Policies for Independent Investment Agents

Policies for Independent Investment Agents
BNY MELLON SERVIÇOS FINANCEIROS
January 2012 Version
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Pursuant to the ICVM 497, more specifically Article 17, item I, BNY Mellon
Serviços Financeiros DTVM S.A. (“BNY Mellon”) formulated policies that all
companies of independent agents tied to BNY Mellon must comply with.
This document contains the minimum policies that the Independent Investment
Agents tied to “BNY Mellon” must comply with when distributing the investment
funds distributed by BNY Mellon.
The companies of independent investment agents may set forth their own
policies as long as these contain the minimum stated herein.
Failure to perform any of the policies may expose the company of Independent
Investment Agents to high risks and penalties.
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CONTENTS
1.
Code of Conduct.....................................................................................................page 4
2.
Anti-Money Laundering Policy and Know Your Customer ............................page 11
3.
Personal Investments Policy ................................................................................page 21
4.
Presents and Entertainment Policy.......................................................................page 25
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1. Code of Conduct for Independent Investment Tied Agents
January 2012
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Chapter 1 Contents
I.
Introduction .................................................................................................. page 6
II.
Goal ................................................................................................................ page 6
III.
Applicability ................................................................................................... page 6
IV.
Principles ........................................................................................................ page 6
V.
Ownership ....................................................................................................... page 9
Attachment_I............................................................................................................ page 10
Commentary
Who should read this manual?
This Policy presents the commitment to Ethics and Compliance that the
independent investment agents tied to BNY Mellon must comply with
All
independent
investment
agents
(“independent
agents”)
pursuant
to
Regulatory Directive CVM 497 tied to BNY
Mellon
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I.
INTRODUCTION
The Code of Conduct is the basis of commitment to Ethics that every company of Independent
Investment Agents tied to BNY Mellon must comply with.
II. GOAL
This Code does not aim to describe each and every law and policy that applies specifically to the
independent agent, partners and/or employees (“Independent Investment Agents”), neither does it
attempt to include all the situations that the Independent Investment Agents may find in business.
The Code presents the basic structure and defines the expectations for business conduct.
Failure to comply with such standards may expose the Independent Investment Agent to high risks.
III. APPLICABILITY
The Code applies to all partners and employees of a company of independent investment agents
(hereinafter “employees”).
All employees must formally adhere to the Code through the Term present in Attachment I.
IV. PRINCIPLES
1. Mutual respect and professional treatment
All employees must work together in order to reach the goals of the company, sharing the mutual
responsibility of keeping everyone informed of any facts that may be important at work and to the
comprehension of the organization. Employees are expected to treat colleagues with
professionalism.
The employee must use judgment to ensure that the personal relationships with any person in the
workplace do not negatively affect the performance of their professional duties, nor their capacity
to supervise other employees.
2. Conduction of business
The independent agent must conduct business honestly and observe the applicable and current
legislation and rules.
Just Competition
The company of Independent Investment Agents must be committed to treating competitors fairly,
in full compliance with the laws and regulations, with honesty and integrity.
Anti-corruption
Any attempt to give money or any other valuable item to influence the actions or decisions of
government agents, including the attempt to receive special treatment for the employee himself
(or his relatives) or for the company can be considered as a violation of the law. Breaching such
laws is a serious offense with significant penalties to the employee and the company. Therefore
the following rules must be observed:
Do not offer anything valuable (including gifts) to a government agent in order to obtain or
maintain business, including payments aimed at reducing taxes or customs duty.
Never make any payment that will not be recorded in the ledger or records of the company, nor
any false accounting entry;
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Anti-financial crime and anti-money laundering policies
Money laundering is the process through which individuals or entities try to hide illegal funds or
find a way of making the origin of such funds seem legitimate. The employee is obliged to support
the compliance with the law in order to fight several types of financial crimes, such as attempts to
launder money for criminal activities or for funding terrorist acts. The employee must fully comply
with all anti-money laundering laws and only do business with clients who have good reputation
and use funds from legitimate sources.
It is very important that an independent agent know his client. To know your client means to
follow the protocols for the identification of clients in their line of business, confirming that the
individual or entity, as well as the origin of the funds, is legitimate.
To this end, the Anti-Money Laundering and Know Your Customer Policies, described later
herein, must be complied with.
3. Avoiding Conflict of Interest
The actions performed during the conduction of business at a company of Independent
Investment Agents are lined by good repute, aiming to eliminate any potential conflict of interest
that may eventually arise. As a result, the actions of its employees cannot be guided by personal
interests or gains, but must be ruled by the commitment to the quality of services provided to
clients, always rendered honestly.
No client must receive privileged treatment in detriment of another client, in spite of any reason,
so the relationship with all clients must be objective and equal.
In order to avoid Conflict of Interest, the following Policies must also be observed:
 Gifts and Entertainment
 Personal Investments Policy
4. Assets
The company’s vital assets are its name and brand. This means that the employee must not
conclude, directly or indirectly, that she has the company’s sponsorship, unless they haveprior
and adequate authorization. Such demand includes avoiding the use of the company’s name to
recommend a client, supplier or third party without due approval.
The neglectful, inefficient or inappropriate use of the company’s assets is irresponsible and
inconsistent with the Code of Conduct. Any type of theft, embezzlement or fraud is not tolerated.
5. Protection of client and employee records and observance of privacy principles
The company is responsible for ensuring the privacy, confidentiality and access control of all the
information of clients and employees.
Therefore:
(i) Gathering of client and employee information must be controlled. This means that the
gathering of such information must be permitted in accordance with the law and only for
legitimate business goals;
(ii) Storage and transportation of all forms containing information gathered from clients and
employees must be controlled and protected. This means that the gathered information must be
kept in a safe environment, transported by authorized people, and access to it must be allowed
only to those who really need it for work;
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(iii) The disposal of client and employee information must be controlled. The employee must only
retain information for as long as necessary in order to provide a service or deliver a product,
observing the applicable retention periods. When is becomes necessary to dispose of information
(regardless of the media in which the information is stored) it must be done appropriately based
on the importance and confidentiality of the information.
Any leak of client or employee information must be reported.
If the employee knows or suspects that information on clients or employees was lost or stolen, or
that there was unauthorized access to such information, they must immediately inform the subject
via the company’s process for communicating incidents. The independent investment agent’s
company must report the fact to the Compliance department of BNY Mellon, at
[email protected].
Inside information
The employee may have knowledge of the company’s business or hold confidential information
about the business of existing clients, prospective clients or former clients, suppliers and
employees. The employee must presume that all the information of this type is confidential and
privileged, and must hold it in utmost secrecy. Confidential information includes all the information
that is not available to the public that may be useful to competitors, or which disclosure may harm
the company or its clients.
The use of such information for personal gain or its transmission to any person outside the
company not explicitly authorized to receive it is never appropriate. Other employees who do not
need such information for work are not entitled to use them. Every employee is expected to
protect all information of this type adequately and failure is not tolerated.
If the employee is not sure whether he is in possession of inside information, he should consider
it as such.
The examples below depict inside information.
All relevant, non-public information pertaining to any company, whose stock and securities are
traded in the stock exchange. Information is considered relevant if an investor considers it
important when deciding to buy or sell securities of the company, or if such information may
potentially influence the market value of such securities.
If the employee holds relevant, private information about any company, he can neither trade
securities in such company for himself, nor for others, including clients.
Business plans, client listings (existing and prospective), marketing strategies and any method of
conducting business. Examples include product development plans, analytic models or methods,
computer programs, source codes, databases and documents belonging to them.
It also includes commercial contracts, invoices, statements of work, investment requirements or
proposal and any other similar document. Any information relevant to the financial information of
a client or supplier (including internal evaluations of such information), or credit history or
opinions. The employee must presume that all information related to client transactions, nonpublic portfolio positions and research reports is privileged.
Policies and procedures elaborated by the Company, and similar work material are proprietary.
The same is true for reports and notices issued by internal auditors, external regulators or
controllers, consultants and any agent or third-party examiner.
6. Use of computers, systems and corporate information
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Employees have access to computers, systems and corporate information in order to work. This
access means that they also have the obligation to use such systems responsibly and to protect
such information and systems.
Electronic systems include but are not limited to:

