Regulation for the Prevention and Detection of Terrorism Financing

This regulation has, among other purposes, that of complying with what is established in the Law Against the Financing of Terrorism, with respect to establishing the regime, obligations, policies, control measures, surveillance, precautionary measures, the procedures to identify and freeze the assets of terrorists and other duties, concerning the obligations imposed by the Law on obligated subjects. The regulation further sets forth the requirements for the reporting of transactions, maintenance of records, the proper identification of clients, and the form and periodicity in which obligated subjects must report to the Financial Information Unit suspicious transactions, as well as any other information. This regulation is of mandatory application for all obligated subjects and for other natural or legal persons that may be related by preventive or punitive aspects of the Law Against the Financing of Terrorism. CHAPTER II DEFINITIONS

For the purposes of this regulation, the following shall be understood as: 1. DESIGNATED NON-FINANCIAL ACTIVITIES AND PROFESSIONS (DNFAP's). a) Natural and legal persons that appear recorded in the numerals 1 to 14 of reformed article 37 of the Law Against the Crime of Money Laundering or that carry out activities enumerated as indicated. b) Independent accountants. c) Lawyers and other professionals in the legal field when they prepare or carry out operations for their clients. d) Any other type of activity or profession that are related to those mentioned in this definition and in article 43 of the Law Against the Crime of Money Laundering and its reforms. 2. ASSETS OR FUNDS. Property of any kind, corporeal or incorporeal, tangible or intangible, moveable or immoveable, regardless of whether they have been obtained legally or illegally. Likewise, legal documents or instruments, whatever their form, including electronic or digital form, that certify ownership or other rights over such property, including among these, without prejudice to the existence of others, the following: bank credits, traveler's checks, bank checks, money orders, shares, securities, bonds, bills of exchange, letters of credit, interest, dividends, other income or value generated by those assets. 3. TERRORIST ACTS. The following are considered terrorist acts: a) Those unlawful acts against crimes that appear foreseen and defined in the Treaties subscribed to and ratified by Honduras, related to terrorism, such as: Convention for the Suppression of Unlawful Seizure of Aircraft of 1970, Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971), Convention on the Prevention and Punishment of Crimes Against Internationally Protected Persons, including Diplomatic Agents (1973), International Convention Against the Taking of Hostages (1979), Convention on the Physical Protection of Nuclear Material (1980), Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988), Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation (1988), Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf (1988), the International Convention for the Suppression of Terrorist Bombings (1997), and the International Convention for the Suppression of the Financing of Terrorism (1999). b) Any other act that has the purpose of or is intended to cause death or serious bodily injury to a civilian citizen, or to any other person not directly participating in hostilities in a situation of armed conflict, when the purpose of such act or event, by its nature or context, is to intimidate the population, or to compel a government or an international organization to perform or refrain from performing any act. 4. BENEFICIAL OWNER refers to the natural person or persons who ultimately owns or controls the client and/or the person in whose name a transaction is being conducted. It also incorporates those persons who exercise final effective control over a legal person or legal arrangement. 5. CLIENTS. All natural or legal persons with whom a contractual relationship of a financial, economic or commercial nature is established on an occasional or permanent basis. In that sense, a client is one who conducts business once, occasionally or habitually with obligated subjects. a. Permanent Clients: those who establish a commercial relationship with a permanent character, understanding as such, natural or legal persons who contract or adhere to the fund transfer service with a permanent character with obligated subjects. b. Occasional Clients: those who conduct business once or occasionally with obligated subjects. 6. SEIZURE OR CONFISCATION. The deprivation or loss with definitive character of Assets or Funds to which the Law refers, ordered by the competent jurisdictional body, unless they were property of a third party not responsible for the crime. 7. CNBS: The National Banking and Insurance Commission shall be understood. 8. DONOR: all natural or legal persons who, in a casual, occasional or permanent manner, make a donation or contribution to the Obligated Subjects comprised in this regulation and in chapter XIII of the Law. 9. INSTITUTIONS SUPERVISED BY THE COMMISSION: Those institutions over which the National Banking and Insurance Commission (CNBS) exercises supervision, surveillance and control and that appear described in Article 6 of the Law of said Commission and that are also indicated in article 2.13 of the Law Against the Crime of Money Laundering contained in decree 45-2002 and its reforms. 10. INSTRUMENTS FOR THE COMMISSION OF CRIMES. Are the assets, funds, property, implements, means, used or intended to be used or allocated in any form, in whole or in part in terrorism activities. 11. LAW. Law Against the Financing of Terrorism. 12. OABI. Office for the Administration of Seized Assets. 13. TERRORIST ORGANIZATIONS. Constitute any group or organization of terrorists that:

• a)

  Commits or attempts to commit terrorist acts by any means, direct or indirect, lawful or deliberately;

• b)

  That participates in terrorist acts;

• c)

  Organizes the commission of terrorist acts or orders others to commit them;

• d)

  Finances terrorist acts or activities. 14. ORIGINATOR. The person who initiates the transfer, and who may or may not be an account holder. The originator and the beneficiary may be the same person. 15. PROCEEDS. Any asset or fund derived from or obtained directly or indirectly from unlawful activities, from crimes established in the Penal Code or whose origin cannot be justified economically or legally. 16. PERSON. Natural or legal entities are understood as such, capable of acquiring rights and/or contracting obligations, in accordance with current legislation. 17. RESOLUTION 1267(1999): Resolution S/RES/1267(1999) shall be understood and its successor resolutions, as when it was issued, it had a one-year time limit. The United Nations Security Council has issued a series of resolutions to extend and perfect the provisions of RESOLUTION 1267(1999). By successor resolutions shall be understood those resolutions that extend and are directly related to the original resolution S/RES/1267(1999). Until February 2004, these resolutions included S/RES/1333(2000), S/RES/1363(2001), S/RES/1390(2002), S/RES/1455(2003) and S/RES/1526(2004). 18. OBLIGATED SUBJECTS. Those natural or legal persons who have the obligation to report to the Financial Information Unit, and that are defined in article 2 numeral 1 of the Law, in articles 2 numeral 13 and 43 of the Law Against the Crime of Money Laundering. 19. NON-REPORTING SUBJECTS. Natural or legal persons who are NOT obligated to report to the UIF the transactions they conduct, but who shall provide information to it when required by this unit. 20. TRANSACTION. Business, contract, agreement or civil or commercial operation, carried out by any means. 21. FUND TRANSFERS. Any operation carried out in the name of a person designated as originator, whether natural or legal, by any means, including electronic means, for the purpose of making available a sum of money to a person designated as beneficiary, whether in the national territory or outside of it. 22. TRUE OWNER. The natural person who ultimately has control of a client, an account or the person in whose name a transaction is carried out or the person who exercises effective control over a legal person. 23. ATYPICAL OR SUSPICIOUS TRANSACTION. Those transactions carried out or not, which according to the uses and customs of the respective activity in question, prove to be complex, unusual, extraordinary, significant and do not follow all the patterns of habitual transactions; are carried out without evident economic or legal justification or that, being legal or evident, prove to be suspicious, as well as financial transactions that may constitute or be related to unlawful activities or that, being lawful, are considered that could be or would be destined for the Financing of Terrorism or terrorist acts. 24. INDIVIDUAL TERRORIST. Any natural person who:

  • a)

    Commits or attempts to commit Terrorist Acts by any means, direct or indirect, unlawfully and deliberately.

  • b)

    Participates in terrorist acts.

  • c)

    Organizes the commission of terrorist acts or orders others to commit these acts.

  • d)

    Contributes to the realization of terrorist acts by a group of persons acting with a common purpose; when that contribution is made intentionally and with the purpose of facilitating the terrorist act or with full knowledge of the group's intention to commit terrorist acts. 25. UIF. The Financial Information Unit. TITLE II GENERAL PROVISIONS CHAPTER III PREVENTION

In order to comply with the purpose of preventing operations of concealment, mobilization, the transfer of assets that are to be used or allocated for the sustenance or financing of terrorist acts, obligated subjects shall be subject to what is provided in the Law Against the Financing of Terrorism, as well as to this regulation and to the obligations established in chapters VII, IX, X, XI, XII, XIII and XIV of the Law Against the Crime of Money Laundering.

