insurance policies do not cover gold in transit.
Gold at Refinery Partners
Voima’s Refinery partners’ have their own insurance policies.
Segregated Bars stored on the Voima Account are not affected by the Refinery partners’ insurance policies. Voima’s own insurance policies do not cover gold stored at the Refineries.
Reporting
Clients can always view and download all transaction records and reporting documents from the Voima Account without having to contact Voima’s customer service. The documents can be downloaded and viewed in PDF files from both mobile and online.
Taxation
In the European Union, Investment Grade Gold and gold accounts are exempt from Value Added Tax (VAT). Voima’s country of incorporation is Finland, which means that gold on the Voima Account is exempt from VAT. Gold brokerage services provided by Voima are also exempt from VAT, which refers to the transaction fees charged by Voima.
36 Only transaction fees are exempt from VAT. Fees subject to VAT include storage, withdrawal, and other service fees. Finnish companies engaged in the sale of VAT- exempt Investment Grade Gold, such as Voima, must register in a VAT register and must file a VAT notification for each tax period.
Voima also offers its Clients the option to withdraw the gold in gold granules or grains. However, gold in the form of granules is subject to 24% VAT upon withdrawal.
Compliance and Risk Management
This chapter discusses Voima’s compliance and risk management measures. The compliance side of the chapter addresses Voima’s Anti-Money Laundering and Counter- Financing of Terrorism policies, as well as Regulatory Compliance in general. The chapter also discusses Voima’s risk management procedures, IT infrastructure management and wind-down planning in case of the company’s insolvency.
Compliance & Ethics in General
Voima’s policy is to maintain high standards of ethical conduct, to comply with all applicable laws, and to do business only with persons and entities who themselves abide by laws and ethical principles. In particular, when dealing in precious metals, Voima operates only with transparency by all parties and with assurances of legitimacy in all transactions.
This compliance and risk management policy is applicable to all Voima’s business units, subsidiaries, affiliates, partnerships and other business organizations over which the company exercises control. It covers all Voima’s employees, officers and directors. The company ensures that all of these persons learn and comply with company standards and laws applicable to their job responsibilities, and adhere to the guiding principles of this policy. Voima maintains and develops this policy through effective communication, procedures and training, regular monitoring and periodic review.
In addition to adherence to the laws of Finland and European Union, Voima applies its compliance, risk management and ethical principles throughout the world, wherever Voima operates or does business. Voima will endeavor to promote and follow a uniform code of conduct in all countries while recognizing that there are differences in laws and standards.
Central to Voima’s ethical principles is to value the principles of honesty, fairness and high ethical standards in all its actions. Voima does not, for example, engage in businesses that it suspects to be involved in criminal activities, terrorist groups, or used to finance criminal or terrorist activities (Voima’s Chain of Integrity).
As part of Voima’s compliance & ethics policy, Voima only uses LBMA accredited refineries that have committed to internationally recognized responsible sourcing standards, meaning that they have successfully implemented legal and anti-corruption
37 requirements and that their guidelines are built based on the OECD Due Diligence Guidance as well as local and global AML/KYC regulations. Our refinery partners do not, for example, conduct refining business that is associated with armed conflict, crime, child labor or human rights abuse. Essential element for Voima’s own due diligence policy for choosing responsible business partners, is that Voima’s Refinery partner will decline business from those parts of the world where it does not have the resources to properly vet a source of precious metals.
Voima’s Legal Counsel Joonas Ilmasti has many years of experience in planning and implementing compliance policies and managing regulatory issues in the fintech and digital currencies industries.
Anti-Money Laundering and Counter-Financing of Terrorism Policies
Anti-Money Laundering and Counter-Financing of Terrorism policies are wide concepts containing compliance areas such as Customer Due Diligence (CDD) and Know-Your- Customer (KYC) policies. Anti-Money Laundering and Counter-Financing of Terrorism policies is present throughout a Client’s lifetime and in some cases even after a Client’s lifetime for legal reasons.
Money laundering means the receipt, use, conversion, conveyancing, transfer, or transmission of funds as defined as punishable in criminal legislation to efface or conceal the illegal origin of the proceeds.
