Anti-Money Laundering Policy

Last updated December 7, 2017

Kountable Anti-Money Laundering Policy & Procedures

Introduction

It is the policy of Kountable and our affiliates to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities by complying with all applicable requirements under US Patriot Act and its implementing regulations.

Money laundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally-derived proceeds so that the proceeds appear to have derived from legitimate origins or constitute legitimate assets. Generally, money laundering occurs in three stages. Cash first enters the financial system at the “placement” stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler’s checks, or deposited into accounts at financial institutions. At the “layering” stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin. At the “integration” stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.

Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal either the origin of the funds or their intended use, which could be for criminal purposes. Legitimate sources of funds are a key difference between terrorist financiers and traditional criminal organizations. In addition to charitable donations, legitimate sources include foreign government sponsors, business ownership and personal employment. Although the motivation differs between traditional money launderers and terrorist financiers, the actual methods used to fund terrorist operations can be the same
as or similar to methods used by other criminals to launder funds. Funding for terrorist attacks does not always require large sums of money and the associated transactions may not be complex.

Our anti-money laundering (AML) policies, procedures and internal controls are designed to facilitate compliance with Bank Secrecy Act (BSA) regulations and FINRA rules and will be reviewed and updated on a regular basis to ensure appropriate policies, procedures and internal controls are in place to account for both changes in regulations and changes in our business. The provisions of this policy will apply to all directors, officers and employees of the Company and its subsidiaries worldwide. In addition, the Company will require independent third parties who represent the Company (such as agents, consultants, and contractors) to conduct themselves in a manner consistent with this Policy Statement.

Penalties & Fines

Failure to comply with this Policy may result in significant civil and criminal penalties for the Company and the individuals involved and is cause for disciplinary action against such individuals, up to and including termination.

Criminal and civil penalties may be assessed against both individuals (including jail time) and companies that violate FCPA.

Compliance Person Designation and Duties

Kountable has developed a comprehensive program for implementing this Policy. Kountable has designated its Compliance Officer as its Anti-Money Laundering Program Compliance Person (AML Compliance Person), with full responsibility for the firm’s AML program. The duties of the AML Compliance Person will include monitoring the firm’s compliance with AML obligation and ensuring communication and training for employees.

The AML Compliance Person will also ensure that the firm keeps and maintains all of the required AML records and will ensure that Suspicious Activity Reports (SAR) are filed with the Financial Crimes Enforcement Network (FinCEN) when appropriate. The AML Compliance Person is vested with full responsibility and authority to enforce the firm’s AML program. The AML Compliance Person, in conjunction with the relevant compliance council, is responsible for giving advice on the interpretation and application of this policy, supporting training and education, and responding to reported concerns.

Policy Overview-Summary of Key AML Provisions

Kountable is firmly committed to preventing money laundering, terrorist financing, corruption and proliferation of weapons of mass destruction. Kountable is committed to collaborating with regulators to facilitate dialogue between all relevant stakeholders. Stakeholders may include national bodies such as Governments, Law Enforcement Agencies, Financial Intelligence Units, Regulators, Export Credit Agencies, Customs and Excise, Tax Authorities, Shipping Agents, Carriers, Port Authorities as well as international agencies such as the ICC Task Force on Money Laundering and FATF.

The international trade system is subject to a wide range of risks and vulnerabilities that provide criminal organizations with the opportunity to launder the proceeds of crime and move funds to terrorist organizations with a relatively low risk of detection. The involvement of multiple parties on both sides of any international trade transaction can make the process of due diligence more difficult.

Also, because trade finance can be more document-based than other banking activities, it can be susceptible to documentary fraud, which can be linked to money laundering, terrorist financing, or the circumvention of OFAC sanctions or other restrictions (such as export prohibitions, licensing
requirements, or controls).

While Kountable is alert to transactions involving higher risk goods (e.g., trade in weapons or nuclear equipment), we are also aware that goods may be over or undervalued in an effort to evade antimony laundering or customs regulations, or to move funds or value across national borders.