Personal computers (including email and instant messages) and computer networks;

Telephones, mobile phones, voice mail, pagers and facsimile;

Other communication devices such as PDAs (Blackberry, Palm etc.)
Confidential or highly-relevant data must never be sent on the Internet or telephone systems
without having such information protected.
Employees must not expect any privacy when using such systems, becasue access to them was
given only to perform legitimate company business and they are expected to use them
professionally and responsibly. The company reserves the right to intercept, monitor and register
your communication via such systems, in keeping with the law.
Employees are expected to protect the safety of such systems, complying with the adequate
access and use rules (such as keeping personal passwords).
V. OWNERSHIP
This Policy is property of the Compliance Team at BNY Mellon.
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ATTACHMENT I
STATEMENT OF COMMITMENT TO THE CODE OF CONDUCT
<name of company of independent investment agents>
In accordance with the established rules, each employee is required to acknowledge in writing to
have received, read and understood the Code of Conduct.
The Code of Conduct contains the guidelines of personal and professional conduct that all employees
must comply with, pursuant to the highest legal, ethical and moral integrity standards. This way, you
must inform that you understand and comply with the company’s policy, signing this statement and
handing it to the majority owners of the independent investment agents’ company or to a person duly
appointed for it. The statement is copied below:
By this private instrument I,_________________________________________, CPF taxpayer
registration number ___________________, declare to have read and understood all the guidelines
set in the Code of Conduct of <name of Independent Investment Agents’ company>, dated January
2012.
In addition, I certify that I am aware that I must report promptly to the majority owners of the
independent investment agents’ company or to a person duly appointed by them any breaches of the
company’s Code of Conduct.
This statament is made and concluded through my signature below.
Date: ____/_____/______
_______________________________________
Employee’s Signature
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2.
Anti-Money Laundering and Know Your Customer
Policies for Independent Investment Tied Agents
January 2012
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Chapter 2 Contents
I. Introduction………………………………………………………………..……………………………………….…….....…… page 13
II. Objectives …..………….…………………………………………………………………….page 13
III. Applicability ……..………………………………....…………..……………………..…. page 13
IV. Brazilian Laws, Regulation and Guidelines ……………………………..………… page 13
V. AML Structure………………………………...……………..…………………………… page 13
VI. Suspicious Activities Reporting ………………..………………………………..…… page 13
VII. Record Keeping …………………………….…………………………………..……… page 14
VII.a. Identification and Verification of Records ……………………………..……page 14
VII.b. Transactions Records …………………………..….……………………..…… page 14
VII.c.Training Records …………………….………………..…………………..…….. page 14
VIII. Ownership ………………………………….………………………………………….. page 14
Attachment I —Brazilian Anti-money laundering legislation ……………….…….. ..page 15
Attachment II — Obligatons & Offences under Brazilian law…………………. …….page 20
Key Comment
Who should read this?
This Policy explains the legal, regulatory and corporate
AML/KYC requirements to which the independent
investment agents tied to BNY Mellon must comply with.
All independent investment agents
(“independent agents”) pursuant to
Regulatory Directive CVM 497 tied to
BNY Mellon
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I.
INTRODUCTION
In accordance to the regulatory requirements regarding Anti-Money Laundering (“AML”), the independent
agents must fully observe the guidelines of this Policy, since they are the distribution channel of BNY
Mellon.
II.
OBJECTIVES
This Policy sets the guidelines of AML for the distribution of shares of investment funds, in line with the
local legal and regulatory requirements.
The Policy was issued to avoid BNY Mellon and its agents from being used as a vehicle for illicit activities,
and therefore systems and controls are required to help prevent the use of the offered products and
services in Financial Crimes, in accordance with the best practices of the business.
III.
APPLICABILITY
This Policy applies to all independent investment agents tied to BNY Mellon.
IV.
BRAZILIAN LAWS, REGULATION and GUIDELINES
The Brazilian Anti-Money Laundering legislation is contained in several Acts subsequent to Law no. 9,613
of 03/03/1998 (Money Laundering Act) that relates mainly to laundering or hiding of assets, rights and
values, and the prevention of using the financial system for illegal acts under this Law.
We are obliged to comply with all relevant decrees, regulations, circular letters and instructions – see
Appendix II for a full list.
Penalties for non compliance include a prison sentence, fines, dismissal from employment, temporary
disqualifications by the regulator and/or removal of the firm’s license to operate. See Appendix II for full
details of obligations and offences under the law.
V.
AML STRUCTURE
The independent agents must keep a minimum structure to include the following procedures:

AML Manuals and/or Policies containing the minimum information as required by the Circular BACEN
3,461/09;

Know Your Customer procedures that establish the criteria for client approval and periodic review, in
accordance with the current AML legislation;

