Regulation on Prevention and Detection of Money Laundering and Financing of Terrorism

OBJECTIVE: The present Regulation has the objective of establishing general guidelines for the participants in the securities market to implement specific policies and procedures and methodologies for the identification of clients that make use of the services and products they provide, as well as the maintenance, availability of records, notification of financial and suspicious transactions, with the purpose of preventing and detecting the execution of transactions related to the crimes of money laundering and financing of terrorism.

REGULATED ENTITIES: The participants in the securities market are subject to the provisions contained in this regulation, understanding as such, securities exchanges, broker-dealers, centralized securities custody, clearing and settlement depositors, fund management companies and securitization companies.

DEFINITIONS AND TERMS: For the purposes of this Regulation, the following shall be understood as: a. BCH: Central Bank of Honduras. b. BENEFICIAL OWNER: Natural person who is the ultimate owner or has the final control of the operation, client, and/or the person in whose name an operation is carried out, and also includes that natural person who exercises final effective control over a legal person. c. CLIENTS: These are natural and legal persons with whom the regulated entity establishes, in an occasional or permanent manner, a contractual relationship of a financial, economic or commercial nature for the provision of a product or service pertaining to the securities market. In the case of securities exchanges and other centralized trading mechanisms, and in the case of centralized securities custody, clearing and settlement depositors, for the purposes of client and market knowledge, clients shall be understood to mean broker-dealers. Likewise, both the agent and the principal shall be considered as client, the representative as well as the represented, as well as the beneficiary of the operations or services requested from the regulated entities, if applicable. Buyer and seller, the reporter and the reported shall have equal standing in securities operations. Persons in whose names the asset and/or service acquired through mutual funds and/or investment appear shall also be considered as reporters. d. COMMISSION: National Banking and Insurance Commission or CNBS. e. FATF: Financial Action Task Force. f. FINANCING OF TERRORISM: Activity by any means, directly or indirectly, providing or collecting assets, dispensing or attempting to dispense financial services and other services, with the intention that they be used or with knowledge that they will be used in whole or in part, to finance the commission of acts of terrorism of terrorist organizations, even if these are not carried out or are going to be carried out in Honduran territory. g. MONEY LAUNDERING: Activity aimed at legitimizing income or assets arising from illicit activities, or lacking economic foundation or legal support for their possession. h. AML/FT: Money Laundering and Financing of Terrorism. i. SUPERINTENDENCE: Specialized technical body of the Commission, responsible for the supervision and control of institutions and persons to whom the provisions contained in this regulation are applicable. j. POLITICALLY EXPOSED PERSON: Those who hold or have held prominent public functions in the country or in a foreign country, and who by their capacity to influence in state decisions, their business relationships with powerful persons and their influence on public processes of any nature, can use such influence for their own illicit enrichment. These persons shall be classified as sensitive clients and therefore the application of enhanced due diligence measures should be reinforced as they are considered higher risk. k. SUSPICIOUS TRANSACTION: Operation inconsistent with the previously determined profile of the beneficiary and other clients that is unrelated to economic activity and that l. FIU: Financial Intelligence Unit. CHAPTER II OF THE COMPLIANCE OFFICER

APPOINTMENT OF COMPLIANCE OFFICER: The Board of Directors or Board of Administration shall appoint a Compliance Officer, who shall oversee compliance with the legal framework in effect regarding Money Laundering and/or Financing of Terrorism. This person shall enjoy absolute autonomy and independence in the exercise of the responsibilities and functions that correspond to them. The appointment of the Compliance Officer does not exempt the obligated entity and its other employees from the obligation to comply with the provisions contained in the legal and regulatory framework in effect regarding money laundering and financing of terrorism. A person contracted as a Compliance Officer may not exercise the functions of that position in more than one obligated entity, except for those positions exercised for those institutions that are members of a financial group authorized by the Commission.

REQUIREMENTS: Any employee with executive level or a person hired for this purpose may be designated as Compliance Officer, who must comply with the following requirements: a) Minimum work experience of two (2) years within the securities market, in the banking or financial sector, or in related areas; and/or, b) Basic knowledge in the area of risk analysis, information systems management, formulation and compliance with policies to prevent crimes of money laundering and financing of terrorism.