For example, an importer may pay a large sum of money from the proceeds of an illegal activity for goods that are essentially worthless and are subsequently discarded. Alternatively, trade documents, such as invoices, may be fraudulently altered to hide the scheme. Variations on this theme include inaccurate or double invoicing, partial shipment of goods (short shipping), and the use of fictitious goods. Illegal proceeds transferred in such transactions thereby appear sanitized and enter the realm of legitimate commerce. Moreover, many suspect trade finance transactions also involve collusion between buyers and sellers. The Applicant’s true identity or ownership may be disguised by the use of certain corporate forms, such as shell companies or offshore front companies. The use of these types of entities results in a lack of transparency, effectively hiding the identity of the purchasing party, and thus increasing the risk of money laundering and terrorist financing.

Despite the fact that, historically, trade finance has not been viewed as high risk, it has been recognized that international trade and the processes and systems that support it are vulnerable to abuse for the purposes of money laundering and terrorist financing. In recent years, however, the focus on these risks have increased for a variety of reasons, including the dramatic growth in world trade. In addition, the fact that controls introduced by financial institutions (FIs) in response to the more traditional money laundering techniques have become a more robust means than other methods to transmit funds, including the use of trade finance products may become more attractive to criminals. Financial Action Task Force (FATF) have identified these risks in the widely-defined area of trade based money laundering. It is important to note that these studies highlight the fact that the problem is not limited to the trade finance activities in which FIs are directly involved, but that any process to move money through the banking system by simple payment may be dressed up as a means of financing trade in order to disguise the true underlying and potentially illegal activity.

Risks Overview

The use of trade finance to obscure the illegal movement of funds includes methods to misrepresent the price, quality or quantity of goods. Generally, these techniques rely on a collusion between the seller and buyer since the intended outcome from the arrangements is obtaining value in excess of what would be expected from an arm’s length transaction. The collusion may well arise because both parties are controlled by the same persons. The transfer of value in this way may be accomplished in a variety of ways that are described below.

Risks Associated with Money Laundering and Terrorist Financing

Over-invoicing: by misrepresenting the price of the goods in the invoice and other documentation the seller gains excess value as a result of the payment.
Under-invoicing: by misrepresenting the price of the goods in the invoice and other documentation the buyer gains excess value as a result of the payment.
Multiple Invoicing: by issuing more than one invoice for the same goods, the seller can justify the receipt of multiple payments. This will be harder to detect if the colluding parties uses more than one FI to facilitate the payments/transactions.
Short Shipping: the seller ships less than the invoiced quantity or quality of goods, thereby misrepresenting the true value of goods in the document. The effect is similar to over-invoicing.
Over Shipping: the seller ships more than the invoiced quantity or quality of goods, thereby misrepresenting the true value of goods in the document. The effect is similar to under-invoicing.
Deliberate Obfuscation of the Type of Goods: parties may structure a transaction in a way to avoid alerting any suspicion to FIs or to other third parties which become involved. This may simply involve omitting information from the relevant documentation or deliberately disguising or falsifying it. This activity may or may not involve a degree of collusion between the parties involved and may be for a variety of reasons or purposes.
Phantom Shipping: no goods are shipped and all documentation is falsified. Kountable is not in a position to determine whether over-invoicing or under-invoicing or any other misrepresentation of value may be involved and cannot feasibly make meaningful determinations about the legitimacy of unit pricing due to the lack of relevant business information. However, there may be situations where pricing appears to be unusual, which should prompt appropriate inquiries to be made.

Risks Associated with Sanctions, Terrorist Financing and Proliferation of Nuclear Weapons

Sanctions that require the embargo of certain goods and services have particular relevance in relation to the provision and facilitation of trade finance products. The understanding will be even more limited where transactions are part of a complex structure. There are a variety of UN and national or regional sanctions in place. These include:
• Country based financial sanctions that target specific individuals and entities
• Trade based sanctions e.g.: embargos on the provision of certain goods, services or expertise to certain countries.
• Financial sanctions and or/activity based financial prohibitions in respect of certain countries which relate to the prevention of nuclear proliferation.


Responding to AML Information Requests:

Giving AML Information to Federal Law Enforcement Agencies and Other Financial Institutions
FinCEN Requests

We will respond to a Financial Crimes Enforcement Network (FinCEN) request concerning accounts and transactions (a 314(a) Request) by immediately searching our records to determine whether we maintain or have maintained any account for, or have engaged in any transaction with, each individual, entity or organization named in the 314(a) Request as outlined in the Frequently Asked Questions (FAQ) located on FinCEN’s secure Web site. We understand that we have 14 days (unless otherwise specified by FinCEN) from the transmission date of the request to respond to a 314(a) Request. Unless otherwise stated in the 314(a) Request or specified by FinCEN, we are required to search those documents outlined in FinCEN’s FAQ. If we find a match, the Compliance Officer will report it to FinCEN via FinCEN’s Web-based 314(a) Secure Information Sharing System within 14 days or within the time requested by FinCEN in the request. If the search parameters differ from those mentioned above (for example, if FinCEN limits the search to a geographic location), the Compliance Officer will structure our search accordingly.