Obligated subjects must pay special attention to those suspicious transactions they detect, and further have the obligation to report such transactions to the UIF. Obligated subjects who fail to comply with what is provided in the Law and this Regulation shall be sanctioned in accordance with what is established in article 78 of the Law Against the Financing of Terrorism.

Obligated subjects, when they are legal persons, shall appoint through their Board of Directors or Councils of Administration, through the General Manager, a Compliance Officer with sufficient independence and autonomy at the Managerial level, in order to coordinate the functions and activities of compliance and monitoring related to the prevention and detection of Money Laundering and Financing of Terrorism. When the obligated subject is a natural person, this person shall perform the functions that the compliance officer must carry out. In cases where obligated subjects have appointed compliance officers in accordance with the Law Against the Crime of Money Laundering, these shall perform the functions established by the Law and this regulation.

Obligated subjects shall preserve, for a minimum period of five (5) years, information concerning each transaction carried out. This information shall be preserved from the moment the transaction was conducted and shall be at the disposal of the competent authorities. Preserving a magnetic copy, photostatic, photographic, microfilmic or any other means of reproduction thereof. CHAPTER IV DUTY TO REPORT OF OBLIGATED SUBJECTS

The following are obligated to report to the UIF, in accordance with what is established in the Law: 1. Persons who are mentioned in the Law Against the Crime of Money Laundering in articles 2, numeral 13, article 43 of said Law and persons described in article 6 of the law of the CNBS. 2. Designated Non-Financial Activities and Professions.

Without prejudice to other duties that the Law provides with respect to obligated subjects, these have the obligation to report immediately to the UIF, those suspected or non-suspected transactions where it is suspected that funds or assets are linked or related to, or are going to be used for terrorism, terrorist acts, or terrorist organizations or those that finance terrorism. Obligated subjects shall report suspicious transactions in a form that the UIF shall elaborate and that shall be provided for that purpose. TITLE III PROCEDURE FOR PRECAUTIONARY MEASURES CHAPTER V PROCEDURE FOR PRECAUTIONARY MEASURES IN GENERAL

With the purpose of making expedite the implementation of the Law, with respect to the procedure that has to do with precautionary measures of funds or assets, especially their safeguarding or freezing, in cases where the competent Jurisdictional body or the Public Prosecutor's Office have knowledge of any of the facts constituting the crime of Financing of Terrorism established in the Law; they shall immediately issue, without notice or prior hearings, precautionary or cautionary measures of freezing, or safeguarding or any other precautionary measure provided for in national legislation, on the identified assets of terrorists, of persons who finance terrorism or of terrorist organizations. For purposes of the preceding paragraph, the concept of immediately shall be understood as a period not greater than five (5) hours. If the precautionary or cautionary measures are issued by the Public Prosecutor's Office, it shall notify the competent Jurisdictional body within the following twenty-four (24) hours, explaining the reasons for what was determined. The competent Jurisdictional body, ex officio, shall validate or annul in whole or in part what was done. If the Jurisdictional body validates the action of the Public Prosecutor's Office, the measure shall remain in effect with respect to the natural or legal person where it was executed. Otherwise, it shall send an official communication to the place where the measure was executed to render it null and void. However, in no case shall the competent Jurisdictional body annul the action taken by the Public Prosecutor's Office where it issued precautionary measures in accordance with the lists of the United Nations Security Council.

When the Public Prosecutor's Office or the competent Jurisdictional body issues a precautionary measure in accordance with the Law, it shall notify it directly and immediately to the obligated subject, or through means of modern technology. The receipt by the obligated subject of notification of the precautionary measure or freezing, decreed by the Public Prosecutor's Office or the competent Jurisdictional body, shall validate as convalidation or part of the authority for the obligated subject, when the latter had issued it, a situation that shall end the temporary freezing action that may have been taken.

The UIF shall immediately communicate to obligated subjects the lists issued by the United Nations Security Council, so that they review without delay their records and indicate whether in their databases they locate funds or assets of the persons appearing on the list, an aspect that, if positive, they shall proceed in accordance with the Law. Furthermore, the aforementioned lists shall be available at the electronic address http://www.cnbs.gov.hn/ webuifindexnew.htm. Likewise, the UIF shall send a copy to the Public Prosecutor's Office of the list issued by the United Nations Security Council.

Obligated subjects, once they have received the list referred to in the preceding article, if they locate in their databases funds or assets of persons appearing on the list of the United Nations Security Council, shall proceed immediately to freeze them and shall in turn inform the UIF. This freezing shall last the time necessary for the Public Prosecutor's Office to act. In the event that obligated subjects do not find funds or assets of the listed persons, this does not exempt them from the obligation to provide information to the UIF within the period of seventy-two (72) hours.

The UIF, once it has received information from the obligated subject regarding the identified assets or funds and the temporary freezing it decreed in the event that it did occur, shall immediately communicate it to the Public Prosecutor's Office so that this or the Jurisdictional body at the request of the Public Prosecutor's Office, without need of prior notice to the persons involved and those provided, shall proceed to decree based on what is established in Chapter VII of the United Nations Charter, the precautionary or cautionary measure of freezing or safeguarding of the assets or funds of these persons or of terrorist organizations or entities that appear on the lists in accordance with or by virtue of S/RES/1267(1999) of the United Nations Security Council. The resolution in which the jurisdictional body or the Public Prosecutor's Office issues precautionary measures of freezing or safeguarding or any other measure shall be properly reasoned and shall define the terms, conditions and limits applicable to such measure. When the freezing measure, precautionary measure, safeguarding or other measure is issued by the Public Prosecutor's Office, this shall, within the period of twenty-four (24) hours following having decreed it, go before the Jurisdictional body for the exclusive purpose of validating it.

The UIF, without prejudice to the responsibility of informing the Public Prosecutor's Office, once it has received information from obligated subjects regarding identified assets or funds, shall immediately inform the United Nations Security Council.

The obligated subject that issues precautionary or cautionary measures of freezing, in accordance with the Law and this regulation, is exempt from criminal, civil, administrative or any other liability. Likewise, obligated subjects shall be exempt from criminal, civil and administrative liability, as well as the officials or employees of these, their directors, administrators, managers, and natural or legal persons not obligated to whom the UIF requires information, when they provide information required in accordance with the Law and this Regulation.

ASSETS AT THE DISPOSAL OF THE OABI. The assets or funds, products, instruments and gains, with respect to which a precautionary, protective or freezing measure has been imposed, as well as those that are seized or those that are found abandoned or in any other circumstance, shall be placed at the disposal of the OABI, for its administration, custody, safekeeping or destruction as the case may be.

DISPOSITION OF ASSETS LINKED TO THE UNITED NATIONS LISTS. When it comes to funds or assets that have been frozen or secured in accordance with the lists sent by the United Nations Security Council, the OABI shall administer, care for and keep custody of them in such a way as to maintain the asset intact and shall not dispose of it in any case, except for reasons in which it is specifically determined that the asset is susceptible to deterioration or it is impossible to maintain it in the same conditions in which it was seized. These assets shall be available when the competent Judicial Body or the Public Ministry requires them.

DISTRIBUTION OF ASSETS. The assets referred to in the previous article, which in Honduras are not linked to any illicit activity, or the affected countries, with the authorization of the United Nations Security Council, shall make a request for return following the procedure established in international treaties. These assets shall be distributed in accordance with the agreement signed on this matter between the countries if one exists, or according to the agreement reached by the central authorities on this matter of each country. In the case that in Honduras the assets or funds that are linked to illicit activities, the procedure described in the previous paragraph shall be followed, once a final judgment or ruling has been issued ordering the forfeiture. The funds or assets on which a forfeiture judgment is imposed or are declared in abandonment shall be distributed in accordance with Articles 22 and 23 of the Law Against the Crime of Money Laundering. CHAPTER VII OF THE DESTINATION OF ASSETS

EVENTS FOR REVOCATION OF MEASURES. The precautionary measures that have been ordered may be revoked before the issuance of a final judgment, when in the analysis of the investigations, it is established that the assets do not belong to persons or organizations engaged in terrorism or linked to acts of terrorism or that the assets were not going to be used or destined to be used in the sustenance or Financing of Terrorism.