NOTIFICATION TO CNBS: The regulated entity shall inform in writing the FIU of the appointment of the Compliance Officer, attaching the respective curriculum vitae. The FIU shall notify the Superintendence of such appointment. This provision also applies when the Compliance Officer is replaced, reporting the reasons that led to their separation. The CNBS may formulate observations within ten (10) business days following the notification of the appointment, when it deems that the position and level of responsibility occupied by the appointed persons does not allow them to perform their functions adequately.

INCOMPATIBILITIES: The following may not be designated as Compliance Officer of a regulated entity:

• a)

  Members of the Board of Directors or Board of Administration of the regulated entity;

• b)

  Persons who have been declared bankrupt or in creditor composition and who have not been rehabilitated;

• c)

  Persons who have been convicted of any crime against property or public faith;

• d)

  Be a Principal Executive who has decision-making and command powers over the transactions or operations carried out by the regulated entity or in which they work;

• e)

  Exercise functions as investment advisor, analyst, broker, internal auditor of the regulated entity;

• f)

  The external auditor, custodian, paying agent or registry agent of a broker-dealer, internal auditor of the regulated entity; and,

• g)

  Be the owner of more than twenty-five percent (25%) of the shares of the regulated entity.

FUNCTIONS OF THE COMPLIANCE OFFICER: The Compliance Officer of a regulated entity shall perform the following functions:

• a)

  Design and update the Compliance Program and propose to the General Manager or President of the Board of Directors or Board of Administration the policies and procedures for the prevention and detection of money laundering risk and financing of terrorism;

• b)

  In coordination with the Human Resources area or another area that exercises that function, plan and train personnel in all legal and regulatory provisions established by the authorities of the Republic of Honduras, as well as internal procedures related to the compliance program;

• c)

  Oversee compliance with the money laundering prevention and/or financing of terrorism system;

• d)

  Ensure that the policies and procedures established for the prevention of the crime of AML/FT are complied with, as well as the standards and prudential resolutions issued by the CNBS and the BCH;

• e)

  Verify the adequate conservation and custody of documents required for the prevention of Money Laundering and Financing of Terrorism;

• f)

  Remain constantly updated on technical and legal aspects related to the crime of Money Laundering and Financing;

• g)

  Implement alert signals for the prevention of the crime of money laundering and financing of terrorism;

• h)

  Keep a record of transactions reported by personnel as suspicious;

• i)

  Analyze unusual transactions detected, with the purpose of determining their atypicality and sending them to the FIU;

• j)

  Prepare the records and reports that must be presented to comply with these standards;

• k)

  Act as a liaison between the FIU and the regulated entity;

• l)

  Propose operational policies and procedures based on risk for prevention against the crime of money laundering and financing of terrorism;

• m)

  Present quarterly reports to the Board of Directors or Board of Administration on the content of its activities carried out in the period, audit reports effected, training received and reports of suspicious transactions submitted;

• n)

  Inform the FIU about new typologies of money laundering that it knows or detects; and, o) Other functions designated by the regulated entity in relation to the matter of AML/FT. CHAPTER III OF RULES RELATING TO CLIENTS OR BENEFICIAL OWNERS

INFORMATION FOR CLIENT IDENTIFICATION: Regulated entities are obligated to verify the identity and legal capacity of their clients, regular or occasional, at the moment of initiating commercial relationships with them, and may not perform transactions with them without first having adequate information about them. For such purposes, the regulated entity shall maintain a file for each of its clients that shall contain the data detailed below: NATURAL PERSON a) Full name and surnames (as it appears in the identity document). b) Place and date of birth. c) Type of identification (identity card, RTN, passport or resident card). d) Nationality. e) Gender. f) Complete residential address. g) Fixed and/or mobile telephone number, fax number and email address. h) Profession, occupation or trade. i) Origin of funds. j) Economic Activity. k) Business name (if applicable). l) Name, address and telephone number of employer including length of employment. m) Public position held in the last two years. n) Detail of income and expenses. o) Patrimonial situation. p) Personal, banking and commercial references. q) Marital status and name of spouse, if applicable. r) Full name and surnames of the beneficial owner. s) Full name and surnames of persons with authorized signatures. t) Objective of the investment. u) Financial capacity and risk preference. v) Declaration of direct and indirect beneficiaries of the transaction. LEGAL PERSON a) Name or business name; b) Corporate purpose and/or principal activity; c) Date of constitution. d) Domicile of the company; e) Location of main office, agencies, branches, or other facilities where the activities of the line of business are developed; f) Telephone number, fax and email address; g) National Tax Registry (RTN); h) Photocopy of the corporate deed and its amendments duly registered as well as registration number with the competent authority. i) Structure of ownership and control of the company, establishing who are its shareholders or owners and recording who is the beneficial owner or controller of the company, if different from the foregoing. The identification of shareholders or owners shall correspond as long as they hold a percentage of capital greater than 10%. In these cases, the information established for natural persons must be requested. j) Volume of income. k) Origin of funds. l) Objective of the final investment. m) Financial capacity and risk preference. In all cases, it must be expressly stated whether the client acts on their own account or on behalf of a third party and, in the latter case, identify the beneficial owner. The same data shall be obtained with respect to all holders, proxies, representatives and persons authorized to operate on behalf of the client whether this is a natural or legal person. For those clients that operate in significant amounts or are located in higher-risk categories, the activity profile shall be recorded in a note in the client file detailing the elements considered to classify them within this category. Such note shall be properly documented allowing the patrimonial, economic, and financial situation to be established or justifying the origin of the funds handled by the client.