If the Compliance Officer searches our records and does not find a matching account or transaction, then Kountable will not reply to the 314(a) Request. We will maintain documentation that we have performed the required search by printing a search self-verification document from FinCEN’s 314(a) Secure Information Sharing System confirming that Kountable has searched the 314(a) subject information against our records.

We will not disclose the fact that FinCEN has requested or obtained information from us, except to the extent necessary to comply with the information request. The Compliance Officer will review, maintain and implement procedures to protect the security and confidentiality of requests from FinCEN similar to those procedures established to satisfy the requirements of Section 501 of the Gramm-Leach-Bliley Act with regard to the protection of customers’ nonpublic information.

We will direct any questions we have about the 314(a) Request to the requesting federal law enforcement agency as designated in the request.

Unless otherwise stated in the 314(a) Request, we will not be required to treat the information request as continuing in nature, and we will not be required to treat the periodic 314(a) Requests as a government provided list of suspected terrorists for purposes of the customer identification and verification requirements.

Rule: 31 C.F.R. § 103.100.

Resources: FinCEN press release (2/6/03); FinCEN press release (2/12/03); NASD Member Alert(2/14/03); FinCEN’s 314(a) Fact Sheet (11/18/08). FinCEN also provides financial institutions with General Instructions and Frequently Asked Questions relating to 314(a) requests through the 314(a) Secured Information Sharing System or by contacting FinCEN at (800) 949-2732.

National Security Letters

National Security Letters (NSLs) are written investigative demands that may be issued by the local Federal Bureau of Investigation and other federal government authorities conducting counterintelligence and counterterrorism investigations to obtain, among other things, financial records of broker-dealers.
NSLs are highly confidential. No broker-dealer, officer, employee or agent of the broker-dealer can disclose to any person that a government authority or the FBI has sought or obtained access to records. If you file a Suspicious Activity Report (SAR-SF) after receiving a NSL, the SAR-SF should not contain any reference to the receipt or existence of the NSL.

Resource: FinCEN SAR Activity Review, Trends, Tips & Issues, Issue 8 (National Security Letters and Suspicious Activity Reporting) (4/2005).

Grand Jury Subpoenas

We understand that the receipt of a grand jury subpoena concerning a customer does not in itself require that we file a Suspicious Activity Report (SAR-SF). When we receive a grand jury subpoena, we will conduct a risk assessment of the customer subject to the subpoena as well as review the customer’s account activity. If we uncover suspicious activity during our risk assessment and review, we will elevate that customer’s risk assessment and file a SAR-SF in accordance with the SAR-SF filing requirements. We understand that none of our officers, employees or agents may directly or indirectly disclose to the
person who is the subject of the subpoena its existence, its contents or the information we used to respond to it. To maintain the confidentiality of any grand jury subpoena we receive, we will process and maintain the subpoena in our online password protected storage system and/or in a secure location in our offices. If we file a SAR-SF after receiving a grand jury subpoena, the SAR-SF will not contain any reference to the receipt or existence of the subpoena. The SAR-SF will only contain detailed information about the facts and circumstances of the detected suspicious activity.

Resources: FinCEN SAR Activity Review, Trends, Tips & Issues, Issue 10 (Grand Jury Subpoenas and Suspicious Activity Reporting) (5/2006). Voluntary Information Sharing With Other Financial Institutions Under USA PATRIOT Act Section314(b)


We will share information with other financial institutions regarding individuals, entities, organizations and countries for purposes of identifying and, where appropriate, reporting activities that we suspect may involve possible terrorist activity or money laundering. The Compliance Officer will ensure that the firm files with FinCEN an initial notice before any sharing occurs and annual notices thereafter. We will use the notice form found at FinCEN’s Web site. Before we share information with another financial institution, we will take reasonable steps to verify that the other financial institution has submitted the requisite notice to FinCEN, either by obtaining confirmation from the financial institution or by consulting a list of such financial institutions that FinCEN will make available. We understand that this requirement applies even to financial institutions with which we are affiliated, and that we will obtain the requisite notices from affiliates and follow all required procedures. We will employ strict procedures both to ensure that only relevant information is shared and to protect the security and confidentiality of this information, for example, by segregating it from the firm’s other books and records. We also will employ procedures to ensure that any information received from another financial institution shall not be used for any purpose other than:
• identifying and, where appropriate, reporting on money laundering or terrorist activities;
• determining whether to do enter into a transaction; or
• assisting the financial institution in complying with performing such activities.