REQUEST FOR REVOCATION OF MEASURES. During the proceedings, the Judicial Body shall revoke the precautionary or protective measures exclusively when it receives a request from the Public Ministry as the entity in charge of the investigation. This requirement shall not be necessary for the Judge to revoke the measures in the final judgment. When it comes to assets that have been frozen in accordance with the lists sent by the United Nations Security Council, such measure may only be received through communication issued by the United Nations Security Council, which shall make the communication of the revocation, following the procedure of the Secretariat of Foreign Relations, in the State, once immediately it shall notify the UIF, and the latter in turn to the Public Ministry, to issue the request.

OTHER EVENTS FOR REVOCATION OF MEASURES. The Judicial Body may revoke the precautionary or protective measures in the final judgment, when it is established in the evidentiary record that there is no criminal liability of the person being tried, or when it is established that the assets do not belong to persons or organizations engaged in terrorism or linked to acts of terrorism or that the assets were not going to be used or destined to be used in the sustenance or Financing of Terrorism or of terrorist acts. However, when it is determined that the assets are of illicit origin, the precautionary measure shall be maintained which shall be notified to the Public Ministry. TITLE IV OF THE FINANCIAL INFORMATION UNIT CHAPTER IX POWERS AND OBLIGATIONS OF THE UIF

COMMUNICATION OF REPORTS OF SUSPICIOUS TRANSACTIONS. Once the UIF receives and analyzes the Reports of Suspicious Transactions submitted by the obligated subjects, the UIF shall forward to the Public Ministry those classified as such.

SUSPICIOUS TRANSACTIONS IDENTIFIED IN THE UIF DATABASE. Once the UIF determines the existence of unusual transactions in its database, these shall be analyzed and if certified as suspicious, they shall be coded and forwarded to the Public Ministry. DATA OF THE UIF. Once the UIF determines the existence of unusual transactions in its database, these shall be analyzed and if certified as suspicious, they shall be coded and forwarded to the Public Ministry.

POWER OF THE UIF TO REQUEST INFORMATION. Provided that constitutional rights are safeguarded, when the UIF must comply with the obligations derived from the Law Against the Crime of Money Laundering, and requires other elements, documents or any information related thereto, it may request from the obligated subjects, and from any other natural or juridical person who does not have such status, that they provide the information it requests. Likewise, the obligated subjects and the natural or juridical persons referred to in the previous paragraph have the duty to allow the UIF free access to all their sources and information systems for the verification or expansion of the information provided by them, or when this is necessary for the analysis of cases related to the Financing of Terrorism. The UIF shall be the entity that decides the manner and time in which it shall carry out such proceeding and the appearance of the personnel of said Unit before the offices of the obligated subject or of the natural or juridical persons shall be sufficient.

ADMINISTRATIVE ASSISTANCE OF THE UIF. The exchange of information between the UIF of the Republic of Honduras and other homologous foreign Units, related to matters of Financing of Terrorism, shall be governed by what is established in the Law Against the Financing of Terrorism, in the Law Against Money Laundering and in this regulation. For this purpose, the cooperation agreements subscribed in matters of money laundering financing of Terrorism. Furthermore, the administrative assistance and exchange of information between the UIF of our country and foreign homologous entities may be based in accordance with what is stipulated in international regulations and initiatives.

PROCESSING OF INFORMATION BY THE PUBLIC MINISTRY. When the UIF requires information that for reasons of constitutional rights it is impossible to obtain directly, it shall be obtained through the Public Ministry.

DEADLINES FOR COMPLIANCE TO PROVIDE INFORMATION TO THE UIF. When the UIF requires information, it must be provided within the term of five (5) business days from the date of receipt of the request. Unjustified non-compliance shall give rise to the application of administrative sanctions, without prejudice to criminal sanctions.

RESERVE AND CONFIDENTIALITY. The officials and employees of the UIF are obligated to maintain the confidentiality of information by reason of their position. This reserve is mandatory to be maintained during the exercise of the position, and after they have ceased to hold it, either by having been transferred to another section or by having withdrawn from the institution. The reserve and confidentiality do not prevent the prohibition of this same reserve of confidentiality is mandatory for the officials and employees of the Commission. The provision regarding reserve and confidentiality is applicable to the obligated subjects, including their officials, employees, directors, administrators, partners, legal representatives, legal representatives, in case of a juridical person. The reserve and confidentiality is also mandatory with respect to the institution or natural persons who do not have the status of obligated subjects to whom information is requested. This provision is not applicable when it is a matter of the publication of the judgment or the resolution in which precautionary measures are ordered. Non-compliance with the provisions of this article shall constitute the crime of infidelity, as defined in the Law Against the Crime of Money Laundering (Decree 45-2002). The reserve and confidentiality comprises the prohibition of not providing information about investigation matters, reports or about Money Laundering and Financing of Terrorism, to persons who, claiming to avail themselves of their hierarchical position, would seek to obtain information for purposes other than the Law and this Regulation. The previous paragraph includes making requests if there is no legal basis for doing so. TITLE V OF THE OBLIGATED SUBJECTS SUPERVISED BY THE NATIONAL COMMISSION OF BANKS AND INSURANCE CHAPTER X OF THE REGULATION, REGISTRATION, SUPERVISION AND VIGILANCE OF THE OBLIGATED SUBJECTS THAT ARE SUPERVISED BY THE NATIONAL COMMISSION OF BANKS AND INSURANCE

REGULATIONS THAT REGULATE OBLIGATED SUBJECTS. For purposes of the prevention, procedures and other provisions issued by the Law Against the Financing of Terrorism, the obligated subjects comprised among the institutions supervised by the CNBS and other non-supervised financial institutions, must comply with what is provided in the regulatory norms of said entity, issued to comply with what is established in the Law Against the Crime of Money Laundering, and the prevention, procedures and other provisions issued by the Law Against the Financing of Terrorism, the obligated subjects comprised among the institutions supervised by the CNBS and other non-supervised financial institutions, must comply with what is provided in the regulatory norms of said entity, issued to comply with what is established in the Law Against the Crime of Money Laundering, and the

REGISTRATION FOR INSTITUTIONS SUPERVISED BY THE COMMISSION. In order to report financial transactions, suspicious or any other information that the UIF requests, the institutions supervised by the Commission shall use as identification code the code assigned for that purpose by said entity. TITLE VI OBLIGATED SUBJECTS THAT ARE CONSIDERED WITHIN NON-FINANCIAL DESIGNATED ACTIVITIES AND PROFESSIONS CHAPTER XI OF THE REGULATION, REGISTRATION, SUPERVISION AND VIGILANCE OF THE OBLIGATED SUBJECTS THAT ARE CONSIDERED WITHIN NON-FINANCIAL DESIGNATED ACTIVITIES AND PROFESSIONS

REGULATION GOVERNING NON-FINANCIAL DESIGNATED ACTIVITY PROFESSIONALS (APNFD'S). The obligated subjects that carry out activities and non-financial professions designated in regulated entities, insofar as applicable pursuant to the regulatory provisions issued by the CNBS for compliance with what is established in the Law Against the Crime of Money Laundering and the Law; furthermore, shall be governed by the provisions of this regulation.

REGISTRATION FOR APNFD'S. In order for obligated subjects designated as APNFD'S to report financial transactions, suspicious transactions or any other information requested by the UIF, they shall be required to send general information thereof. The obligated persons shall have five (5) calendar months, counted from the effective date of the Regulation, to submit the indicated information. The information referred to in the preceding paragraph shall be sent to the email address uif@cnbs.gov.hn with the following data: a) Business Name b) Commercial Name (if applicable) c) Legal Representative d) Address e) Telephone f) City g) Employee, Compliance Officer and/or person responsible for reporting. h) Email (preferably corporate) i) Economic Activity (Attach copy from Chamber of Commerce) and/or length of existence resolution. j) Type of entity of the obligated subject to report. When there are modifications in the general information of the obligated subject, they shall notify the UIF thereof, within a period of fifteen (15) days after the corresponding change is made. CHAPTER XII OF NATURAL OR LEGAL PERSONS WHOSE HABITUAL ACTIVITY IS THE EXPLOITATION OF GAMBLING GAMES

OBLIGATION OF NATURAL OR LEGAL PERSONS THAT EXPLOIT GAMBLING GAMES REGARDING COMPLIANCE WITH THE REGULATION. In order to prevent and impede the crime of Terrorism Financing or Money Laundering, the obligated subjects whose habitual activity is the exploitation of gambling games, such as Casinos, Slot Machines, Bingos and Lotteries and other crimes, without prejudice to compliance with the regulations established in Article 28 of this regulation, shall observe the provisions of this chapter.