ENHANCED DUE DILIGENCE: Regulated entities shall define policies and procedures for enhanced due diligence with respect to the clients and/or beneficial owners with whom they operate, which shall allow them to obtain an adequate knowledge of them. Such policies and procedures shall contain, at minimum:

• a)

  Reasonable measures to identify the client and/or beneficial owner and verify their identity using information from independent and reliable sources;

• b)

  Identify the beneficial owner and take reasonable measures to verify the true identity of the same so that the regulated entity is convinced that it knows them with certainty. In the case of legal persons, measures must be taken to understand the structure of ownership and control of the client;

• c)

  Procedures to obtain, update and maintain information regarding the economic activity developed by the client, which allow the origin of the funds handled to be adequately justified;

• d)

  Clear rules for client acceptance, defined based on risk factors such as: Country of origin, level of political exposure, type of business or activity, related persons, type of product required, volume of operations, etc., that contemplate special analysis mechanisms and more rigorous approach requirements for higher-risk client categories;

• e)

  Transaction monitoring systems that allow the detection of atypical or suspicious patterns in client behavior, conducting a continuous process of enhanced due diligence regarding the commercial relationship and a detailed examination of all client operations. Analysis and monitoring shall be applied individually to all clients of the regulated entity to allow the effective detection of suspicious transactions, adapting to new circumstances that arise during the relationship, leaving evidence of this management in the respective file. If during the process there are doubts about the information provided, the regulated entity shall conduct an on-site verification to verify its existence, leaving documentary evidence of this management in the client file. If the information collected is inconsistent with that provided by the client, or does not satisfy the regulated entity, it shall terminate the relationship. Additionally, they shall consider preparing a suspicious transaction report to the FIU.

MEASURES IN HIGHER-RISK SITUATIONS: Regulated entities shall establish continuous monitoring of those higher-risk clients, understood as those:

• a)

  Client residing in non-cooperative countries according to FATF;

• b)

  Politically Exposed Persons (PEPs) for which they shall comply with FIU Resolution 650/10-05-2010 regarding PEPs;

• c)

  Non-profit associations;

• d)

  Geographic areas considered high risk; and,

• e)

  Those carrying out cash operations for significant volumes, taking extreme precautions if they are low denomination currencies.

VERIFICATION OF CLIENT DATA: Regulated entities shall establish mechanisms to verify the data provided by the client, as well as the validity of the documentation presented. Regulated entities shall develop or have adequate information technology that allows them to detect all those operations that deviate from the previously determined parameters, so that these can be analyzed to determine whether or not they can be considered suspicious transactions.

SPECIAL VERIFICATION PROCEDURES: Regulated entities shall implement special procedures to verify the identity and control the transactions of those persons who link with the organization through operations in which direct and personal contact is not usual (non-face-to-face operations), such as in the case of non-resident clients, operations via Internet or through any operational modality that, using new or developing technologies, may favor client anonymity. If during the special verification process there are doubts about the information provided, or do not satisfy the regulated entity, it shall terminate the relationship. Additionally, they shall consider preparing a suspicious transaction report to the FIU.