Rule: 31 C.F.R. § 103.110.

Resources: FinCEN Financial Institution Notification Form; FIN-2009-G002: Guidance on the Scope of Permissible Information Sharing Covered by Section 314(b) Safe Harbor of the USA PATRIOT Act (06/16/2009).

Implementation Procedures

Operational Directives

Kountable reviews trade transactions on an individual basis. The documents and specific terms are reviewed to examine the transaction not only for fraud but also for unusual and potentially suspicious activities. The complex nature of these transactions provides a large amount of information about the
parties and the goods and services involved in the transaction. While certain elements of the process may be automated the overall process of reviewing trade documents by its nature cannot be successfully automated. Kountable relies on lists provided by various governments of known or suspected terrorists.

Office of Foreign Assets Control Screening

Kountable’s AML program also includes screening for compliance with appropriate agencies, including FinCEN and the Office of Foreign Assets Control, both of which are housed in the US Department of Treasury.

These policies are part of Kountable’s Compliance Program, which was developed, and continues to develop, to ensure we satisfy all legal and regulatory requirements to maintain ethical business practices. Kountable has committed to not doing business with individuals or businesses who are sanctioned by OFAC or appear on the Specially Designated Nationals (SDN) list. Kountable will comply with legal and regulatory requirements related to sanctioned entities.

Kountable refuses to accept funds from, or disburse funds to any business or individual who appears on any OFAC SDN as well as with any business that is 50% or more owned by an individual who appears on the SDN list. Kountable refuses to accept funds from, or disburse funds to, businesses, shell banks, or customers whose funds we reasonably believe to have derived from or contributed to any criminal activity from a sanctioned source.

The Compliance Team and Trade Team management are responsible for training the Trade Team in identifying and reporting any red flags or potential red flags in the course of their relationships with customers. Should any red flags be detected and reported, they will be analyzed and results of that analysis will be included in project information communicated with the Approval Committee, the final decision makers on project funding. Additionally, all staff are required to complete Anti-Corruption and Anti-Bribery, Foreign Corrupt Practices Act (FCPA) and Global Anti-Money Laundering training courses provided by our vendor, Thomson Reuters.

The Compliance Team is empowered to review red flag activity and determine appropriate measures to be taken as required by law and regulations. These measures may include refusing to fund a project or maintain a relationship with a reseller based on their own activities or activities of their partners/affiliates and, when appropriate, filing a suspicious activity report (SAR) with FinCEN. Additionally, as necessary, Kountable’s service corporations and legal team will
communicate with local law enforcement and regulators in jurisdictions where we conduct business and report as needed according to local legal requirements.

For every company and individual name submitted by the Trade Team to Compliance, OFAC screening is conducted via the FINRA OFAC search tool. Additionally, if information is received from the Trade Team related to possible sanctions violations, enhanced due diligence is conducted and a summary report is included in the Approval Committee Packet to ensure final decision-makers are aware of any sanctions risks associated with a project before funding
decisions are made.

Customer Identification Program (CIP)

We have established, documented and maintain a separate written Customer Identification Program (CIP).

Lack of Verification

When we cannot form a reasonable belief that we know the true identity of a potiential customer, we will do the following: (1) not enter into a transaction with the party; (2) impose terms under which a customer may conduct transactions while we attempt to verify the customer’s identity; (3) close an account after attempts to verify customer’s identity fail; and (4) determine whether it is necessary to file a SAR in accordance with applicable laws and regulations.

Recordkeeping

We will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancies identified in the verification process. We will keep records containing a description of any document that we relied on to verify a customer’s identity, noting the type of document, any identification number contained in the document, the place of issuance, and if any, the date of issuance and expiration date. With respect to non-documentary verification, we will retain documents that describe the methods and the results of any measures we took to verify the identity of a customer. We will also keep records containing a description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained. We will retain records of all identification information for five years after the account has been closed; we will retain records made about verification of the customer’s identity for five years after the record is made.