Site Visit Report
Such Manuals, Policies and Procedures must be formalized and made available to BNY Mellon, in order
to be analyzed and approved whenever requested.
VI.
SUSPICIOUS ACTIVITIES REPORTING
In accordance with the AML regulation, if any suspicious activity is identified, the independent agent must
inform the authorities, within 24 hours from confirmation, without however informing the related client that
such information is being disclosed.
In these cases, as per mentioned laws and regulation, due measures must be taken as determined by
the authorities, and BNY Mellon must be notified immediately at [email protected].
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VII.
RECORD KEEPING
The independent agent must keep the records regarding AML, as estated below.
Records that are kept in electronic or paper format must be made promptly available (access to records
must be provided no later than five business days).
The fact that BNY Mellon maintains clients’ identification and transaction records does not
exempt the independent agent from such maintenance.
a.
IDENTIFICATION AND VERIFICATION OF RECORDS
The independent agent must keep records of the identification and verification documents that
were obtained in the beginning, during and at least 5 (five) years from the 1st (first) day of the
year following the termination of the relationship with the client.
In addition to it, the records of visits to, approval and rejection of clients, along with other
documents issued by the independent agent, must be retained for a period similar to that
mentioned above, while this deadline may be extended indefinitely if there is an investigation,
formally informed by the authorities to the person or institution.
b.
TRANSACTIONS RECORDS
In addition to the identification and verification records, the independent agent is obliged to
maintain the records of all transactions made on behalf of its clients. Such records must also be
maintained for not less than 5 (five) years from the termination of the relationship with the client.
c.
TRAINING RECORDS
All training provided to employees and partners of independent agents must be duly registered
and maintained for at least five years from termination of relationship with them.
VIII.
OWNERSHIP
This Policy is onwed by BNY Mellon Compliance Team.
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APPENDIX I - BRAZILIAN AML LEGISLATION
BRAZILIAN FINANCIAL SECTOR AUTHORITIES
a) Council for Financial Activities Control (COAF)
COAF was created in 1998 by Law 9,613 of March 3, 1998, under the jurisdiction of the Ministry of
Finance, for the purpose of regulating, applying administrative sanctions, receiving pertinent information,
examining and identifying suspicious occurrences of illicit activities related to money laundering.
COAF has been also responsible for coordinating the Brazilian participation in several international
organizations, such as Financial Action Task Force (“FATF” or GAFI), Financial Action Task Force of
1
South America against Money Laundering (“GAFISUD”) , Egmont Group, and Inter-American Drug Abuse
2
Control Commission (CICAD/OAS).
Through COAF, Brazil has become member of FATF, GAFISUD and the Egmont Group, being
recognized as a country that works effectively to struggle those criminal activities.
b) Brazilian Central Bank
The Central Bank, created by Law 4,595 of December 31, 1964, is a federal institution that is part of the
National Financial System.
The Central Bank has established the Department to Combat Financial Crimes (“DECIF”) to (i) implement
anti-money laundering policies, (ii) oversight financial institutions under its supervision in order to ensure
compliance with suspicious transaction reporting, (iii) provide suspicious activity information to the COAF.
c) Every financial institution must designate a director to be responsible for Money Laundering
before
the
Central
Bank.
1
GAFISUD is a regional inter-governmental organization which getters the countries of South America in order to combat moneylaundering and terrorism financing by means of the continuous improvement of national policies and the strengthening of different
methods of co-operation between Member States.
2
The Inter-American Drug Abuse Control Commission (CICAD) was established by the General Assembly of the Organization of
American States (OAS) in 1986 as the Western Hemisphere’s policy forum on all aspects of the drug problem. Each member
government appoints a high-ranking
representative to the Commission, which meets twice a year.
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Securities and Exchange Commission (CVM)
CVM is a federal agency linked to the Ministry of Finance and was created by Law 6,385 of December 7,
1976.CVM is empowered to discipline, rule, and supervise the activities of the financial and capital
market.
Its regulatory activities cover all subjects linked to the Brazilian securities market, including those of
enforcing anti-money laundering measures.
BRAZILIAN ANTI-MONEY LAUNDERING LEGISLATION
a) Anti-Money Laundering Laws
Law N° 9,613 of March 3, 1998 (“Law 9613”) among other provisions, classifies money laundering
activities as crimes and sets forth anti-money laundering rules. According to Law 9613, money laundering
is defined as dissimulation and concealment of the origin, location, nature, movement or ownership of
goods, rights, assets or amounts arising, directly or indirectly, from crimes against the National Financial
System or the public administration or against a foreign country's public administration, terrorist activities
and the financing of terrorist activities, drug dealing, weapons' smuggling or organized criminal activities.
In accordance with Law 9,613, financial institutions must:
i.
identify its clients and keep a current record, in accordance with the rules and instructions
issued by the relevantauthorities, including the Central Bank and CVM;
ii.
keep record of all the transactions in national or foreign currency, with securities, credit
instruments, metals, or any other asset that may be converted into cash, that exceeds the
3
limitation set forth by the relevant authority and pursuant to instructions of such authority;
iii.
comply, within the period established by the relevant judicial body, with the requirements set
forth by COAF;
iv.
pay special attention to the transactions that, under the regulations issued by the relevant
authorities, may be an evidence of the crimes described in Law 9613 or be related thereto;
and
v.
inform the relevant authorities, within 24 hours, without telling its client that such information
is being disclosed, of thefollowing:

all the transactions described in item (ii) above that exceed the limitation set forth, for
such purpose, by the same authority and in the form and conditions established by it,
together with the identification provided in item (i) above; and