MONITORING OF THE RELATIONSHIP WITH CLIENTS: After establishing a commercial relationship with a client, regulated entities shall specify the parameters under which the analysis and monitoring of their transactions shall be conducted, in order to determine whether the operations they execute correspond or do not to the documented knowledge they have of them. Analysis and monitoring shall be applied individually to all clients of the regulated entity to allow the effective detection of suspicious transactions, adapting to new circumstances that arise during the relationship, leaving evidence of this management in the respective file. Detailed examination of operations carried out during the entire course of that relationship, to verify that the operations being conducted are compatible with the information maintained by the regulated entity. These persons shall be classified as sensitive clients and therefore the application of enhanced due diligence measures should be reinforced with appropriate risk management systems, obtain approval from the board of directors or board of administration when initiating commercial relationships, implement procedures to determine the origin of the source of funds and maintain permanent monitoring of operations and commercial relationship. f) When regulated entities enter into contracts related to supervised institutions or other non-supervised obligated entities or with other regulated entities, they shall require and maintain in the respective files at minimum the following: f.1 Communication of the appointed Compliance Officer. f.2 Copy of the letter of submission of the Compliance Program to the Superintendence. f.3 Name of the regulatory or supervisory body or entity; and, f.4 Name of the External Audit Firm registered in the registry administered by the Commission for such purpose. This information shall be evaluated by the Compliance Officer of the regulated entity to determine the acceptance or expansion of the information, attaching a copy of the minutes in the client file.

KNOWLEDGE OF THE MARKET: Regulated entities shall develop tools that allow them full knowledge of the market in which they operate, with the purpose of determining the ranges within which the usual operations conducted by their clients are located according to the characteristics of the market. In such a way that regulated entities are capable of detecting operations that deviate from the activity profiles of clients or from the parameters of normality in effect in the market to which they belong, comparing the operations carried out by clients with profiles of similar activities. CHAPTER IV OF RULES RELATED TO THE PERSONNEL OF THE INSTITUTION

KNOWLEDGE: With regard to regulations related to personnel, regulated subjects shall observe at minimum:

• a)

  In the selection process they shall establish procedures to evaluate and verify the personal and employment background of their future officials, employees and advisors;

• b)

  Monitor the conduct of personnel, especially those who hold positions related to customer service, reception and administration, establishing appropriate rules and controls; and,

• c)

  Shall exercise special care regarding personnel whose standard of living does not correspond to their income, are required to take vacations or may be directly or indirectly associated with the disappearance of funds from the institution.

TRAINING: Regulated subjects shall develop and maintain an updated annual training program in order to instruct their officials and employees on the current regulations regarding the prevention of money laundering and/or terrorist financing, as well as regarding the policies, mechanisms and procedures established by them. Said program shall be approved by the Board of Directors or Administrative Council of the regulated subjects. In each employee's file, documented evidence shall be filed proving that they have been trained on the subject of Money Laundering and Terrorist Financing. Likewise, the administration of the subjects shall verify through periodic evaluations that their officials and employees know the obligations and responsibilities contained in the legal and regulatory framework in effect regarding money laundering and terrorist financing.

CONFIDENTIALITY AND SECRECY: Officials and employees of regulated subjects shall maintain the strictest confidentiality and secrecy regarding the information reports referred to in this Regulation, refraining from providing any information or news regarding the same, except to the Public Ministry or the competent judicial authority, therefore it is prohibited to inform any person of the fact that information has been requested by the competent authority or that it was provided to it. CHAPTER V OF THE REPORT, REGISTRATION AND DOCUMENTATION OF FINANCIAL AND SUSPICIOUS TRANSACTIONS

CASH TRANSACTION REPORT: Individual operations related to the services provided by regulated subjects and conducted in cash that equal or exceed the amount established by BCH shall be registered in the form of "Cash Transaction Report for the Securities Market" (RTE-MV), which shall be provided within the first ten (10) business days of the month following the transaction.

NON-CASH FINANCIAL TRANSACTIONS: Those non-cash financial transactions related to the regulated subject that equal or exceed the amount established by BCH shall be reported to the UIF within the first ten (10) business days of the month following the transaction, in accordance with the mechanism established for such purposes.