Terrorist financing means the provision or collection (i) directly or indirectly for the financing of terrorism, or (ii) with the awareness by the person concerned that he or she is financing terrorism or related acts.
Tax legislation of Finland requires sellers of Investment Grade Gold to know and identify the buyers when the total value of one transaction or related transactions is at least EUR 15 000. Voima has proactively implemented a much wider KYC and CDD policy requiring all its registered Clients to verify their identity and submit certain information for understanding the reasons for using the service. Voima’s essential policy is to make sure and have adequate processes in place to mitigate any risks of its service being used by persons or entities engaged in illegal activities such as money laundering, terrorist financing, fraud, or other financial crimes.
To combat money laundering and terrorist financing, Voima has an effective AML/KYC program consisting of for example:
• AML/CFT Policy defining the principles of KYC and CDD processes, roles and responsibilities in the organization, sanction lists relevant to its operations, staff training on AML/CFT and record keeping procedures.
• AML/CFT risk assessment identifying relevant money laundering and terrorist financing threats and vulnerabilities for Voima’s operations, describing control
38 mechanisms in order to prevent the actualization of threats and vulnerabilities as well as residual risk assessment.
• Compliance officer who is responsible for designing, supervising and reviewing the overall process, and has a direct line of reporting to the top management.
Voima also follows international sanctions lists, including the European Union’s consolidated list of financial sanctions, the national freezing decisions made by the Finnish National Bureau of Investigation and U.S. Treasury Department’s list of Specially Designated Nationals (OFAC Lists). If the information concerning the individual or entity matches the information of individuals or entities under sanctions, a customer relationship is not established. Voima checks its customer register periodically and surveys business transactions to ensure that it does not offer its services to parties who are under financial sanctions.
Customer Due Diligence (CDD)
Customer Due Diligence or CDD, is the process in which relevant information about a Client is collected and evaluated for any potential risk for money laundering or terrorist financing activities. CDD is essential for KYC, and although these processes differ around the globe, CDD usually supposes identifying a Client and knowing Client’s activities.
Client’s risk profile is first assessed to be followed then by basic Customer Due Diligence, Enhanced Due Diligence or Simplified Due Diligence. Enhanced Due Diligence, or EDD, takes place when a Client is assessed to be at a heightened risk to the company. This higher level of due diligence is required to minimize the risks. A high-risk situation generally occurs where there is an increased opportunity for money laundering or terrorist financing through the service. Customer Due Diligence continues after establishing business relationships, as Clients’ risk profile may change after a while.
CDD starts from obtaining information about a Client, which at Voima means obtaining information such as full name, email address, telephone number, date of birth, social security number, nationality, country of residence, home address, business identity number and details about company’s business activities.
Know Your Customer (KYC)
Know Your Customer refers to the process of verifying a Client’s identity and understanding the nature of Client’s activities. The primary goal is to satisfy that the source of Client’s funds is legitimate and to assess money laundering risks associated with that Client for purposes of monitoring the Client’s activities.
KYC policies incorporate the following (partly overlapping) key elements:
• Customer Acceptance Policy;
• Customer Identification Procedures;
39 • Ongoing Monitoring Process (or Transactions Monitoring); and
• Risk management.
Customer Acceptance Policy:
Voima performs customer identification and verification to all its Clients upon registration. Customers are identified through a document verification and facial recognition method provided by a third-party service provider. This means that a third-party service provider will 1) check the validity and integrity of the Client’s identity document; 2) check the validity and integrity of a photo that the Client is required to take from himself/herself, and finally, 3) compares the picture that the Client has taken from himself/herself to the picture contained in their identification document.
Recognizing the importance of performing reliable remote identity verification, Voima only uses market leading, thoroughly tested and solid technology companies as its identity verification partners.
Corporate customers are verified with an up-to-date extract from the company register. The identity of the person operating the company account is verified, and his/her authority to act on behalf of the legal person is also ascertained. A legal person is also asked to provide basic information on the beneficial owners, the company’s branch of industry, and, if necessary, a more detailed description of the ownership structure and controlling interests.
The customer must fulfil all the required information included in the registration process and pass the identity verification process before Voima can accept the customer to use its service in accordance with the company’s Customer Acceptance Policy.