the offer or the carrying out of any of the transactions described in item (iv) above.
The relevant authority mentioned above (which, as the case may be, is the Central Bank or CVM) or COAF
may further regulate the record keeping requirements for all entities and/or institutions under its supervision.
The transactions that, under the regulations issued by such authorities, may be an evidence of the crimes
provided for in Law 9613 or be related thereto, should be reported to the relevant authority, or COAF, as the
case may be.
The good faith communication made by the entities subject to Law 9613 is enough to avoid the imposition of
civil and administrative liabilities.
Law 9.613 imposes administrative penalties ranging from (i) a formal warning, to (ii) fines that range from
one percent to twice the amount of the relevant transaction or up to 200% of the profit obtained (or that
would have been obtained) with the transaction or R$ 200,000.00, to (iii) the cancellation of the relevant
administrator's ability to act as an officer or administrator of one of the entities subject to Law 9613 for up to
ten years, to (iv) the cancellation of the authorization of the relevant entity to conduct business.
3
Such records and files shall be maintained for at least 5 (years) from the closing of the bank account or transaction, or longer, based on the decision
of the competent authority.
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Law 9.613 also translates into Brazilian legislation a number of international initiatives as Vienna
Convention, Palermo Convention, UN Convention against the Financing of Terrorism, UN Convention
4
against Corruption, the Financial Action Task Force4 (“FATF”) 40+9 Recommendations .
Law N° 7,492 of June 16, 1986 was published in order to prevent crimes against National Financial
System. It establishes sanctions to punish the financial institutions, its directors or customers in case of
participation in any crimes listed in this Law.
Law N° 7,560 of December 19, 1986 (i) creates the National Anti-Drug Fund (“FUNAD”), (ii) establishes
the seizure of the assets resulted from illicit drug trafficking or related activities, and (iii) defines that the
seized assets shall be transferred to FUNAD’s funds.
Law N° 8,429 of June 2, 1992 was published in order to punish Government employees for illicit
enrichment and corruption. According to this Law, any Government employee must be sanctioned if
receives a benefit or any other illegal advantage. The assets, rights and valuables resulting from any of
the crimes mentioned above will be confiscated to the benefit of the Government.
Law N° 9,034 of May 3, 1995 sets forth several investigative methods that can be used by judges for the
prevention and suppression of criminal organisations activities and allows the access to private
information, such as banking data, in criminal investigations.
Complementary Law N° 105 of January 10, 2001 establishes procedures regarding financial institutions´
transactions secrecy and sets out other measures.
Law N°10,701 of July 9, 2003 (“Law 10701”) (i) sets forth terrorist financing and crimes against foreign
governments as money laundering crime, (ii) requires the Central Bank to create and maintain a registry
of information of all bank account holders, and (iii) enables COAF to request financial information from
any Government entity regarding any subject suspected of involvement in criminal activity
b)
Regulation imposed by the Central Bank
As a regulatory authority, the Central Bank has, through the issuance of Circular N°3,461 ("Circular
3461") and of Circular Letter N°2,826 ("Circular Letter 2826"), both as amended from time to time, listed
the transactions that, due to their characteristics (as to the parties involved, amounts, manner in which
they are carried out, or instruments used), or the absence of economic or legal basis may be an evidence
of the crimes provided for in Law 9613 or be related thereto. In addition, Circular 3,461 and Circular Letter
2,826 established the procedures to be adopted by financial institutions as of March 1, 1999 to prevent
the activities related to the crimes provided for in Law 9613.
Circular Letter 2,826 of December 4, 1998 establishes a list of transactions that must be reported to the
Central Bank. Such list is divided into (i) certain transactions in cash or travelers' checks, (ii) certain
events related to the maintenance of bank accounts, (iii) certain events related to international activities,
and (iv) certain events related to the employees of the financial institutions and their respective
representatives.
Circular 3,461 of July 24, 2009 also provides that a financial institution is required to keep record of all
financial services and transactions carried out with its customers or on their behalf, including: (a) monthly
transactions exceeding R$ 10 thousand in the aggregate; (b) suspected transactions; (c) cash transfers
4
The Financial Action Task Force, created by the G7 in Paris in 1989, sets the international guidelines to combat money laundering and terrorism,
checks whether countries implement the measures pursuant to their standards and identifies and studies methods and trends in money laundering and
terrorism. FATF issued the 40 Recommendations on Money Laundering and the 9 Special Recommendations of FATF on terrorism financing, and one
of its goals is to increase the participation of countries worldwide. Brazil is a member of the FATF.
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above R$ 1 thousand by means of checks, wire transfers, money orders, and the like; (d) suspected
issuance or recharge of stored value cards (smart cards); among others.
Besides, specific records must be kept for transactions (a) above R$ 100 thousand in cash; (b) signaling
a suspected deal; or (c) involving checks or wire transfers above R$100 thousand.
In addition to it, the Circular establishes the procedures that a financial institution must follow to monitor
financial transactions of politically exposed persons (PEPs).
Resolution 2,025 provides that for the opening of a bank account, the bank must obtain and keep an
updated record file of its individual clients, including personal information, such as: complete name, sex,
birth date, place of birth, nationality, marital status, name of spouse, occupation, address, telephone
number, number of enrollment in the taxpayer's registry, number of the identity card, and information
regarding such client's income and assets. The following information is required from corporate clients:
corporate name, number of enrollment in the Commercial Registry, number of enrollment in the
taxpayer's registry, address, telephone number, main activity or business, information about the financial
status of the company, as well as the qualification of its controlling shareholders, administrators and
attorneys-in-fact, and the corporate name of affiliate companies. The record must also include the
sources which the bank consulted with to verify the information provided by the client.
The relevant financial institution is required to receive and keep a copy of the documentation evidencing
the information provided by the client and to confirm that the copies provided are true and that the
information provided is correct. The manager of the account is personally responsible for such
verification.
Circular Letter N°3,342 of October 2, 2008 (“Circular Letter 3342”) determines the reporting procedures
that financial institutions must follow in regards to transactions and proposed transactions linked to
terrorism and terrorist financing.
According to the Circular Letter 3,342, transactions conducted or services rendered in connection with
individuals or entities described below shall be promptly reported to the Central Bank:

Osama bin Laden, members of the Al-Qaeda organization, Taliban members, or associated
individuals, groups, companies or entities,

The former Government of Iraq or its state bodies, corporations, or agencies located outside Iraq,
as well as funds or

other financial assets or economic resources that have been removed from Iraq, or acquired by
Saddam Hussein or other senior officials of the former Iraq regime and their immediate family
members, including entities owned or controlled, directly or indirectly, by them or by persons
acting on their behalf or at their direction,

Persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the terrorist
acts; entities owned or controlled directly or indirectly by such persons; and persons or entities
acting on behalf of such persons and entities
Circular Letter 3,430 of February 11, 2010 (“Circular Letter 3430) clarifies aspects imposed by Circular
3.461 above mentioned.
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c)
Regulation imposed by the CVM
In addition, the CVM, as a regulatory authority, has, through the issuance of Instruction N° 301
("Instruction 301"), further regulated the "know your customer" rules and the record keeping requirements
applicable to the entities overseen by it.
According to Instruction 301, the entities subject to the anti-money laundering rules should pay special
attention to the following transactions:

transactions involving amounts that are incompatible with the assets, the economical activity or
occupation and the presumed financial capacity of the parties;

frequent transactions between the same parties in which there are gains or losses always to the
same party;

transactions that evidence significant changes in the volume and/or frequency of the business of
any party;

transactions that due to their characteristics evidence the intention to deceive the identification of
the actual parties

involved and/or respective beneficiaries;

the carrying out of transactions that due to their characteristics evidence that they have been
entered on behalf and/or

