MONEY-LAUNDERING PREVENTION SANTANDER GROUP GLOBAL POLICY

Transcription

1 MONEY-LAUNDERING PREVENTION SANTANDER GROUP GLOBAL POLICY August 2007

2 INDEX 1. Introduction 2. The concept of money laundering 3. Written anti-money laundering program 4. Customer acceptance policy 5. Know your customer 6. Internal organization for money-laundering prevention 7. Analysis and control of sensitive operations 8. Reporting suspicious activities to the Authorities 9. Preservation and filing of documents 10. Record-keeping and reporting requirements 11. Training of Santander Group personnel 12. Consolidated KYC Risk Management 13. Internal Audit 14. Policy Owner 2

3 MONEY-LAUNDERING PREVENTION SANTANDER GROUP GLOBAL POLICY 1. Introduction In response to the international community s growing concern about the problem of money laundering, many countries around the world are enacting or strengthening their laws on the subject. Along with society and the authorities of different countries, the Santander Group recognizes the importance of the fight against money laundering, since it impacts fundamental aspects of social life. The Santander Group supports the Basle Declaration of 1990 and manifests its complete solidarity and maximum co-operation with the relevant authorities in the prevention of money laundering. The Santander Group understands that the best way to fulfill this commitment is to establish effective internal policies and procedures that are conducive to: - Conducting financial activities in accordance with strict ethical standards and current laws and regulations. - The implementation of codes of conduct and monitoring and reporting systems to prevent its entities from being used for money laundering. - Ensuring that all employees observe Know Your Customer policies and procedures. - Strict compliance with applicable anti-money laundering laws, as well as the recommendations issued on this subject by the international Financial Action Task Force on Money Laundering and national and international authorities. As a result, Santander Group management and employees must be vigilant for any suspicious activity and report it immediately to the established internal bodies, in accordance with specified policies and procedures, so that they may in turn notify the relevant authorities. The commitment of all Santander Group management and employees is essential in preventing the use of its products and services for money laundering purposes. Adherence to this policy is absolutely fundamental to ensuring that all Santander Group entities, regardless of geographic location, comply fully with anti-money laundering legislation. They should therefore be actively involved in the policy s implementation and development. This Chapter establishes minimum standards to which Santander Group Units must adhere. In any case where local anti-money laundering laws establish higher standards, Santander Group Units must adhere to such laws. 3

4 If any applicable laws are in conflict with this policy, Santander Group Units must consult the appropriate Legal Department, which in turn will inform the respective Money Laundering Prevention Officer or Unit. When local provisions prevent its application, the Unit affected should immediately inform the Santander Group s Analysis and Resolution Committee (CAR), by way of the DCPBC (Central Department for the Prevention of Money Laundering) of the reasons why this policy cannot be applied. Compliance with this policy and the standards it sets forth is mandatory for all Santander Group Units worldwide. In this sense, Units are understood as all banks, affiliate companies, departments or branches of the Santander Group, both in Spain and abroad, who in accordance with the criteria set forth in this Manual, are susceptible to the application of internal regulations on anti-money laundering matters. In the development, implementation, and application of the policies and procedures that comprise the anti-money laundering program in each of the Santander Group Units, the policy set forth in this Chapter shall be followed, adapting it, to the extent permitted by the country s laws and regulations and nature of the business, to the model developed by the Santander Group. 2. The concept of money-laundering Money-laundering is the participation in any transaction that seeks to conceal or disguise the nature or origin of funds derived from illegal activities. Regarding this Manual and its original policies, as well as the relevant developing procedures, terrorism financing will be included within the concept of money laundering. Terrorism Financing is defined as, providing or collecting funds, by any means, direct or indirect, intended to be used, or knowing that they are going to be wholly or partially used for the commission of terrorist acts. Generally, the money laundering process consists of three stages: Placement Introduction of cash originating from criminal activities into financial or non-financial institutions. Layering Separating the proceeds of criminal activity from their source through the use of layers of complex financial or non-financial transactions. These layers are designed to hamper the audit trail, disguise the origin of funds and provide anonymity. Integration Placing the laundered proceeds back into the economy in such a way that they re-enter the financial system as apparently legitimate funds. Financial institutions may be used at any point in the money laundering process. 4