SUSPICIOUS TRANSACTION REPORTS AND REGISTRATION: In the "Suspicious Transaction Report" (RTS), regulated subjects shall immediately communicate to the UIF those operations conducted by natural or legal persons that, after analysis, they consider suspicious; subsequently creating a detailed file of the operations conducted throughout the course of that relationship, to verify that the operations being conducted are compatible with the information held by the regulated subject. These persons shall be classified as sensitive clients and therefore the application of due diligence measures must be reinforced with appropriate risk management systems, obtain approval from the board of directors or administrative council when initiating business relationships, implement procedures to determine the source of funds and maintain permanent monitoring of operations and the business relationship. CHAPTER VI ON THE PREVENTION OF TERRORIST FINANCING

ON THE OBLIGATION OF REGULATED SUBJECTS: When Regulated Subjects suspect or have reasonable grounds to believe that there are funds linked or related to or that could be used for terrorism, terrorist acts, by terrorist organizations, that finance terrorism, they must immediately inform the UIF using the "Suspicious Transaction Report" form (RTS). Regulated subjects shall comply with the provisions of the Law Against the Financing of Terrorism and its regulation. CHAPTER VII ON THE COMPLIANCE PROGRAM

COMPLIANCE PROGRAM: Regulated Subjects shall have a Compliance Program appropriate to the organization, structure, resources and complexity of their operations. A copy of the Compliance Program and the Board of Directors meeting minutes in which said program is approved shall be sent to the Superintendence, which shall acknowledge receipt of the same and may make such observations as it deems pertinent in conjunction with the UIF: Obligated subjects shall review annually the effectiveness of their Compliance Program, in order to verify its implementation and identify deficiencies or needs for updating and/or modification arising from changes in current legislation and the issuance of international regulations, policies and best practices. Any update and/or modification shall be communicated in writing to the Superintendence.

MINIMUM CONTENT OF THE COMPLIANCE PROGRAM: The Compliance Program shall contain at minimum the following: 1. Procedures Manual: This Manual shall be approved by the Board of Directors or Administrative Council, and shall contain guidelines for the development of institutional policy in the prevention and detection of the crime of money laundering and terrorist financing. This manual shall consider at minimum:

• a)

  Forms for the registration and reporting of suspicious transactions;

• b)

  Internal procedures for consultation and communication of suspicious transactions;

• c)

  Procedures for reporting suspicious transactions to the UIF immediately;

• d)

  Procedures for responding to information requests made by competent authorities;

• e)

  Procedures for control of compliance with the manual and sanctions for non-compliance;

• f)

  Procedures for identification and knowledge of clients, regarding their economic activity, operations, periodicity, volumes, products or services consistent with their profile;

• g)

  Procedures for identification, evaluation and reporting of natural or legal persons who may improperly use the institution's services for purposes they consider or are used in the legitimization of funds and terrorist financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established. 4. Audit System: In order to support the work of the Compliance Officer, each regulated subject shall incorporate into the internal audit manual the verification of the effectiveness, efficiency, compliance and results obtained in the implementation of the Compliance Program, and shall perform at least the following tasks:

  • a)

    Verify compliance with the system for prevention of money laundering and/or terrorist financing;

  • b)

    Verify compliance with the provisions established in the legal framework regarding money laundering and/or terrorist financing;

  • c)

    Conduct ongoing monitoring of the implementation of observations and recommendations made as a result of the evaluation of the Prevention System; and,

  • d)

    Design the audit plan that includes verifying the effectiveness and compliance of policies and procedures for the prevention and detection of money laundering and/or terrorist financing by the institution. Likewise, in the contract that the regulated subject enters into with the external audit firm, a clause must be included requiring an opinion on compliance regarding the suitability and functioning of the policies and procedures adopted by the regulated subject to prevent being used in money laundering arising from illicit activities and terrorist financing, indicating the material significant deficiencies and omissions, the recommendations issued to overcome them and the corrective measures adopted. 5. Sanctions Regime: Regulated subjects shall implement an internal sanctions regime so that it is applied to the person to whom one or more of the policies or procedures for the prevention and detection of money laundering and terrorist financing is imputed. This sanctions regime shall be applied without prejudice to the sanctions indicated by the current legal framework. CHAPTER VIII OF FINAL PROVISIONS

PRESERVATION OF DOCUMENTS: Regulated subjects shall preserve, for at least a period of five (5) years all necessary documents concerning the operations conducted, which allow them to immediately comply with information requests from competent authorities, as well as to preserve records of the identification data of their clients, after the business relationship has concluded. individualized for each case, it shall contain all the necessary supporting information that supports and evaluates this situation. The regulated subject, its directors, officials, owners, authorized representatives and employees authorized by Law, are exempt from administrative and criminal responsibility, as appropriate when, in compliance with this article, they make the communications.