for the benefit of third parties; and

transactions that evidence unexpected and unjustified changes in the transactions usually carried
out by the parties.
Moreover, Instruction 301 provides that every transaction involving securities in amounts over
R$10,000.00 should be registered, as well as all transactions carried out with or by the same person,
conglomerate or group, within a single month, that exceed, individually or in the aggregate, such limit for
each entity or institution.
In accordance with Instruction 301, financial institutions should keep an updated record file of their
individual clients, including personal information, such as: complete name, sex, birth date, place of birth,
nationality, marital status, name of spouse, occupation, address, telephone number, number of
enrollment in the taxpayer's registry, number of the identity card, and information regarding such client's
income and assets. The following information is required from corporate clients: corporate name, number
of enrollment in the Commercial Registry, number of enrollment in the taxpayer's registry, address,
telephone number, main activity or business, information about the financial status of the company, as
well as the qualification of its controlling shareholders, administrators and attorneys-in-fact, and the
corporate name of affiliate companies.
In addition, Instruction 301 provides that all entities subject to its rules should create their own internal
control procedures and mechanisms for purposes of complying with the applicable "know-your-customer"
and anti-money laundering rules.
Although Instruction 301 does not require that financial institutions keeps a copy of documents or
evidence of the information provided by the client, CVM Instruction N° 387 of April 28, 2003 requires that
the relevant entity obtains copies of the enrollment in the taxpayer's registry, identity card, and evidence
of the current address of the individual (or By-Laws, in case of a corporate client).
Instruction N° 463 of January 8, 2008, that amended the Instruction 301, establishes (i) the procedures to
be taken by the financial institutions in connection with the Politically Exposed Persons (PEPs) and the
transactions carried out by these persons, (ii) that financial institutions and other entities subject to the
Anti-Money Laundering Law must “adopt control measures, in accordance with procedures previously
and expressly established, to verify the information contained in their customer records, so as to avoid the
account to be used by third parties and to identify the final beneficial owners of the transactions”, and (iii)
that the client’s information must be updated at least every 24 months.
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d)
Regulation imposed by COAF
Resolution Nº 015 of March 28, 2007 establishes the procedures to be followed by natural persons and
entities regulated by COAF, in accordance with Law 9613, concerning transactions and proposed
transactions linked to terrorism and terrorist financing.
Resolution Nº 016 of March 28, 2007 establishes the procedures to be followed by natural persons and
entities regulated by COAF, in accordance with Law 9613, concerning transactions and proposed
transactions linked to politically exposed persons.
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APPENDIX II - OBLIGATIONS & OFFENCES UNDER BRAZILIAN LAW
The independent agent, as well as each of its employees, must ensure that the money launderers are not
assisted in any way. These obligations can be summarised under the following key offences: :
i.
Assisting to retain
If you know or suspect that a customer is involved in or is benefiting from criminal conduct, you must not
enter into arrangement with this client which would enable him to retain or control the proceeds of this
criminal conduct, or which would enable these proceeds to be used to secure funds for him, or to be used
for his benefit to acquire property by way of investment. You must not therefore permit a person, whom
you know or suspect to be involved in money laundering, to enter into a relationship or to conduct any
transactions for the purposes of criminal process of laundering. If you do so, you may be liable to both a
prison term of 3 to 10 years and a fine.
ii.
Acquisition, Possession or Use
If you know that money coming into an account is the proceeds of a criminal conduct, it is an offence to
acquire, possess or use these proceeds on behalf of the independent agent. Committing this offence
makes you liable to 3 to 10 years in prison and a fine.
iii.
Concealing or Transferring
If you know or have reasonable grounds for suspecting that a certain client’s money is the proceeds of
criminal conduct, you must not conceal, disguise, convert or transfer this money to help the client avoid
prosecution or evade a confiscation. Essentially, this means that if you know or suspect that a client is
involved in Money Laundering, then you should not undertake any transactions on the account without
clearance from a director responsible for implementing and following the fulfillment of the measures
established by the law. If you do so, you could be liable for a prison sentence of 3 to 10 years and a fine.
iv.
Failure to Disclose
It is an offence to fail to report knowledge or suspicion of drug money laundering or of providing financial
assistance for terrorism. Under the legislation, you are also expected to report knowledge or suspicion of
the laundering of criminal proceeds derived from any serious crime. Failing to disclose could result in
imprisonment of 3 to 10 years and a fine.
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v.
Tipping Off
If you know or suspect that a disclosure of possible money laundering has been made, or that an
investigation into money laundering is imminent or underway, you must not disclose to any person,
especially the client(s) involved, information or any other matter that is likely to prejudice any such
investigation. To do so would cause you to commit the offence of “tipping off” and you would be liable to a