5 3. Written Anti-Money Laundering Program Each Unit must have a written anti-money laundering program (Money Laundering Prevention Manual) establishing the policies, procedures and internal controls designed to comply with applicable law. The written programs should ensure that Santander Group Units: - Know their customers. - Designate personnel to be responsible for compliance with anti-money laundering provisions. - Comply with applicable record-keeping and reporting requirements as established by law. - Develop and implement appropriate methods of control to detect suspicious activity by customers and to take appropriate action. - Report suspicious activity to government authorities in accordance with applicable law. - Introduce corporate anti-money laundering training programs. - Implement internal audit and quality control systems with respect to anti-money laundering policies and procedures. The Money Laundering Prevention Manuals prepared by each Santander Group Unit must be validated by the DCPBC and approved by the CAR (or in absence of the latter, the most senior management body of the Unit in question). 4. Customer acceptance policy The Santander Group considers that evaluating the potential customer risk is fundamental to the effective prevention of money-laundering. Therefore, all Group Units should take into account the following factors that will permit them to evaluate the risk involved with each type of customer: - The different categories of customers. - The nature of the products and services provided to them. - The customers expected use of Santander Group products and services. - The countries in which the Santander Group Units and their customers are located. For money-laundering risk control purposes, the Santander Group will not accept the following categories of customers: 5

6 - Persons about whom information is available indicating possible involvement in criminal activities. - Persons with businesses that make it impossible to verify the legitimacy of their activities or the source of funds. - Persons who refuse to provide the required information or documentation. - Casinos or gambling/betting establishments that are not officially authorized. - Shell banks. The following will only be accepted as customers with prior authorization from the Analysis and Resolution Committee (CAR) in the relevant country: - Customers involved in the production or distribution of weapons and other military equipment. - Casinos or gambling/betting establishments that are duly authorized by the respective official Unit. - Exchange houses, money transmitters, or other similar entities. - Customers who are officers, shareholders, or owners of exchange houses, money transmitters, casinos, betting establishments, or other similar Units. - Customers who are high-level public officials and their family members, and wellknown personalities wishing to open accounts outside their native countries (PEP s). 5. Know Your Customer The most effective means of preventing the use of the financial system for money laundering is to identify and know your customers, regardless of whether they are established customers or otherwise. Along these lines, all Santander Group Units should establish Know Your Customer policies, procedures, and internal controls aimed at effective and complete knowledge of our customers and their activities, in order to: - Confirm and document the true identity of customers who maintain any type of banking relationship. - Confirm and document any additional customer information commensurate with the assessment of the money laundering risk. - Ensure that Santander Group Units do not do business with any individuals or entities whose identities cannot be confirmed, who do not provide all required information, or who have provided information that is false or that contains significant inconsistencies that cannot be clarified. 6

7 For customer identification, Santander Group entities shall consider the following criteria: - In the case of individuals, official identification shall be required to confirm the individual s identity. - For corporations and other legal entities, the deed of incorporation must be presented, including information concerning the customer s name, legal form, address, directors, and the corporate bylaws, powers of attorney, entry in the appropriate register or other reliable identifying information. - Neither anonymous accounts nor accounts using fictitious names may be opened or maintained. - Coded or ciphered accounts may be opened only in those countries where it is legal to do so and when the most senior officer of the Group in the country or the Unit affected has given express authorization in writing. In these cases, all requirements must be fulfilled, including identification of the beneficial owner of the account, in accordance with these regulations and those established by the provisions of the country in which the account is to be opened. - The documents evidencing the authority of any person authorizing financial transactions on behalf of the customer shall be required. Santander Group Units shall have procedures for determining that person s identity and relationship to the customer. - All necessary measures shall be taken to obtain information about the true identity of the person on whose behalf a relationship is established, an account opened, or a significant transaction conducted (that is, the beneficial owners) whenever the customer is acting on behalf of third parties or in cases where doubts exist as to whether the customer is acting on its own behalf. Other customer information Santander Group Units shall use procedures that enable them to obtain the necessary information at the time of the establishment of a relationship or at the opening of an account, commensurate with the assessment of the money laundering risks, in order: - to establish the customer s source of funds; - to establish the nature and extent of the customer s expected use of its products and services; - to confirm the information provided by the customer. Customer referrals from Units abroad Santander Group Units shall use procedures in order to check that they have appropriately identified the customers referred to them by other Group Units, so they may: 7