DUTY OF REGISTRATION. Without prejudice to the registration that they must perform with the property institute, chambers of commerce or others, the obligated subjects referred to in this chapter must be registered or inscribed as such in order to carry out the activity of exploitation of gambling games with the Executive Revenue Department. The verification of the registration and compliance with regulations regarding Terrorism Financing and Money Laundering shall be carried out by the Superintendence of Mercantile Companies.

COMPLEMENTARITY BY THE CASINO LAW AND ITS REGULATION. For the granting of licenses to operate casinos and games of chance or gambling, and other functions carried out thereby, as well as prohibitions for the license holder or other persons to whom this right is granted for their exploitation, shall be governed by what is established in the "Casino Law, Games of Chance or Gambling," contained in Decree No. 488-1977, its reforms and regulation.

DESIGNATION OF COMPLIANCE OFFICER. The obligated subjects referred to in this chapter must appoint a Compliance Officer or person responsible for execution, who shall be notified to the Superintendence of Mercantile Companies, attaching the respective curriculum vitae; the Superintendence may make observations when it considers that the position or responsibility does not allow them to properly fulfill their functions.

POLICIES AND PROCEDURES. The obligated subjects referred to in this chapter must have a Compliance Manual appropriate to the organization, structure, resources and complexity of their operations, which shall form an integral part of the Internal Regulation. A copy of the Compliance Manual and the minutes of the Board of Directors or Administrative Council meeting in which said manual is approved shall be sent to the Superintendence of Mercantile Companies, which shall acknowledge receipt thereof and may make such observations as it deems appropriate. The obligated subjects shall periodically review the effectiveness of their Compliance Manual in order to verify its execution and identify deficiencies or need for updating and/or modification derived from changes in Honduran legislation or the issuance of regulations, policies and international best practices. Any update and/or modification must be communicated in writing to the Superintendence of Mercantile Companies. The Compliance Manual must contain at least the following:

• a)

  Code of Ethics: behavioral guidelines that demonstrate the commitment of obligated subjects in preventing the misuse of their products and services. Shareholders, directors, legal representatives, administrators, officers and employees are subject to compliance with this Code to prevent the products and services of the obligated subject from being used to legitimize or conceal funds intended for money laundering and terrorism financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes must be established.

• b)

  Sanctions Regime: must include persons who have failed to comply with the policies or procedures established for the prevention and detection of Money Laundering and Terrorism Financing. This sanctions regime shall be applied without prejudice to the sanctions established in the Law.

• c)

  Audit System: in order to support the work of the Compliance Officer, each obligated subject shall incorporate into the annual internal audit program for verification of the effectiveness, efficiency, compliance and results obtained in the implementation of the Compliance Manual. Likewise, in the contract that obligated subjects execute with the external audit firm, a clause must be included requiring an opinion on compliance with the provisions of the Law and this Regulation, to verify the internal controls designed to ensure compliance with all laws and regulations against terrorism financing.

• d)

  Client Knowledge Policies: the obligated subject must determine the policies and procedures for knowing its clients. These policies and procedures must aim at least to: d.1. Establish measures that allow the obligated subject to contemplate monitoring standards for those clients who within the establishment handle multiple transactions, such as purchase or collection of casino chips, opening of accounts, cable or electronic transfers and currency exchange, individually or separately, in order to reduce the risk that by action or omission their services are used to legitimize funds from illicit activities or to finance terrorist actions, it being understood that financial transactions do not refer to gaming transactions involving only casino chips. d.2. Protect the reputation of the obligated subject; d.3. Ensure compliance with standards established in current legislation; d.4. Promptly alert suspicious transactions, carried out by clients, that could be related to the crime of money laundering and terrorism financing; d.5. Establish requirements regarding the identification of clients, in such a way that the obligated subject knows the full identification thereof. When there are doubts or certainty that clients do not act on their own account, the obligated subjects referred to in this chapter shall adopt reasonable measures to obtain information about the true identity of the person on whose behalf the clients act (beneficiary/ultimate owner). Maintaining identified clients, whether habitual or occasional, in a database; and, d.6. Alert certain patterns of conduct typical of or susceptible to being used in the commission of the crime of money laundering and terrorism financing. e. Internal Control Procedures: the control mechanisms adopted by the obligated subject, as well as the characteristics of the entity and those of its different products and services, must contain precise directives for the development of institutional policy in the prevention and detection of the crime of money laundering and terrorism financing. Considering the following: e.1. Procedures to monitor compliance with standards for knowledge and employee training; e.2. Comply with the client knowledge policy on the part of its Managers and employees and the manner in which verification must be documented that the client information is complete; e.3. Any other measures that the obligated subject considers necessary.

IDENTIFICATION REQUIREMENT. The obligated subject, without prejudice to observing the general rules in order to comply with the provisions of this regulation, must identify all its clients upon entry into the establishment, at least the following information: a) Full Name and Surname b) Identity Number c) Type of Identification (Identity Card, residence card, passport or driver's license). d) Address The information referred to in this article shall be handled by the obligated subject in a database.

TRANSACTION REPORTING. Transactions related to the products and services that the obligated subject provides to its clients, which equal or exceed the amount established by the BCH, must be recorded in the "Gaming Transaction Report" form (RT-J), which the UIF shall provide for such purpose. Reports must be submitted to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

SUSPICIOUS TRANSACTION REPORT: The obligated subjects in this chapter, once a suspicious transaction has been determined, must proceed to report to the UIF immediately and directly. The obligated subject shall not inform another authority or person, including the Superintendence of Mercantile Companies, about the report of the Suspicious Transaction carried out and the names of those reported. The report of suspicious transactions carried out by or the obligated subject shall not be considered a violation of confidentiality reserve. CHAPTER XIII OF LAWYERS AND NOTARIES

OBLIGATION OF LAWYERS AND NOTARIES REGARDING COMPLIANCE WITH THE REGULATION. Lawyers and Notaries as obligated subjects to prevent and detect the facts, acts, operations or omissions that may result from the commission of Terrorism Financing and Money Laundering, shall observe the provisions of this chapter.

DESIGNATION OF COMPLIANCE OFFICER. The obligated subjects referred to in this chapter, in order to comply with what is established in this regulation, must appoint a Compliance Officer and/or person responsible for execution, who shall be notified to the Superintendence of Mercantile Companies, attaching the respective curriculum vitae; the Superintendence may make observations when it considers that the position or responsibility does not allow them to properly fulfill their functions.

IDENTIFICATION. Lawyers and Notaries must fully identify their clients when establishing a relationship with a client, when carrying out the following activities: a) Purchase and sale of property; b) Administration of money, securities and other property; c) Administration of bank accounts, savings accounts or securities accounts d) Organization of contributions or payments for the creation, operation, administration or purchase and sale of mercantile companies; e) Creation of legal persons, operation or administration of structures or legal persons. In the identification process, the following are observed as minimum guidelines:

• a)

  They must request a copy of the deed with which the assets used in the purchase are justified;

• b)

  Request the certification issued by a Certified Public Accountant registered with the professional association, duly endorsed by the Professional Association where they are registered. In this certification the Accountant shall indicate the origin of the assets, according to the documentation presented by the client, and shall indicate with precision the documentation that they have reviewed to carry out the same;

• c)

  They must pay special attention to prevent natural persons from using legal persons as shell companies to carry out their operations. These must have procedures that allow knowledge of the structure of the company, determination of the origin of its funds and identification of the owners, beneficiaries and those who exercise real control of the legal person;

• d)

  They must have procedures that allow knowledge of the structure of the company, determination of the origin of its funds and identification of the owners;

• e)

  Request banking documentation regarding the existence of the funds or documentation that proves the sale of movable, immovable property, securities or livestock for sufficient amounts; and,

• f)

  Any other documentation that supports, according to the declared origin and purpose, the holding of sufficient assets to carry out the operation. The identification requirements provided in this last numeral shall also apply when, in the judgment of Lawyers and Notaries, operations linked to each other are carried out, which individually have not reached the minimum level established, but which together reach or exceed such amounts. The request by the obligated subject of the information requirements indicated in this Chapter shall not be considered non-compliance with what is established in the Notary Law, nor with professional secrecy.