prison term of 3 to 10 years and a fine.
It is likely that an investment agent will rarely have knowledge that a client is involved in criminal conduct
and that therefore the money that is invested in their portfolio is the proceeds of this. It is more likely that
an investment agent will suspect, from the client’s behavior or from the pattern of transactions in the
portfolio, that the client is involved in Money Laundering. A possible defence to the above-mentioned
offences therefore is the disclosure of any knowledge or suspicion that the investiment agent may
identify, as established by AML Laws, with immediate notification to BNY Mellon.
3. Personal Investments Policy for Independent Investments
Tied Agents
January 2012
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Chapter 3 Contents
I.
Introduction .................................................................................................. page 23
II.
Goal ............................................................................................................... page 23
III.
Applicability ................................................................................................. page 23
IV.
Rules ............................................................................................................. page 23
V.
Ownership .................................................................................................... page 24
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I.
Commentary
Who should read this manual?
This Policy presents the procedures for and
limitations on personal investments that Independent
Investment Agents tied to BNY Mellon must comply
with.
All independent investment agents
(“independent agents”) pursuant to
Regulatory Directive CVM 497 tied to
BNY Mellon
INTRODUCTION
The adoption of a Personal Investments Policy is considered fundamental to the performance of the
activity of Independent Investment Agent tied to BNY Mellon.
II. GOAL
This policy aims to help the partners and employees of the Independent Investment Agents’ company
identify situations involving their personal investments that may constitute conflict of interest in the
distribution of shares of investment funds or investment clubs and also in the distribution of any other
security, even if it is not the object of the link set forth with BNY Mellon.
III. APPLICABILITY
The Policy applies to all partners and employees at a company of Independent Investment Agents
(“employees”).
IV. RULES
General Restrictions
•
Excessive Trading: Employees are discouraged from trading excessively or performing
trades that may interfere with their work activities.
•
Speculative Operations: Employees are discouraged from taking short-term positions or
speculative positions, short selling options, trading excessively or performing trades that may
interfere with their work activities.
•
Front Running: Employees are prohibited from participating in “front running,” which amounts
to the purchase or sale of marketable securities for themselves or for company accounts,
based on their knowledge of the company’s positions or plans of some of your clients.
•
Scalping: Employees cannot engage in “scalping,” which is the purchase or sale of
marketable securities for clients with the purpose of affecting the price of assets in a position
held or to be acquired by an employee.
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•
Spread Betting: Employees cannot engage in “spread betting” (betting on asset prices to
reflect in market movement) or similar activities such as a mechanism to avoid restrictions on
personal investments in assets covered by this Policy.
•
The employees are prohibited from participating in IPO (Initial Public Offerings) if performing
any service rendered by the Independent Investment Agents that has any conflict of interest,
or potential conflict of interest, even if the service provided is not due to the connection to
BNY Mellon.
•
Employees must not trade in securities, including shares of investment funds distributed by
the company of independent agents for which they work, while possessing inside information,
neither can they relay such information to third parties, except if the employee needs the
information for the normal course of activities.
General Rules
•
Prior approval: The employees must not trade, directly or indirectly, shares of investment
funds or investment clubs for which the company of independent agents performs
distribution, without prior approval in writing from the majority owners of the company of
independent investment agents or a person duly appointed by them.
The employee will be formally notified about the transaction’s approval or otherwise.
•
Permanence period (60 days): The employees cannot buy/sell or sell/buy share of a fund
distributed by the company of independent agents for which she works or is a partner of in
less than 60 days, unless it is an exception duly approved by the majority owners of the
company of independent investment agents or a person duly appointed by them. Indexed
funds, regardless of being distributed by the independent agent, are exempt from the
permanence period.
•
Interest in Companies: Employees are prohibited from participating in the ownership structure
of another company without written prior approval from the majority owners of the company of
independent investment agents or person duly appointed by them.
General Concepts
Indirect ownership
An employee has indirect ownership of accounts of family members with whom he lives. This
includes spouse, children, and any other family members living in the same residence. In
addition, it is considered indirect ownership of a security whoever has the opportunity to directly
or indirectly, at any time, share the profit from the operations with such assets.
Exempted Marketable Securities
Investment clubs and funds not distributed by the independent agent and the indexed funds, even
those distributed by the Independent Investment Agents, are exempt from this policy