8 - Document that the other Group Unit has knowledge of the customer. - Determine that the information and documentation obtained by the Unit referring the customer satisfies its own identification requirements. - If the Unit that administers the relationship with the customer has the necessary information, it must also make that information available to the Group Units that provide products and services to the customer. If the Unit that administers the relationship with the customer does not have the required information, or cannot supply it, the Units that provide products or services shall obtain this information directly from the customer. - In all cases, the Units that provide products or services to a customer must have sufficient information to enable them to detect any suspicious activity on the part of the customer. 6. Internal Organization for money-laundering prevention Santander Group Units shall establish the appropriate internal controls and reporting mechanisms in order to recognize, prevent, and impede illicit transactions related to money laundering and report to government authorities in accordance with applicable law. These bodies will be subject to local legal and regulatory standards and should adhere to the principles of timeliness, security, efficiency, and coordination, not only with respect to internal reporting but also in the investigation and reporting of operations. A unit for money laundering prevention will be established for each country, conforming to the model adopted by the Santander Group in Spain, which is described in Chapter III of this Manual. As a minimum, each Group Unit shall designate a Money Laundering Prevention Officer. The Money Laundering Prevention Units (which are the bodies specializing in moneylaundering prevention) function in connection with all affiliate companies in the respective country. Their responsible officers will be designated by the CAR at the proposal of the respective management bodies, following approval by the DCPBC, to whom they will report. In cases where the size of the business does not justify the existence of a Money- Laundering Prevention Unit, such responsibilities will be assumed by an Officer Responsible for Prevention, as a minimum. The hierarchy of the Santander Group in each country will be responsible for assigning the necessary personnel to the respective Money Laundering Prevention Unit. Such personnel will report functionally to the DCPBC. 7. Analysis and control of sensitive operations Santander Group Units shall develop and implement procedures for monitoring and immediately investigating sensitive or high-risk transactions relating to money laundering, and detecting suspicious activities. 8

9 In developing monitoring procedures, Santander Group Units shall assess the characteristics of the customer and their transactions. Santander Group Units shall have policies and procedures to ensure that once a suspicious transaction or activity is detected, the matter is referred to the person or Unit established by internal regulations. 8. Reporting suspicious activities to the Authorities Santander Group Units in all countries shall have policies and procedures that require the immediate reporting of suspicious activities to internal anti-money laundering bodies, so that they may perform the necessary investigations and issue timely reports or communications of suspicious transactions to the Authorities in compliance with local laws, when the transactions are determined: - To be related to funds derived from illegal activities or are designed to hide or disguise funds derived from such activities. - To be divided or structured to evade the reporting or recordkeeping requirements of the applicable money laundering laws and regulations. - To be without a business or apparent lawful purpose after examination of the available facts, including the background and possible purpose of the transaction. When Santander Group Units or employees report suspicious transactions or activities to the internal anti-money laundering units, in accordance with the procedures established by internal policies and procedures, they are strictly prohibited from providing any information internally or externally regarding the customers or transactions to which the information pertains. 9. Preservation and filing of documents Santander Group Units shall maintain the following documents for at least six years, unless local legislation specifies a longer period: - Know Your Customer Information. - Reports made to government authorities concerning suspicious customer activity relating to possible money laundering, together with supporting documents. - Records of all courses given on the prevention of money-laundering. - Any other documents required to be retained under applicable anti-money laundering laws. The aforementioned documentation should be appropriately filed so that it may be easily retrieved and its confidentiality guaranteed. 9