Customer Identification Procedure:
Voima’s Customer Identification Procedure is based on the following:
1) identifying the Clients and verifying their identity;
2) identifying the representatives of legal entity customers and verifying their identity as well as confirming that they have the legal right to represent the legal entity; identifying the beneficial owners of legal entities, and if needed, verify their identities;
3) evaluating, is there a special obligation to use enhanced customer due diligence in the customer relationship; and
4) obtaining information on the activities of the Client and their beneficial owners, monitoring the activities of the Client and investigating backgrounds of any unusual or suspicious business activities.
Ongoing Monitoring:
After the customer approval process, customers are segmented into different risk categories as part of the company’s Ongoing Monitoring Process and customers in the
40 highest risk category will have to go through an EDD process. Voima also monitors the activities of the customers so that it has the capability to notice if the actions of the customer deviate from their regular procedures or if they do not fit with the experience and information that Voima has on the customers. The origin of funds relating to the business transaction must be uncovered in more detail if it seems prudent.
KYC/CDD information of a customer who has conducted any trades via Voima’s platform is stored for 6 (six) years after the end of the customer relationship.
Regulatory Compliance
Voima’s regulatory compliance involves following laws, decrees, and orders by the governing bodies of Finland. As a Finnish limited liability company, Voima is primarily under the legislative power of Finland and the European Union.
Data Protection Compliance
As a data controller operating under the jurisdiction of the European Union and collecting personal data of residents of the EU, Voima needs to comply with new, stricter EU customer data protection rules. The General Data Protection Regulation (GDPR) sets a new standard for data subjects’ rights regarding their data, and Voima has effective systems and processes in place to maintain data protection compliance. GDPR compliance is also important due to the public’s increased concern over its privacy which is growing with every new high-profile data breach.
The most important principles and requirements of Voima’s management of personal data are:
• Lawfulness, fairness, and transparency: personal data should be processed in a lawful, fair and transparent manner;
• Limited purpose: personal data should be collected for specified, explicit and legitimate purposes and not further processed in a way not compatible with these purposes;
• Confidentiality and integrity: personal data should be processed in a manner that ensures appropriate security, including protection against unauthorized or unlawful processing and accidental loss, destruction or damage.;
• Data minimization: the collection of personal data should be limited and data collected must be relevant to accomplish a specific purpose;
• Storage limitation: personal data shouldn’t be kept for longer than is necessary for the purposes for which such personal data is processed; and
• Accuracy: personal data stored and managed should be accurate and, where necessary, kept up to date.
Preventing Money Laundering and Terrorist Financing
Voima’s proactive KYC/AML programs and procedures are designed to meet the AML/ CTF standards set by international and national authorities but Voima’s internal standards
41 are higher. This policy reflects the management’s desire to prevent the use of Voima Account by persons or entities engaged in illegal activities and thus safeguard the Client’s use of Voima Account.
Voima’s AML/CTF Policy has been outlined in section “Anti-Money Laundering and Counter-Financing of Terrorism” above and it sets out the standards which must be complied with and includes:
• Appointing a Compliance officer who has a sufficient level of seniority and independence, and who has responsibility for oversight of compliance with the relevant legislation, regulations, rules and industry guidance;
• Establishing and maintaining a Risk-Based Approach (RBA) to the assessment and management of money laundering and terrorist financing risks faced by the firm;
• Establishing and maintaining risk-based Customer Due Diligence (CDD), identification, verification and Know Your Customer (KYC) procedures, including enhanced due diligence for customers presenting a higher risk, such as Politically Exposed Persons;
• Establishing and maintaining risk-based systems and procedures for the monitoring of ongoing customer activity;
• Establishing procedures for reporting suspicious activity internally and to the relevant law enforcement authorities as appropriate;
• Maintaining appropriate records for the minimum prescribed periods;
• Providing training for and raising awareness among all relevant employees.
Risk Management
This chapter discusses the possible risks to Voima’s Clients and Voima’s risk management policies. The chapter is divided into sections covering various risk categories. Each section includes a brief explanation of the risk and how Voima will manage it. Risk management can be divided roughly into two parts, namely the identification of risks and the management of risks.