V. OWNERSHIP
This Policy is property of the Compliance Team at BNY Mellon.
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4. Gifts and Entertainment Policy for
Independent Investment Tied Agents
January 2012
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Chapter 4 Contents
I.
Introduction ................................................................................................... page 27
II.
Goal ............................................................................................................. page 27
III.
Applicability ................................................................................................. page 27
IV.
Rules ............................................................................................................. page 27
V.
Ownership .................................................................................................... page 28
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Commentar
I.
Commentary
Who should read this manual?
This Policy presents the procedures for and
limitations on receiving/offering presents and
entertainment that independent investment agents
tied to BNY Mellon must comply with.
All independent investment agents
(“independent agents”) pursuant to
Regulatory Directive CVM 497 tied to
BNY Mellon
INTRODUCTION
This policy aims to help the partners and employees of the company of Independent Investment Agents
identify situations involving gifts, entertainment, payments or other expenses that may constitute or
resemble conflict of interest.
II. GOAL
This policy aims to help the partners and employees of the company of Independent Investment Agents
identify situations involving receipt/offering of gifts and entertainment that may constitute conflict of
interest in the distribution of investment clubs and funds.
III. APPLICABILITY
The Policy applies to all partners and employees at a company of independent investment agents
(“employees”).
IV. RULES
•
Gifts and/or entertainment must be defined in a broader sense to include money, securities,
business opportunities, goods, services, discounts on goods and services, tickets to concerts,
soccer matches and more, meals, drinks and any similar items.
•
Gifts and/or entertainment must be accepted/offered in good faith.
The following items are NOT permitted, regardless of price:
•
Something in exchange for the present or entertainment;
•
Accepting or giving money or equivalent (checks, voucher convertible in cash, securities or
loans);
•
Accepting or giving a gift or entertainment that breaches any law or regulation or that may tarnish
the reputation of the Independent Investment Agent;
•
Accepting or giving anything that may be interpreted as graft or undue influence;
•
Accepting or giving gift or entertainment that violates the conduct standards of your occupation,
especially if you are officially licensed or certified;
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•
Using your position, in any way, to obtain something valuable from clients or suppliers, current or
potential ones, or from people to whom you refer business;
•
Providing excessively sumptuous or frequent entertainment to clients or suppliers, current or
potential ones;
•
Participating in any entertainment that is deemed inappropriate, containing sexual content or
inconsistent with ethical business practices;
•
Accepting gifts or entertainment from, or giving gifts or entertainment to, any supplier during the
process of selection or bidding, whether you are the primary relationship manager, involved
directly in the negotiation for the acquisition of products or hiring of services or otherwise;
•
Participating in any action that leads another person to breach the standards of her own company
in regards to presents and entertainment; and
•
Giving gift or entertainment to existing or potential client or supplier that is not adequately
registered on the company’s records.
The following items are generally acceptable, however any issues must be forwarded to the
majority owners of the company of independent investment agents or to a person duly
appointed by them:
•
Gifts given based on relationships that are obviously familiar or long-dated, personal relations
(such as those between you and your parents, children, spouse or childhood friends) in which
there are clear circumstances that such relationships are the reason for the gift, and not the
commercial relationship;
•
Gifts with nominal value up to R$200.00, but only if such gift is given in relation to an event or
occasion commonly observed or recognized (e.g. event such as a wedding, Christmas,
professional event such as a conference or cultural or sports event).
•
Promotional items with nominal value up to R$200.00 such as pens, calendars, paperweights
etc.;
•
Items with little intrinsic value such as plate, certificates and trophies in recognition of service and
achievements in civic, charity, educational or religious organizations;
•
Discounts on goods or services that do not exceed those available to the general public or to you
as an employee of the Company; and
•
Loans by other financial institutions, as long as these are borrowed on standard terms and for
lawful purposes.
Gifts and/or Entertainment received/offered must be duly controlled and pre-approved by the majority
owners of the company of independent investment agents or a person duly appointed thereby.
If the employee receives a gift that does not meet these requirements, they should return such gift
and/or Entertainment immediately to the donor.
General Concepts
Entertainment can be exemplified by the following items: lodging, meals, transport and more.
Gift x Entertainment
In order for an event (e.g.: cultural or sports) to be considered entertainment, the client, supplier or seller
must be present with the employee.
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V. OWNERSHIP
This Policy is property of the Compliance Team at BNY Mellon.
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