Comparison with Government-Provided Lists of Terrorists

At such time as we receive notice that a federal government agency has issued or updated a list of known or suspected terrorists and identified the list as a list for CIP purposes, we will, within a reasonable period of time after a potential transaction is evaluated (or earlier, if required by another federal law or regulation or federal directive issued in connection with an applicable list), determine whether a customer appears on any such list of known or suspected terrorists or terrorist organizations issued by any federal government agency and designated as such by Treasury in consultation with the federal functional regulators. We will follow all federal directives issued in connection with such lists. We will continue to comply separately with OFAC rules prohibiting transactions with certain foreign countries or their nationals.

Notice to Customers

We will provide notice to customers that the firm is requesting information from them to verify their identities, as required by federal law.

General Customer Due Diligence

It is important to our AML and SAR reporting program that we obtain sufficient information about each customer to allow us to evaluate the risk presented by that customer and to detect and report suspicious activity. When we review a customer transaction, the due diligence we perform may be in addition to customer information obtained for purposes of our CIP.

For each trade, Kountable performs a risk analysis, in the event there are circumstances in which we cannot perform appropriate due diligence with respect to a correspondent transaction, we will determine, at a minimum, whether to refuse to enter into, or suspend, the transaction, file a SAR SF, close the correspondent account and/or take other appropriate action.

Risk Assessment

Kountable applies a risk based approach to the assessment and management of risk in our due course of business. The assessment of risk and application of appropriate AML controls will depend on the role of Kountable in any trade transaction. Where Kountable has appropriate perspective and access, it is our
policy to mitigate the risks identified by each transaction.

General Risk Analysis

Kountable customer (“Reseller”) Business:
• Reseller’s business
• the end customer’s anticipated business activity (both volume and type);
• the source of the end customer.

For accounts that we have deemed to be higher risk, we will obtain the following information:
• the purpose of the account;
• additional payee information;
• individuals with ownership or control over the account, such as beneficial owners, signatories,
or guarantors.
• the end customer’s (or beneficial owner’s) occupation or type of business;
• financial statements;
• banking references;
• domicile (where the customer’s business is organized);
• proximity of the customer’s residence, place of employment, or place of business to each
other, proposed transaction parties, and Kountable offices;
• description of customer’s primary trade area and whether international transactions are expected to be routine;
• description of the business operations and anticipated volume of trading; Description of the business operations, the anticipated volume of currency and total sales, and a list of major customers and suppliers.
• explanations for any changes in account activity.

We will also use reasonable efforts to ensure that the customer information remains accurate.

Trade Document Reconciliation

Kountable will only may advance payments to the accounts and amounts as stated exactly on the invoice provided and approved. No deviation to these terms is acceptable without a revision to the Specified agreements.

Red Flags

Red flags that signal possible money laundering or terrorist financing include, but are not limited to:

Customers – Insufficient or Suspicious Information

• Provides unusual or suspicious identification documents that cannot be readily verified.
• Reluctant to provide complete information about nature and purpose of business, prior banking relationships, anticipated account activity, officers and directors or business location.
• Refuses to identify a legitimate source for funds or information is false, misleading or substantially incorrect.
• Background is questionable or differs from expectations based on business activities.
• Customer with no discernable reason for using the firm’s service.

Efforts to Avoid Reporting and Recordkeeping

• Reluctant to provide information needed to file reports or fails to proceed with transaction.
• Tries to persuade an employee not to file required reports or not to maintain required records.
• “Structures” deposits, withdrawals, transactions or purchase of monetary instruments below a
certain amount to avoid reporting or recordkeeping requirements.
• Unusual concern with the firm’s compliance with government reporting requirements and firm’s
AML policies.

Certain Funds Transfer Activities

• Wire transfers to/from financial secrecy havens or high-risk geographic location without an
apparent business reason.
• Many small, incoming wire transfers or deposits made using checks and money orders. Almost
immediately withdrawn or wired out in manner inconsistent with customer’s business or history.
May indicate a Ponzi scheme.
• Wire activity that is unexplained, repetitive, unusually large or shows unusual patterns or with no
apparent business purpose.