Identification of risks includes both identifying and measuring the risks, which means measuring the risk’s potential impact. At Voima, risks are identified through an internal process governed by the management board, which includes employees from all of Voima’s business branches. All employees are allowed and encouraged to report any potential risks to the management team.
Management of risks includes the examination and implementation of solutions to the risk as well as monitoring the results. Voima has implemented both internal and external measures to manage risks. Voima’s internal knowledge including both employee and advisor expertise is used in both identification and management of risks. External
42 consulting services are used whenever deemed necessary although always without exposing sensitive information to external parties.
All risks are taken seriously. However, as this chapter discusses some of the most critical and prominent risks related to the Voima Account, some risks are omitted for security reasons.
Physical Security Risks
Physical loss or physical damage occurring to the Client’s Gold Holdings overseen by Voima is a possible risk that is always present when dealing with tangible assets such as gold. The most prominent physical security risk is attempted robbery of the gold by a third party.
Voima’s storage premises are built without compromise to cover expectations set for gold bullion storage. Physical and technical preparations and acquisitions have been made in accordance with the highest level of standard instructions. These preparations, however, are only a passive measure that lay the foundations of security. Active security measures are built on top of the passive measures by processes and by maintaining the proper functionality of the set operations.
Some of the active security measures include around the clock monitoring, cooperation with public authorities, and Quick Reaction Force (QRF) planning.
As part of the multi-layered security procedures, the company partially uses outsourced security professionals to handle, to oversee, or to support a certain layer of the operations.
Liquidity Risk
Liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting fair market value. In the world’s most liquid markets, large orders can be filled with ease instantly. In illiquid markets, by contrast, moving in and out of positions may affect the market price of the asset. In general, liquidity risk is a concern for large investors who might have difficulties moving in and out of positions.
The global gold market exchanges over one hundred billion dollars worth of Investment Grade Gold each day—an amount dwarfing any stock market liquidity and rivaling liquidity in some government bonds and currencies. Voima offers Clients indirect access to this liquid market through the Voima Account.
Even though Voima aims to provide a liquid solution to holding gold, gold may not be available for purchase or sale at all times through Voima’s channels. There are no market makers in the spot gold market who offer actual market making in its full responsibilities to traders or brokers outside the actual spot markets such as the LBMA or the SGE.
The liquidity risks of the gold market, although low and very unlikely in reasonable scrutiny, are well-acknowledged and Voima is dedicated to expanding its network of trade partners to ensure liquidity at all times. Voima’s trade partners, such as the LBMA accredited Refineries are not market makers but offer bid and ask to Voima during regular business days.
43 Market Risk
Market risk applies to Clients holding a position in either an asset or a currency. In general, market risk implies the risk of negative changes in the value of an investment relative to the unit of measure, which is usually the base currency of the Client. The risk of loss in trading or holding assets such as gold can be substantial. As with any asset, the value of gold can go up or down in Fiat Currency. Vice versa, the risk of loss in purchasing power when holding Fiat Currency can be substantial due to inflation, especially over long-term. It is relevant to mention that any Fiat currency can decrease in value over time, and historically all currencies have lost their value in comparison to gold. Gold can lose value against fiat currency, as well, but gold itself cannot be erased, since it is a physical element. It is up to the clients to decide how much of their wealth to store in gold or fiat currency over time.
From Voima’s perspective, market risk demands constant management. Voima achieves this by implementing strict risk monitoring and controlling measures, which include continuous hedging of Voima’s gold balances through gold accounts held at Voima’s LBMA accredited Refinery partners.
Counterparty Risk
Gold itself does not hold counterparty risk, and physical gold is no one’s liability. However, there are some counterparty risks, although minimal, involved when buying and storing gold on the Voima Account. These counterparty risks include Voima itself and Voima’s partners.
The counterparty risk posed by Voima materializes if, for example, Voima becomes insolvent, and the business is unwound. This risk is, however, managed by having both Client cash and gold holdings separated from Voima’s balance sheet and ensuring proper financing of the company, thus limiting the risk to delayed liquidity for the time of processing client asset distribution. The most significant risk associated with this is the unavailability of the service, in which case the customer cannot sell or redeem his holdings for a certain period of time.