IDENTIFICATION REQUIREMENT. Lawyers and Notaries, without prejudice to observing the general rules for the identification of clients required by the Civil Code and the respective organic laws, must identify their clients observing at least the following information: NATURAL PERSON a. Full Name (as it appears in the identity document). b. Date of birth. c. Place of birth. d. Profession, occupation or trade. e. Nationality. f. Gender. g. Number of Personal Identification Document. h. Type of identification (identity card, RTN, passport or resident card). i. Complete residential address. j. Marital status and name of spouse, if applicable. k. Landline and/or mobile phone number, fax number and email. l. Name of business (if applicable). m. Line or activity of the business. n. Name of the company in which they work. o. Complete address of the company. p. Work telephone number. q. Length of employment with the company. r. Declaration regarding legality, origin and purpose of assets when transactions exceed fifty thousand lempiras (L.50,000.00). If transactions exceed fifty thousand lempiras (L.50,000.00), additionally to the declaration of legality and origin of funds, the corresponding supporting documentation shall be required. LEGAL PERSON a. Commercial name b. Company name or denomination. c. Economic activity. d. Photocopy of RTN or RUC. e. Photocopy of the Corporate Deed and its duly registered and updated amendments. f. Detail and identification of persons authorized to contract on behalf of the company (applying all requirements demanded for natural persons). g. h. Address. i. Telephone, fax, email, website or other that applies. j. Policies executed with this or other insurers. k. Declaration regarding legality and origin of funds when transactions exceed the sum of one hundred thousand lempiras (L.100,000.00). If transactions exceed the sum of three hundred thousand lempiras (L.300,000.00), it shall be necessary that, additionally to the declaration of legality and origin of funds and purpose of assets, the corresponding supporting documentation be attached.

REQUIREMENT FOR PUBLIC BODIES. Lawyers and Notaries, without prejudice to observing the general rules for the identification of clients and requirements imposed by the Civil Code and the respective organic laws, must require, at a minimum, in the case of Public Bodies:

• a)

  Certified copy of the administrative act of designation of the intervening official;

• b)

  Number and type of identity document of the official who must exhibit it in original form. The following shall be accepted as valid documents to certify identity: passport, as well as the appointment agreement;

• c)

  Exact actual address of the official.

• d)

  Exact legal address; and telephone of the agency in which the official performs functions;

REQUIREMENT FOR REPRESENTATIVES. The information to be required from the attorney-in-fact, tutor, curator, or legal representative shall be analogous to that requested from the requiring party and shall likewise present the corresponding power of attorney, from which the character invoked is evident, in a properly certified copy.

SPECIAL CASES. The same requirements indicated for legal entities shall be necessary in the cases of temporary business unions, business collaboration associations, cooperation consortiums, associations, non-profit foundations, and other entities without legal personality.

VERIFICATION OF INFORMATION. If in the process of the relationship with the client there are doubts about their existence, Attorneys and Notaries shall perform a verification to confirm their existence, leaving documentary evidence of this action. In the event that the information collected is inconsistent with that provided by the client, or does not satisfy the obligated subject, this party should terminate the relationship. Furthermore, they shall consider the preparation of a suspicious transaction report to the UIF.

POLICIES AND PROCEDURES. Attorneys and Notaries shall have Policies and Procedures appropriate to specialized subjects. These Policies and Procedures shall be contained in a single Compliance Manual, which shall be prepared and approved by the Bar Association of Honduras, and shall be mandatory for all Attorneys and Notaries. The Bar Association of Honduras shall send a copy thereof to the Superintendency of Commercial Companies, which may make such observations as it deems pertinent. In the same manner, the Bar Association of Honduras shall periodically review the effectiveness of the Manual in order to verify its implementation and identify deficiencies or needs for updating and/or modification resulting from changes in Honduran legislation or the issuance of international regulations, policies, and best practices. Any update and/or modification shall be communicated in writing to the Superintendency of Commercial Companies. The Compliance Manual shall contain, at a minimum, the following:

• a)

  Code of Ethics: guidelines of conduct that demonstrate commitment to the prevention of improper use of its services. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established.

• b)

  Client Knowledge Policies: Attorneys and Notaries must determine the policies and procedures for knowing clients. These policies and procedures shall aim at least to: b.1. Establish measures that allow attorneys and notaries to establish monitoring standards for those clients who conduct multiple transactions, in order to reduce the risk that through action or omission their services are used to legitimize funds that proceed from illicit activities or to finance terrorist actions. b.2. Protect its reputation; b.3. Ensure compliance with the standards established in existing legislation; b.4. Warn opportunely of suspicious transactions carried out by clients that could be related to the crime of money laundering and terrorism financing; b.5. Establish requirements with respect to the identification of clients, such that the obligated subject knows the complete identification of the same. When there are doubts or certainty that clients do not act on their own account, the obligated subjects referred to in this chapter shall adopt reasonable measures in order to obtain information about the true identity of the person on whose account the clients act (beneficial owner/ultimate beneficial owner). Maintaining identified habitual and occasional clients; b.6. Warn of certain conduct patterns peculiar to or susceptible to being used in the commission of the crime of money laundering and terrorism financing;

• c)

  Internal Control Procedures: the control mechanisms adopted by Attorneys and Notaries, as well as the characteristics of their services, shall contain precise directives for the development of policy in the prevention and detection of the crime of Money Laundering and Terrorism Financing. Considering the following: c.1. Procedures to monitor compliance with standards for knowledge and training of employees or assistants; c.2. Comply with the client knowledge policy and the manner in which evidence must be kept that the client's information has been verified as complete; c.3. Any others that the obligated subject considers necessary.

REGARDING TRANSACTION REPORTING. All notarial legal acts or transactions that Attorneys and Notaries provide to their clients that equal or exceed the amount established by the BCH shall be recorded in the form of "Notarial Transaction Report" (RTN), which for this purpose shall be provided by the UIF. Reports shall be sent to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

SUSPICIOUS TRANSACTION REPORT: Attorneys and Notaries, once a suspicious transaction has been determined, shall proceed to report it to the UIF immediately and directly. In no case shall the obligated subject inform the Bar Association of Honduras or the Institute of Notaries, or any other authority or person, including the Superintendency of Commercial Companies, about the report made. The suspicious transaction report shall not be considered a violation or non-compliance with what is established in the notarial law, nor with professional secrecy. CHAPTER XIV OF NON-PROFIT ASSOCIATIONS AND FOUNDATIONS

DUTY TO COMPLY WITH OTHER REGULATIONS AND THIS REGULATION. The obligated subjects referred to in this chapter, without prejudice to compliance with the regulations established in Article 28 of this regulation, shall comply with what is provided in Chapter XIII of the Law Against Terrorism Financing.

REGARDING SUPERVISION AND VERIFICATION. Supervision and verification of the registry and compliance with regulations on Terrorism Financing and Money Laundering shall be carried out by the Superintendency of Commercial Companies.

TRANSACTION REPORTING. For purposes of complying with regulations on Terrorism Financing and Money Laundering, natural or legal persons who receive donations or contributions from third parties in amounts equal to or greater than two thousand dollars (US $2,000) or its equivalent in national or other foreign currency shall be recorded in the form of "Transaction Report for Non-Profit Organizations" (RT-O), which for this purpose shall be provided by the UIF. Reports shall be sent to the UIF within the first (10) business days of the month following the donations or contributions, in accordance with the parameters it establishes.