Activity Inconsistent With Business

• Transactions patterns show a sudden change inconsistent with normal activities.
• Unusual transfers of funds or journal entries among accounts without any apparent business
purpose.
• Maintains multiple accounts, or maintains accounts in the names of family members or corporate
entities with no apparent business or other purpose.
• Appears to be acting as an agent for an undisclosed principal, but is reluctant to provide
information.

Trade Related Red Flags

Prior to entering into a Specified Agreement and throughout the project, Kountable requires a thorough review of all applicable trade documentation (e.g., customs declarations, trade documents, invoices, etc.) to enable Kountable to monitor and report unusual and suspicious activity. In addition to OFAC filtering, the monitoring process should give greater scrutiny to:
• A customer’s inability to produce appropriate documentation (i.e., invoices) to support a requested transaction.
• Significant discrepancies between the descriptions of the goods on the transport document (i.e., bill of lading), the invoice, or other documents (i.e., certificate of origin, packing list, etc.).
• A lack of evidence of legitimate business activity, or any business operations at all, undertaken by many of the parties to the transaction(s);
• Items shipped that are inconsistent with the nature of the customer’s business (e.g., a steel company that starts dealing in paper products, or an information technology company that starts dealing in bulk pharmaceuticals).
• Transactions that are not commensurate with the stated business type and/or that are unusual
and unexpected in comparison with the volumes of similar businesses operating in the same
locale;
• Customers conducting business in higher risk jurisdictions.
• Customers shipping items through higher risk jurisdictions, including transit through noncooperative countries.
• Customers involved in potentially higher risk activities, including activities that may be subject to export/import restrictions (e.g., equipment for military or police organizations of foreign governments, weapons, ammunition, chemical mixtures, classified defense articles, sensitive technical data, nuclear materials, precious gems, or certain natural resources such as metals, ore, and crude oil).
• Obvious over or underpricing of goods and services.
• Obvious misrepresentation of quantity or type of goods imported or exported.
• Transaction structures that appear unnecessarily complex and designed to obscure the true nature of the transaction.
• Customer directs payment of proceeds to an unrelated third party.
• Third party payments for goods or services made by an intermediary (either an individual or an entity) apparently unrelated to the seller or purchaser of goods. This may be done to obscure the true origin of the funds.
• Unusual financial nexuses and transactions occurring among certain business types (e.g., food importer dealing with an auto parts exporter);
• Shipment locations or description of goods not consistent with letter of credit.
• Significantly amended letters of credit without reasonable justification or changes to the beneficiary or location of payment. Any changes in the names of parties also should prompt additional OFAC review.

Responding to Red Flags and Suspicious Activity

When an employee of the firm detects any red flag, or other activity that may be suspicious, he or she will notify the AML Compliance Person. Under the direction of the AML Compliance Person, the firm will determine whether or not and how to further investigate the matter. This may include gathering additional information internally or from third-party sources, contacting the government, freezing the account and/or filing a SAR.

In situations involving violations that require immediate attention, such as terrorist financing or ongoing money laundering schemes, we will immediately call an appropriate law enforcement authority. If a customer or company appears on OFAC’s SDN list, we will call the OFAC Hotline at (800) 540-6322.

Other contact numbers we will use are: FinCEN’s Financial Institutions Hotline ((866) 556-3974) (especially to report transactions relating to terrorist activity), local U.S. Attorney’s office, local FBI office and local SEC office (to voluntarily report such violations to the SEC in addition to contacting the appropriate law enforcement authority). If we notify the appropriate law enforcement authority of any such activity, we must still file a timely SAR-SF.

Although we are not required to, in cases where we have filed a SAR-SF that may require immediate attention by the SEC, we may contact the SEC via the SEC SAR Alert Message Line at (202) 551-SARS (7277) to alert the SEC about the filing. We understand that calling the SEC SAR Alert Message Line does not alleviate our obligations to file a SAR-SF or notify an appropriate law enforcement authority.

AML Recordkeeping

Responsibility for Required AML Records and SAR-SF Filing

Our AML Compliance Person and his or her designee will be responsible for ensuring that AML records are maintained properly and that SAR-SFs are filed as required.