Separating Client assets from Voima’s balance sheet ensures that Voima’s creditors do not have access to Client assets in the case of bankruptcy. More information on Voima’s wind-down planning can be found in section “Wind-Down Planning” below.
Since the majority of liquidity on the Voima Accounts come from trades conducted with the LBMA accredited Refineries, the continuation of their business poses a theoretical counterparty risk for Voima’s Clients. However, all of the refineries are LBMA accredited, which means that the counterparty risk posed by the refineries to Voima Accounts can be deemed low.
Voima’s providers of Fiat Currency Client asset accounts, Osuuspankki and Nordea, pose a theoretical counterparty risk to Voima’s Clients. When selecting a suitable custodian for Voima’s Client asset accounts, the most important selection criteria was that the financial institutions should be a low-risk tier 1 commercial bank based in the Nordics and have a sufficient API interface in order. In the selection process, Osuuspankki and Nordea were found to be suitable partners.
44 Outsourcing Risk
The risks in Voima’s outsourcing contracts, and their handling, can generate risks which do not affect the Client but are present in Voima’s business. These risks are called outsourcing risks. These risks could involve the lack of transparency or dishonesty in Voima’s outsourced partners’ actions. Examples are the outsourcing contractors’ practice of ‘overselling’ their services, which means their inability to deliver the promised service or the proposed quality of service. Lacking quality control in, for example, the analysis of inbound material could result in more risks when outsourcing.
Voima performs due diligence on third-party service providers to evaluate their reliability, transparency, and ability to deliver. As a part of this process, Voima regularly reviews the quality of third-party service providers. By doing this, Voima always seeks to improve the productivity and security of the cooperation by jointly discussing the key development areas moving forward.
In general, Voima contracts tried and trusted partners which are nationally and internationally recognized and respected providers. In addition, contrary to common practice, the company also tends to contract less known, smaller partners when it comes to certain processes closely tied to risk management. These smaller partners also tend to have close ties to Voima. In some important respects, these smaller partners are more reliable than the widely recognized larger partner
Information Technology and Cybersecurity Risks
Voima aims to minimize technology risks by choosing stable and well known international information technology partners in data processing and software services. For technology risk management and preparation, the company has used several people who have a background in providing their expertise for the likes of Finnish authority officials.
The company’s local information technology systems have been set up by individuals who have distinguished themselves in the industry. Voima has internally controlled data management, whether it be a closed network hard drive or a chosen and controlled SAAS service with strict access settings. Also, internal processes and operations documentation on data handling and sharing have been arranged securely by only granting access to the documentation for the responsible personnel directly associated with Voima’s IT.
Operational Risks
Operational risks consist of failure to maintain and execute the processes that are built into the Voima Accounts. These include processes tied to customer service, security management, trade settlement, accounting, and legal management. As with any other business, the company’s operational risks may ultimately be influenced by the lack of capital, resulting from a cash flow crisis or an unsuccessful funding round.
To minimize operational risks, Voima has concentrated on creating and monitoring internal processes with ever-increasing automation and well-documented processes. Clear and well-structured processes help to minimize, for example, settlement risks, security risks, service downtime risks, and other operational risks. Proper process
45 management also increases the efficiency of the service. Also, proper and frequent training of Voima’s staff reduces the risks resulting from employee negligence.
Voima’s operations are strongly centralized in Helsinki, and the company intends to operate from Finland also in the future. The company has a strong core team that has been carefully expanded. With the company’s vault and development operations in Helsinki, the company has a firm grip on its personnel. Continuous monitoring is inherent as well as effective.
Legal and Compliance Risks
Compliance risk is the threat posed to a company’s financial, organizational, or reputational standing resulting from violations of laws, regulations, codes of conduct, or organizational standards of practice.
Voima is a company registered and incorporated in Finland. Therefore Voima’s business is regulated by the laws of Finland, which covers well-established principles of statutory property rights and corporate laws. Since Finland is a European Union member that also means that Voima follows regulations and directives set by the EU.