SUSPICIOUS TRANSACTION REPORT: The obligated subjects in this chapter, once a suspicious transaction has been determined, shall proceed to report it to the UIF immediately and directly. In no case shall the obligated subject inform the UIF, another authority, or any person, including the Superintendency of Commercial Companies, about the suspicious transaction report made. The suspicious transaction report made by the obligated subject shall not be considered a violation of the duty of confidentiality. CHAPTER XV NATURAL OR LEGAL PERSONS THAT PROVIDE MONEY TRANSFER AND/OR REMITTANCE SERVICES

GENERAL PROVISIONS REGARDING COMPANIES PROVIDING TRANSFER SERVICES. In order to prevent and impede the crime of Terrorism Financing and Money Laundering, natural or legal persons providing money transfer and/or remittance services or fund remissions shall observe the provisions contained in the Regulation of Remittance Companies prepared by the CNBS, both with respect to their own activities and also those activities of fund transmission or processing of payment orders carried out by the agents or subagents that they designate through representation contracts in the Republic of Honduras. CHAPTER XVI LEGAL PERSONS ENGAGED IN THE PURCHASE AND SALE OF AUTOMOBILES

DUTY TO COMPLY WITH OTHER REGULATIONS AND THIS REGULATION. In order to prevent and impede the crime of Terrorism Financing and Money Laundering, the obligated subjects considered as legal persons engaged in the purchase and sale of automobiles, without prejudice to compliance with the regulations established in Article 28 of this regulation, must also observe the provisions of this chapter.

DUTY OF REGISTRATION. The obligated subjects referred to in this chapter shall be registered or inscribed as such in order to conduct the activity of buying and selling automobiles with the Executive Directorate of Revenue. Verification of registration and compliance with regulations on Terrorism Financing and Money Laundering shall be carried out by the Superintendency of Commercial Companies.

DESIGNATION OF COMPLIANCE OFFICER. The obligated subjects referred to in this chapter shall appoint a Compliance Officer or person responsible for execution with sufficient autonomy in order to coordinate the functions and compliance and monitoring activities related to the prevention and detection of money laundering and terrorism financing. This official shall be appointed by the Board of Directors or Board of Administration, or through the General Manager, and the appointment shall be notified to the Superintendency of Commercial Companies, attaching the respective curriculum vitae; the Superintendency may make observations when it considers that the position or responsibility does not allow the official to perform its functions appropriately.

POLICIES AND PROCEDURES. The obligated subjects referred to in this chapter shall have a Compliance Manual appropriate to the organization, structure, resources, and complexity of their operations. A copy of the Compliance Manual and the minutes of the Board of Directors or Board of Administration meeting in which such manual is approved shall be sent to the Superintendency of Commercial Companies, which shall acknowledge receipt thereof and may make such observations as it deems pertinent. The obligated subjects shall periodically review the effectiveness of their Compliance Manual in order to verify its implementation and identify deficiencies or needs for updating and/or modification resulting from changes in Honduran legislation or the issuance of international regulations, policies, and best practices. Any update and/or modification shall be communicated in writing to the Superintendency of Commercial Companies. The Compliance Manual shall contain, at a minimum, the following:

• a)

  Code of Ethics: guidelines of conduct that demonstrate the commitment of obligated subjects to the prevention of improper use of their products and services. Shareholders, directors, legal representatives, administrators, officials, and employees are subject to compliance with this Code to prevent the products and services of the obligated subject from being used to legitimize or conceal funds destined for money laundering and terrorism financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established.

• b)

  Sanctions Regime: shall cover persons who have failed to comply with the policies or procedures established for the prevention and detection of money laundering and terrorism financing. This sanctions regime shall be applied without prejudice to the sanctions established in the Law.

• c)

  Audit System: in order to support the work of the Compliance Officer, each obligated subject shall incorporate into the annual internal audit program the verification of the effectiveness, efficiency, compliance, and results obtained in the implementation of the Compliance Manual. Similarly, in the contract that obligated subjects sign with the external audit firm, a clause shall be included requiring an opinion on compliance with the provisions of the Law and this Regulation, to verify the internal controls designed to ensure compliance with all laws and regulations against terrorism financing.

• d)

  Client Knowledge Policies: the obligated subject must determine the policies and procedures for knowing its clients. These policies and procedures shall aim at least to: d.1. Establish measures that allow the obligated subject to establish client monitoring standards in accordance with the volume or type of transaction they conduct to determine whether or not they correspond to the documentary knowledge held of them, in order to reduce the risk that through action or omission its products and services are used to legitimize funds that proceed from illicit activities or to finance terrorist actions; d.2. Protect the reputation of the obligated subject; d.3. Ensure compliance with the standards established in existing legislation; d.4. Warn opportunely of suspicious transactions carried out by clients that could be related to the crime of money laundering and terrorism financing; d.5. Establish requirements with respect to the identification of clients, such that the obligated subject knows the complete identification of the same. Maintaining identified habitual and occasional clients in a database. When there are doubts or certainty that clients do not act on their own account, the obligated subjects referred to in this chapter shall adopt reasonable measures in order to obtain information about the true identity of the person on whose account the clients act (beneficial owner/ultimate beneficial owner). Maintaining identified habitual and occasional clients; and, d.6. Warn of certain conduct patterns peculiar to or susceptible to being used in the commission of the crime of money laundering and terrorism financing;

• e)

  Internal Control Procedures: the control mechanisms adopted by the obligated subject, as well as the characteristics of the entity and those of its various products and services, shall contain precise directives for the development of the institutional policy on the prevention and detection of the crime of money laundering and terrorism financing. Considering the following: e.1. Procedures to monitor compliance with standards for knowledge and training of employees; e.2. Comply with the client knowledge policy by its Managers and employees and the manner in which evidence must be kept that the client's information has been verified as complete; e.3. Any others that the obligated subject considers necessary.

IDENTIFICATION REQUIREMENT.- The obligated subject, without prejudice to observing the general rules in order to comply with the provisions of this regulation, shall identify its clients at the moment of establishing a commercial relationship, at a minimum the following information: NATURAL PERSON a) Full name (as it appears in the identity document). b) Date of birth. c) Place of birth. d) Profession, occupation or trade. e) Nationality. f) Personal Identification Document number. g) Type of identification (identity card, RTN, passport or resident card). h) Complete residential address. i) Marital status and name of spouse, if applicable. j) Fixed and/or mobile telephone number, fax number and email address. k) Name of the company where employed. l) Length of employment at the company. JURIDICAL PERSON a) Commercial name. b) Corporate name or designation. c) Economic activity. d) Photocopy of RTN or RUC. e) Photocopy of the Articles of Incorporation and amendments thereof duly registered and updated. f) Details and identification of persons authorized to contract on behalf of the company (applying all requirements required for natural persons). g) Address. h) Telephone, fax, email, website or other as applicable.

TRANSACTION REPORTING.- The transactions related to the products and services that the obligated subject provides to its clients, which equal or exceed the amount established by the BCH, shall be recorded in the "Automobile Transaction Report" form (RT-A), which for such purposes shall be provided by the UIF. Reports shall be submitted to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

SUSPICIOUS TRANSACTION REPORTING.- The obligated subjects in this chapter, once the suspicious transaction is determined, must proceed to report to the UIF immediately and directly. The obligated subject shall not inform another authority or person, including the Superintendency of Commercial Corporations, of the Suspicious Transaction Report filed. The obligated subject shall not inform the DEI or another authority or person, including the Superintendency of Commercial Corporations, of the Suspicious Transaction Report filed. The suspicious transaction report filed by the obligated subject shall not be considered a violation of the confidentiality obligation. CHAPTER XVII ANTIQUITIES, WORKS OF ART, PHILATELIC INVESTMENT OR OTHER LUXURY GOODS AND MANUFACTURE OR INDUSTRIALIZATION OF JEWELRY OR GOODS MADE WITH PRECIOUS METALS

DUTY TO COMPLY WITH OTHER REGULATIONS AND THIS REGULATION.- In order to prevent and stop the crime of Terrorist Financing and Money Laundering, obligated subjects that habitually engage in the purchase and sale of antiquities, works of art, philatelic investment and the manufacture or industrialization of jewelry or goods made with precious metals shall observe the provisions of this chapter.

DUTY OF REGISTRATION.- Without prejudice to the registration they must perform at the property institute, chambers of commerce or others, the obligated subjects referred to in this chapter shall be registered or enrolled as such with the Executive Tax Authority. Verification of registration and compliance with regulations on Terrorist Financing and Money Laundering shall be conducted by the Superintendency of Commercial Corporations.

DESIGNATION OF COMPLIANCE OFFICER.- The obligated subjects referred to in this chapter shall appoint a compliance officer with sufficient autonomy in order to coordinate the functions and activities of compliance and monitoring relating to the prevention and detection of money laundering and terrorist financing. This officer shall be appointed by the Board of Directors or Board of Administration, or through the General Manager, and the appointment shall be notified to the Superintendency of Commercial Corporations, attaching the respective curriculum vitae; the Superintendency may make observations when it considers that the position or responsibility does not allow proper performance of its functions.