10 10. Record-keeping and reporting requirements Santander Group Units shall have procedures for ensuring the enforcement of the requirements established by the laws of the country in question concerning the recording of certain transactions and their compulsory and systematic regular reporting to the authorities, whether they involve cash transactions, funds transfers, or other types of operations. In addition, Santander Group Units must develop and implement adequate monitoring procedures and systems to detect and impede the structuring of transactions to avoid their recording or reporting to the authorities. Equally, Santander Group Units will develop and implement the necessary systems and controls allowing full compliance with local laws regarding the blocking of transactions and flow of funds and/or the prohibition to open accounts for those individuals or companies that, as described in such regulations, may be subject to these measures. 11. Training of Santander Group Personnel A priority objective for the Santander Group is the adoption of necessary measures to enable its personnel to be familiar with the requirements established by anti-money laundering laws and regulations. Thus, the Human Resources Department of each Unit, under the supervision and coordination of Training Management of Banco Santander in Spain, shall organize training programs and special courses for management and employees, and specifically for personnel whose positions are suitable for detecting activity or transactions that may be related to money laundering, and train these employees to detect suspicious activity and to understand suspicious transaction reporting policies and procedures. The training programs should include international standards and local legislation to prevent money laundering, the latest trends in illicit activity, and Santander Group policies and procedures designed to combat money laundering, including how to recognize and report suspicious activities. The Human Resources Departments of the Santander Group Units, in adapting corporate training plans and programs, should develop similar training programs and determine which personnel require specialized training in view of the risk of money laundering inherent in their responsibilities or positions. A specific record will be kept of all training activity given, stating the date, place and duration of each course, the number of attendees and the Unit to which they belong. A copy of these records should be sent to the Training Area of Banco Santander in Spain. Apart from general training programs, all Area, Unit, and Branch Money Laundering Prevention Officers should be informed of and should provide on-going updates to the employees under their authority regarding changes in the policies and laws and regulations on this subject, as well as any new methods, techniques, or procedures found to be susceptible to money laundering. 10

11 12. Consolidated KYC Risk Management Santander Group believes that an efficient way to manage legal and reputational risks associated to being unwittingly used as a vehicle for money laundering or other unlawful activities is the consolidated management of these risks at a Group level, encompassing all branches and affiliates, regardless of their operating jurisdiction. Therefore, consolidated KYC risk management will be considered as the process centralized at Banco Santander in order to coordinate and to share information at a Group level, in order to identify, review, and mitigate legal and reputational risks while observing all the applicable regulations. Accordingly, all branches and affiliates will immediately submit to Head Office, upon their own initiative, all data associated with relevant high risk customers and activities and, equally, will meet all information requests coming from Head Office regarding information that may help to manage, at a Group level and in a consolidated basis, the legal and reputational risks associated to money laundering. Those affiliates holding local or offshore subsidiaries and having responsibilities over their legal and reputational risks shall apply the same criteria in order to set identical channels of information and to create an information pyramid in line with Banco Santander. In any case, safeguard measures will be set, in order to guarantee the confidentiality of the information related to customers and transactions, being subject to the privacy legislation ruling the relevant jurisdiction. 13. Internal Audit The internal audit function is necessary to ensure continued compliance with this policy, and its responsibilities include supervising the effectiveness of the Santander Group s money laundering prevention system (which comprises compulsory policies, standards and procedures) to ensure that all Units know their customers and that transactions are performed in conformity with professional ethics and current anti-money laundering laws. The internal audit function will conduct the necessary audits and reviews for this purpose. 14. Policy Owner The owner of this policy is the Board of Directors of Banco Santander, S.A., and is approved by the Grupo Santander s Analysis and Resolution Committee (C.A.R). Further amendments to this policy shall be approved by the Board, at C.A.R. proposal. It is assigned to the Grupo Santander C.A.R. to approve the necessary procedures in order to implement this policy across the Group s Units. 11