Finland is deemed to have one of the soundest legal systems in the world, providing support for the Client’s rights. Finland has, for example, never nationalized or confiscated the gold holdings of its citizens, and Finland is commonly known for its strong property rights.
Important regulations that Voima’s business is subject to include e.g. Know Your Customer (KYC) obligation coming from the taxation legislation of Finland, and the EU’s General Data Protection regulation (GDPR) that poses heavy penalties for non- compliance. For more information on compliance, please refer to the above subchapters titled “Regulatory Compliance” and “Anti-Money Laundering and Counter-Financing of Terrorism Policies”.
Wind-Down Planning
This chapter explains Voima’s wind-down plan. The plan has been crafted to minimize adverse effects, which may otherwise result in potential losses for the Clients or Voima’s stakeholders.
General
Wind-down planning deals with situations in which the company’s business is no longer viable, or the company makes a strategic business choice to exit their business. Voima’s management team has designed a wind-down plan that identifies the steps and resources needed to wind down Voima’s business, especially in a situation where resources are limited. Voima has also evaluated the risks and impact of a wind-down and considered how to mitigate them. The objective of Voima’s wind-down plan is to reduce the risk of adverse effects on consumers and market participants in case the company has to wind-down.
Voima’s wind-down plan includes the following components:
46 1. Mapping out the scenarios that could lead to a company no longer being viable, adequate governance processes, management information monitoring, and other control processes to support timely wind-down decision making.
2. A plan to steer the firm to wind down its business in an orderly manner once ceasing the business has been voluntarily decided or rendered unavoidable by external circumstances.
3. An assessment of the resources, both financial and non-financial, that are needed to support an orderly wind-down.
4. Processes for proactively identifying and mitigating any material risks or obstacles to winding down in an orderly manner (e.g., issues that could lead to significant consumer detriment or create a significant adverse impact on the financial market(s) or other third parties).
Roles & Responsibility Areas during a Wind-Down Process
Board of Directors
The governing body considers and approves the wind-down plan.
Senior Management
The planning process is led by the CEO while other management team members provide valuable input to the review, validation, and challenge before the wind-down plan is presented to the governing body for deliberation.
Front-line Business
Front-line business is engaged to understand and mitigate the potential operational issues and challenges from the wind-down process, including redundancies, IT systems, and access to third-party services.
External Parties
External insolvency practitioners will be consulted as well as other relevant third-party experts for improving the company’s decision-making and understanding of different wind-down scenarios.
Wind Down Scenarios
A company is not viable if it no longer has adequate financial or non-financial resources to carry on its activities.
Voima has set and is regularly monitoring thresholds for relevant management information (including profitability, capital adequacy, liquidity), serving as early warning signs to facilitate a timely wind-down process. If the data shows breaches of those threshold values, it will trigger a report to senior management and quick thinking on the next steps.
Voima recognizes that well-structured management information can help to identify emerging risks that could lead to a wind-down scenario. For instance:
47 1. funding institutions are reconsidering terms/conditions of funding provided to the company;
2. loss of critical infrastructure (especially loss, theft or destruction of IT systems, or physical gold) with no signs of a timely recovery; and
3. significant financial losses with no signs of timely recovery
The Wind Down Process
In the event of Voima’s business becoming no longer viable, or Voima making a strategic business decision to exit its business, Voima would firstly contact its Clients stating it will cease its activities with a specific deadline given to Clients. Voima will also inquire from the Clients that have assets in their Voima Account to either withdraw them or in a case the Client has Gold Holdings, the option to choose either to sell the gold or withdraw it.
If the operations of a company cannot be continued and the company has more assets than debts, the company is dissolved through a statutory liquidation procedure. On the other hand, if the company has more debts than assets, and cannot repay debts to creditors may be declared bankrupt by a court order in a statutory bankruptcy process.
The purpose of the liquidation procedure is to determine the company’s asset position, convert the necessary amount of assets into cash, pay debts and pay the possible surplus to shareholders. Shareholders’ meeting decides on whether the company should enter into a liquidation process and elects one or more liquidators. Generally, one liquidator is sufficient to handle the company’s liquidation proceedings. The liquidator will replace the company’s Board of Directors and CEO but is often a member of the company’s Board of Directors or another person within the company because he/she often has the best knowledge of the company’s assets and liabilities.