POLICIES AND PROCEDURES.- The obligated subjects referred to in this chapter shall have a Compliance Manual appropriate to their organization, structure, resources and operational complexity. A copy of the Compliance Manual and the minutes of the Board of Directors or Board of Administration meeting approving such manual shall be submitted to the Superintendency of Commercial Corporations, which shall acknowledge receipt and may make relevant observations. The obligated subjects shall periodically review the effectiveness of their Compliance Manual, in order to verify its implementation and identify deficiencies or needs for updates and/or modifications arising from changes in Honduran legislation or the issuance of regulations, policies and international best practices. Any update and/or modification shall be communicated in writing to the Superintendency of Commercial Corporations. The Compliance Manual shall contain at a minimum the following:

• a)

  Code of Ethics: behavioral guidelines demonstrating the commitment of obligated subjects in preventing misuse of their products and services. Shareholders, directors, legal representatives, administrators, officials and employees shall be subject to compliance with this Code to prevent the products and services of the obligated subject from being used to legitimize or conceal funds intended for money laundering and terrorist financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established.

• b)

  Sanctions Regime: shall cover persons who have failed to comply with the policies or procedures established for the prevention and detection of money laundering and terrorist financing. This sanctions regime shall be applied without prejudice to the sanctions established in the Law.

• c)

  Audit System: in order to support the work of the compliance officer, each obligated subject shall incorporate an annual internal audit program to verify the effectiveness, efficiency, compliance and results obtained in the implementation of the Compliance Manual. Likewise, in the contract that obligated subjects execute with the external audit firm, a clause must be included requiring an opinion on compliance with the provisions of the Law and this Regulation, to verify the internal controls designed to ensure compliance with all laws and regulations against terrorist financing.

• d)

  Client Knowledge Policies: the obligated subject must determine the policies and procedures for knowing its clients. These policies and procedures must aim at least to: d.1. Establish measures that allow the obligated subject to contemplate customer monitoring standards according to the volume or type of transaction they conduct to determine whether or not they correspond to the documentary knowledge held of them, with the purpose of reducing the risk that through action or omission their products and services be used to legitimize funds originating from illicit activities or to finance terrorist actions. d.2. Protect the reputation of the obligated subject; d.3. Ensure compliance with the standards established in current legislation; d.4. Timely alert suspicious transactions carried out by clients that could be related to the crime of money laundering and terrorist financing; d.5. Establish requirements regarding the identification of clients, so that the obligated subject knows their complete identification. Maintaining regular and occasional clients identified in a database. When there are doubts or certainty that clients do not act on their own account, obligated subjects referred to in this chapter shall adopt reasonable measures in order to obtain information about the true identity of the person on whose account the clients act (beneficial owner / ultimate beneficial owner). Maintaining regular and occasional clients identified; and, d.6. Alert certain conduct patterns typical of or susceptible to being used in the commission of the crime of money laundering and terrorist financing.

• e)

  Internal Control Procedures: the control mechanisms adopted by the obligated subject, as well as the characteristics of the entity and its different products and services, shall contain precise guidelines for the development of institutional policy in the prevention and detection of the crime of money laundering and terrorist financing. Considering the following: e.1. Procedures to monitor compliance with the standards of client knowledge and employee training; e.2. Comply with the client knowledge policy by its Managers and employees and the manner in which it must be documented that verification of the completeness of client information has been performed; e.3. Such others as the obligated subject considers necessary.

IDENTIFICATION REQUIREMENT.- The obligated subject, without prejudice to observing the general rules in order to comply with the provisions of this regulation, shall identify its clients at the moment of establishing a commercial relationship, at a minimum the following information: NATURAL PERSON a) Full name (as it appears in the identity document). b) Date of birth. c) Place of birth. d) Profession, occupation or trade. e) Nationality. f) Personal Identification Document number. g) Type of identification (identity card, RTN, passport or resident card). h) Complete residential address. i) Marital status and name of spouse, if applicable. j) Fixed and/or mobile telephone number, fax number and email address. k) Name of the company where employed. Length of employment at the company. JURIDICAL PERSON a) Commercial name. b) Corporate name or designation. c) Economic activity. d) Photocopy of RTN or RUC. e) Photocopy of the Articles of Incorporation and amendments thereof duly registered and updated. f) Details and identification of persons authorized to contract on behalf of the company (applying all requirements required for natural persons). g) Address. h) Telephone, fax, email, website or other as applicable.

TRANSACTION REPORTING.- The transactions related to the products and services that the obligated subject provides to its clients, which equal or exceed the amount established by the BCH, shall be recorded in the "Securities Transaction Report" form (RT-V), which for such purposes shall be provided by the UIF. Reports shall be submitted to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

SUSPICIOUS TRANSACTION REPORTING.- The obligated subjects in this chapter, once the suspicious transaction is determined, must proceed to report to the UIF immediately and directly. The obligated subject shall not inform another authority or person, including the Superintendency of Commercial Corporations, of the Suspicious Transaction Report filed. The suspicious transaction report filed by the obligated subject shall not be considered a violation of the confidentiality obligation. CHAPTER XVIII NATURAL OR JURIDICAL PERSONS ENGAGED IN THE HABITUAL ACTIVITY OF PURCHASE AND SALE OF REAL PROPERTY

DUTY TO COMPLY WITH OTHER REGULATIONS AND THIS REGULATION.- In order to prevent and stop the crime of Terrorist Financing and Money Laundering, for the purposes of the matter in this article, obligated subjects shall be understood as juridical persons engaged in the purchase and sale of real property, and shall observe the provisions of this chapter.

DUTY OF REGISTRATION.- Without prejudice to the registration they must perform at the property institute, chambers of commerce or others, the obligated subjects referred to in this chapter shall be registered or enrolled as such with the Executive Tax Authority. Verification of registration and compliance with regulations on Terrorist Financing and Money Laundering shall be conducted by the Superintendency of Commercial Corporations.

DESIGNATION OF COMPLIANCE OFFICER.- The obligated subjects referred to in this chapter shall appoint a Compliance Officer or a compliance officer with sufficient autonomy in order to coordinate the functions and activities of compliance and monitoring relating to the prevention and detection of money laundering and terrorist financing. This officer shall be appointed by the Board of Directors or Board of Administration, or through the General Manager, and the appointment shall be notified to the Superintendency of Commercial Corporations, attaching the respective curriculum vitae; the Superintendency may make observations when it considers that the position or responsibility does not allow proper performance of its functions.

POLICIES AND PROCEDURES.- The obligated subjects referred to in this chapter shall have a Compliance Manual appropriate to their organization, structure, resources and operational complexity. A copy of the Compliance Manual and the minutes of the Board of Directors or Board of Administration meeting approving such manual shall be submitted to the Superintendency of Commercial Corporations, which shall acknowledge receipt and may make relevant observations. The obligated subjects shall periodically review the effectiveness of their Compliance Manual, in order to verify its implementation and identify deficiencies or needs for updates and/or modifications arising from changes in Honduran legislation or the issuance of regulations, policies and international best practices. Any update and/or modification shall be communicated in writing to the Superintendency of Commercial Corporations. The Compliance Manual shall contain at a minimum the following:

• a)

  Code of Ethics: behavioral guidelines demonstrating the commitment of obligated subjects in preventing misuse of their products and services. Shareholders, directors, legal representatives, administrators, officials and employees shall be subject to compliance with this Code to prevent the products and services of the obligated subject from being used to legitimize or conceal funds intended for money laundering and terrorist financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established.

• b)

  Sanctions Regime: shall cover persons who have failed to comply with the policies or procedures established for the prevention and detection of money laundering and terrorist financing. This sanctions regime shall be applied without prejudice to the sanctions established in the Law.

• c)

  Audit System: in order to support the work of the compliance officer, each obligated subject shall incorporate an annual internal audit program to verify the effectiveness, efficiency, compliance and results obtained in the implementation of the Compliance Manual. Likewise, in the contract that obligated subjects execute with the external audit firm, a clause must be included requiring an opinion on compliance with the provisions of the Law and this Regulation, to verify the internal controls designed to ensure compliance with all laws and regulations against terrorist financing.