We will create and maintain SAR-SFs and their accompanying documentation for at least five years. We will keep other documents according to existing BSA and other recordkeeping requirements, including certain SEC rules that require six-year retention periods (e.g., Exchange Act Rule 17a-4(a) requiring firms to preserve for a period of not less than six years, all records required to be retained by Exchange Act Rule 17a-3(a)(1)-(3), (a)(5), and (a)(21)-(22) and Exchange Act Rule 17a-4(e)(5) requiring firms to retain for six years account record information required pursuant to Exchange Act Rule 17a-3(a)(17)).

Rules: 31 C.F.R. § 103.38, Exchange Act Rule 17a-8 (requiring registered broker-dealers subject to the Currency and Foreign Transactions Reporting Act of 1970 to comply with the BSA regulations regarding reporting, recordkeeping and record retention requirements), FINRA Rule 3310.

SAR-SF Maintenance and Confidentiality

We will hold SAR-SFs and any supporting documentation confidential. We will not inform anyone outside of FinCEN, the SEC, an SRO registered with the SEC or other appropriate law enforcement or regulatory agency about a SAR-SF. We will refuse any subpoena requests for SAR-SFs or for information that would disclose that a SAR-SF has been prepared or filed and immediately notify FinCEN of any such subpoena requests that we receive. We will segregate SAR-SF filings and copies of supporting documentation from other firm books and records to avoid disclosing SAR-SF filings. Our AML Compliance Person will handle all subpoenas or other requests for SAR-SFs We may share information with another financial institution about suspicious transactions in order to determine whether we will jointly file a SAR. In cases in which we file a joint SAR for a transaction that has been handled both by us and another financial institution, both financial institutions will maintain a copy of the filed SAR. Rules: 31 C.F.R. §103.19(e); 67 Fed. Reg. 44048, 44054 (July 1, 2002).

Resources: NTM 02-47.

Training Programs

We will develop ongoing employee training under the leadership of the AML Compliance Person and senior management. Our training will occur on at least an annual basis. It will be based on our firm’s size, its customer base, and its resources and be updated as necessary to reflect any new developments in the law.

Our training will include, at a minimum: (1) how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; (2) what to do once the risk is identified (including how, when and to whom to escalate unusual customer activity or other red flags for analysis and, where appropriate, the filing of SAR-SFs); (3) what employees’ roles are in the firm’s compliance efforts and how to perform them; (4) the firm’s record retention policy; and (5) the disciplinary consequences (including civil and criminal penalties) for non-compliance with the BSA. We will develop training in our firm, or contract for it. Delivery of the training may include educational pamphlets, videos, intranet systems, in-person lectures and explanatory memos. Currently our training program is administered via lecture from management. We will maintain records to show the persons trained, the dates of training and the subject matter of their training.

Confidential Reporting and Non-Retaliation

Employees will promptly report any potential violations of the firm’s AML compliance program to the AML Compliance Person, unless the violations implicate the AML Compliance Person, in which case the employee shall report to CEO. Such reports will be confidential, and the employee will suffer no retaliation for making them.

All questions and reports of known or suspected violations of the law or this policy will be treated to the extent possible with sensitivity and discretion. An employee’s supervisor, the Compliance Officer and the Company will protect an employee’s confidentiality to the extent possible consistent with law and the Company’s need to investigate an employee’s concern. The Company strictly prohibits retaliation against an employee who, in good faith, seeks help or reports concerns to the Company. If an employee believes he or she is being treated unfairly or retaliated against by anyone as the result of making a complaint under this policy, the Compliance Officer and the CEO should be immediately notified. Any employee who retaliates against an employee who, in good faith, sought help or filed a report will be subject to appropriate disciplinary action, up to and including termination of employment.

Rules: 31 C.F.R. § 103.120; FINRA Rule 3310.

Questions

Questions about this policy should be directed to the Compliance Officer and/or the CEO.

Senior Manager Approval

Senior management has approved this AML compliance program in writing as reasonably designed to achieve and monitor our firm’s ongoing compliance with the requirements of the BSA and the
implementing regulations under it. This approval is indicated by signatures below.

Rules: 31 C.F.R. § 103.120; FINRA Rule 3310.


Rule: FINRA Rule 3310.
Resources: See NTM 02-21, FinCEN SAR Narrative Guidance Package (11/2003), FinCEN Suggestions for Addressing Common Errors Noted in Suspicious Activity Reporting (10/10/2007)

References:
Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering InfoBase Trade Finance Activities-Overview
Guidance on Preparing a Complete and Sufficient Suspicious Activity Report Narrative