During the wind down process Voima will not cease to operate and Clients will be able to transact in both gold and euros until the company is dissolved. Even in the case of Voima’s bankruptcy, the Clients will be delivered either a full cash settlement for the market value of the gold held in their Voima Account or Investment Grade Gold based on their Gold Holdings at Voima.
Account Opening Manual This chapter is a short manual for opening a Voima Account for an individual as well as to a corporation, institution or other organization. The account opening process for an institution begins in the same way as the process for opening an individual account. Therefore the submission should be performed by a person with a mandate from the institution to open an account to Voima.
48 1st Step - Opening an Individual Account
For institutions, the sign-up process takes place in two phases: sign-up for the Account Manager and sign-up for the Organization Account. Organization Accounts are always managed by an individual, the Account Manager, who has to register to manage the Organization Accounts.
The Account Manager should be an individual who has been authorized by the entity to open a Voima Account. The Account Manager can open an individual Voima Account either from app.voimagold.com or from Voima’s mobile app. For the account opening process, the Account Manager should have a valid identification document available. In total, the sign-up process for the Account Manager’s individual account should take less than ten minutes to complete.
2nd Step - Opening an Organization Account
Once the Account Manager has opened an individual account, an application for an Organization Account can be submitted from the individual Voima Account’s settings by selecting ‘Organizational profiles’ and answering the questions in the account opening flow.
During the Organization Account opening flow the Account Manager has to submit a valid trade registry extract and disclose the personal details of all beneficial owners of the organization. In the case of non profit organizations, which may not have actual beneficial owners, the personal details of everyone involved in the decision making process for the use of the organization’s funds shall be addressed. These may include, for example personal details of the members of the board or the members of the investment committee.
Once Voima has received and approved the necessary documentation, Voima’s back office will process the application and inform the Account Manager via email once the process is finished. The approval process usually takes between one to five business days once all necessary information has been received, but account opening may take longer if Voima’s onboarding team is busy.
3rd Step - Transfer Funds to the Voima Account
Once the account has been approved and opened, Clients can deposit funds to their Currency Account via bank transfer that can then be used to buy gold. Alternatively, Clients can deposit funds directly to their Gold Account, and by doing so, Voima performs the change from euros to gold on behalf of the Client during the next settlement hours after the bank transfer has been received and logged by Voima.
It is important to note that the reference number for a transfer to the Currency Account is different from the reference number for a transfer to the Gold Account. Both reference numbers can be found from the Organization’s Voima Account accessible online or via Voima’s app.
49 4th Step - Submit an Order
If the Client decided to fund their Currency Account instead of making a deposit directly to their Gold Account the Account Manager needs to place a buy order through the Client’s Voima Account in order to buy gold. After Voima has received and processed the Client’s currency deposit the funds will be visible on the Client’s Currency Account. The Account Manager can place a buy order by selecting ‘Gold’, ‘Buy Gold’, ‘Currency Account’, and by following the order flow from the Organization’s Account. All transactions are processed during the settlement hours at 11:00 and 16:00 Helsinki time (EET) during regular business days.
For assistance with account opening, funding the account, and placing orders, please contact Voima’s customer service. Email [email protected] or phone +358 (0)9 612 1917
Disclaimer Nothing in this document constitutes investment recommendation or an offer for the purchase or sale of gold, any gold-related products or services, or any other products, services, securities, or financial instruments. This document does not suggest the future or expected value of gold, any gold-related products or services, or implicitly recommend or suggest an investment strategy of any kind.
You should be aware that the risk of loss in trading or holding commodities such as gold can be substantial. As with any asset, the value of gold can go up or down, and there can be a substantial risk that you lose money buying, selling, holding, or investing in gold.
Voima Gold Oy. is a limited liability company operating under the laws of Finland and the European Union, and does not offer legal or taxation guidance on any jurisdictions. You are responsible for compliance with your local laws and regulations, including but not limited to tax laws, and paying local taxes that may be applied on gold purchases, gold sales, and gold custody.
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