• d)

  Client Knowledge Policies: the obligated subject must determine the policies and procedures for knowing its clients. These policies and procedures must aim at least to: d.1. Establish measures that allow the obligated subject to contemplate customer monitoring standards according to the volume or type of transaction they conduct to determine whether or not they correspond to the documentary knowledge held of them, with the purpose of reducing the risk that through action or omission their products and services be used to legitimize funds originating from illicit activities or to finance terrorist actions. d.2. Protect the reputation of the obligated subject; d.3. Ensure compliance with the standards established in current legislation; d.4. Timely alert suspicious transactions carried out by clients that could be related to the crime of money laundering and terrorist financing; d.5. Establish requirements regarding the identification of clients, so that the obligated subject knows their complete identification. Maintaining regular and occasional clients identified in a database. When there are doubts or certainty that clients do not act on their own account, obligated subjects referred to in this chapter shall adopt reasonable measures in order to obtain information about the true identity of the person on whose account the clients act (beneficial owner / ultimate beneficial owner). Maintaining regular and occasional clients identified; and, d.6. Alert certain conduct patterns typical of or susceptible to being used in the commission of the crime of money laundering and terrorist financing.

• e)

  Internal Control Procedures: the control mechanisms adopted by the obligated subject, as well as the characteristics of the entity and its different products and services, shall contain precise guidelines for the development of institutional policy in the prevention and detection of the crime of money laundering and terrorist financing. Considering the following: e.1. Procedures to monitor compliance with the standards of client knowledge and employee training; e.2. Comply with the client knowledge policy by its Managers and employees and the manner in which it must be documented that verification of the completeness of client information has been performed; e.3. Such others as the obligated subject considers necessary.

IDENTIFICATION REQUIREMENT.- The obligated subject, without prejudice to observing the general rules in order to comply with the provisions of this regulation, shall identify its clients at the moment of establishing a commercial relationship, at a minimum the following information: NATURAL PERSON a) Full name (as it appears in the identity document). b) Date of birth. c) Place of birth. d) Profession, occupation or trade. e) Nationality. f) Personal Identification Document number. g) Type of identification (identity card, RTN, passport or resident card). h) Complete residential address. i) Marital status and name of spouse, if applicable. j) Fixed and/or mobile telephone number, fax number and email address. k) Name of the company where employed. l) Length of employment at the company. JURIDICAL PERSON a) Commercial name. b) Corporate name or designation. c) Economic activity. d) Photocopy of RTN or RUC. e) Photocopy of the Articles of Incorporation and amendments thereof duly registered and updated. f) Details and identification of persons authorized to contract on behalf of the company (applying all requirements required for natural persons). g) Address. h) Telephone, fax, email, website or other as applicable.

REPORT OF TRANSACTIONS. Transactions related to the products and services that the obligated subject provides to its clients, which equal or exceed the amount established by the BCH, must be registered in the form of "Report of Real Estate Transactions" (RT-B&R), which for such purpose shall be provided by the UIF. Reports must be submitted to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

REPORT OF SUSPICIOUS TRANSACTIONS: The obligated subjects in this chapter, once a suspicious transaction has been determined, must proceed to report to the UIF immediately and directly. In no case shall the obligated subject inform another authority or person, including the Superintendence of Commercial Corporations, about the Report of Suspicious Transaction filed. The report of suspicious transactions filed by the obligated subject shall not be considered a violation of the confidentiality reserve. CHAPTER XIX COMPANIES PROVIDING OR HOLDING CONCESSIONS FOR POSTAL OR PARCEL DELIVERY SERVICES THAT CONDUCT REMITTANCE OR FOREIGN EXCHANGE OPERATIONS OR TRANSFER OF DIFFERENT TYPES OF CURRENCY OR BANKNOTES.

DUTY TO COMPLY WITH OTHER REGULATIONS AND THIS REGULATION. In order to prevent and impede the crime of Financing of Terrorism and Money Laundering, the obligated subjects identified as Companies Providing or Holding Concessions for Postal or Parcel Delivery Services that conduct remittance or foreign exchange operations or transfer of different types of currency or banknotes, must, without prejudice to the compliance with the regulations established in article 28 of this regulation, observe the provisions of this chapter.

DUTY OF REGISTRATION. Without prejudice to the registration that they must perform with the Institute of Property, chambers of commerce or others, the obligated subjects referred to in this chapter must be registered or inscribed as such in the Executive Directorate of Revenue. The verification of registration and compliance with the regulations on Financing of Terrorism and Money Laundering shall be carried out by the Superintendence of Commercial Corporations.

POLICIES AND PROCEDURES. The obligated subject must proceed to formally adopt a written policy, in compliance with the laws, regulations and standards to prevent and impede the crime of asset laundering and financing of terrorism, as well as express procedures to ensure full compliance with such policy. The measures to be adopted must, at a minimum, incorporate the following:

• 1)

  Internal control procedure: The establishment and implementation of internal controls (structures, procedures and appropriate electronic means) designed to ensure compliance with laws and regulations against money laundering;

• 2)

  Compliance officer: The appointment of a high-level official responsible for ensuring the observance and implementation of the necessary procedures and controls;

• 3)

  Personnel training: The adoption of a formal program of education and training for all employees of the entity;

• 4)

  Audits: The implementation of periodic and independent audits of the overall program initiated, to ensure the achievement of the proposed objectives.

REQUIREMENT OF IDENTIFICATION. The obligated subject, without prejudice to observing the general rules in order to comply with the provisions of this regulation, must identify its clients at the moment of performing any transaction and require at a minimum the following data: a) Full name and surname b) Identity number c) Type of identification (Identity card, residence card, passport, RTN or RUC). At the moment of the transaction, the presentation of a valid identity document or passport shall be mandatory in case of being a foreign national.

IDENTIFICATION OF REMOTE TRANSACTIONS: Without prejudice to the requirements for verification of identification, the obligated subjects must adopt specific and appropriate measures for managing the risk of money laundering and financing of terrorism, when business relationships are established or transactions are conducted with clients who have not been physically present for their identification.

PERFORMANCE ON BEHALF OF ANOTHER. When there are doubts or certainty exists that the transaction in this chapter is performed on behalf of another party, the obligated subjects referred to in this chapter shall adopt reasonable measures in order to obtain information about the true identity of the person on whose behalf the clients act (beneficial owner/final owner). If in the verification process to verify its existence, the information gathered is inconsistent with that provided by the client, or does not satisfy the obligated subject, this party should terminate the relationship. Furthermore, they must consider the preparation of a report of suspicious transactions to the UIF.

REPORT OF TRANSACTIONS. Transactions related to the products and services that the obligated subject provides to its clients, which equal or exceed the amount established by the BCH, must be registered in the form of "Report of Provider or Concessionaire Transactions" (RT-PC), which for such purpose shall be provided by the UIF. Reports must be submitted to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the parameters it establishes.

REPORT OF SUSPICIOUS TRANSACTIONS: The obligated subjects in this chapter, once a suspicious transaction has been determined, must proceed to report to the UIF immediately and directly. In no case shall the obligated subject inform another authority or person, including the Superintendence of Commercial Corporations, about the Report of Suspicious Transaction filed. The report of suspicious transactions filed by the obligated subject shall not be considered a violation of the confidentiality reserve. CHAPTER XX OF SANCTIONS

SANCTIONS. The obligated subjects who fail to comply with the provisions contained in this Regulation shall be sanctioned in accordance with what is provided in the Law. TITLE VII FINAL PROVISIONS

UNFORESEEN SITUATIONS. Any matter not provided for in this Regulation shall be resolved by the CNBS, Superintendence of Commercial Corporations or the corresponding body in accordance with the provisions of the applicable legislation on the matter.

EFFECTIVE DATE. This Regulation shall enter into force as of the date of its publication in the Official Gazette "LA GACETA". 2. Communicate to supervised institutions and other non-supervised obligated parties. 3. Instruct the Secretary of the Commission to send this regulation for publication in the Official Gazette La Gaceta. 4. This resolution is of immediate execution. F) VILMA C. MORALES M., President, FRANCISCO ERNESTO REYES, Secretary FRANCISCO ERNESTO REYES Secretary 10 S. 2011.