TRANSACTIONS RELATED TO NATURAL OR LEGAL PERSONS WHO MANAGE THIRD PARTY FUNDS: Regulated subjects shall have effective procedures to detect all transactions conducted by natural or legal persons who habitually manage third party funds, conducting monitoring of their operations. To ensure adequate monitoring of these movements, they shall be in a position to identify the final beneficiary of the transactions and obtain information on the origin of the funds, whenever required for the development of their due diligence procedures. CHAPTER VI ON THE PREVENTION OF TERRORIST FINANCING

ON THE OBLIGATION OF REGULATED SUBJECTS: When Regulated Subjects suspect or have reasonable grounds to believe that there are funds linked or related to or that could be used for terrorism, terrorist acts, by terrorist organizations, that finance terrorism, they must immediately inform the UIF using the "Suspicious Transaction Report" form (RTS). Regulated subjects shall comply with the provisions of the Law Against the Financing of Terrorism and its regulation. CHAPTER VII ON THE COMPLIANCE PROGRAM

COMPLIANCE PROGRAM: Regulated Subjects shall have a Compliance Program appropriate to the organization, structure, resources and complexity of their operations. A copy of the Compliance Program and the Board of Directors meeting minutes in which said program is approved shall be sent to the Superintendence, which shall acknowledge receipt of the same and may make such observations as it deems pertinent in conjunction with the UIF: Obligated subjects shall review annually the effectiveness of their Compliance Program, in order to verify its implementation and identify deficiencies or needs for updating and/or modification arising from changes in current legislation and the issuance of international regulations, policies and best practices. Any update and/or modification shall be communicated in writing to the Superintendence.

MINIMUM CONTENT OF THE COMPLIANCE PROGRAM: The Compliance Program shall contain at minimum the following: 1. Procedures Manual: This Manual shall be approved by the Board of Directors or Administrative Council, and shall contain guidelines for the development of institutional policy in the prevention and detection of the crime of money laundering and terrorist financing. This manual shall consider at minimum: a) Forms for the registration and reporting of suspicious transactions; b) Internal procedures for consultation and communication of suspicious transactions; c) Procedures for reporting suspicious transactions to the UIF immediately; d) Procedures for responding to information requests made by competent authorities; e) Procedures for control of compliance with the manual and sanctions for non-compliance; f) Procedures for identification and knowledge of clients, regarding their economic activity, operations, periodicity, volumes, products or services consistent with their profile; g) Procedures for identification, evaluation and reporting of natural or legal persons who may improperly use the institution's services for purposes they consider or are used in the legitimization of funds of 2. Client Knowledge Policies: These policies and procedures shall aim at least:

• a)

  Establish measures for sound risk administration, which allow regulated subjects to contemplate standards for acceptance and identification of clients and monitoring of those considered high risk, tending to reduce the risk that by commission or omission their services are used by illegitimate funds proceeding from illicit activities or to finance terrorist actions;

• b)

  Protect the reputation of the institution;

• c)

  Ensure compliance with the standards established in current legislation and sound practices of the securities market;

• d)

  Warn timely of suspicious transactions, conducted by any natural or legal person with whom securities transactions are conducted, which could be related to the crime of money laundering and terrorist financing;

• e)

  Prevent among other negative consequences, the imposition of criminal, administrative or pecuniary sanctions on its employees, officials and directors or the regulated subject itself;

• f)

  Establish requirements with respect to the identification of the client and/or final beneficiaries, such that regulated subjects know the full identification of the same;

• g)

  Warn of some patterns of conduct typical or susceptible to being used in the commission of the crime of money laundering and terrorist financing, which appear in the catalog of transactions that will be provided for such purposes; and,

• h)

  Classify individual or corporate clients, by geographic area and by required products; as well as by risk and regular and occasional clients. 3. Code of Ethics: This Code shall contain among other aspects the principles, values, policies, processes and controls that must be applied to manage the risk of exposure to money laundering and terrorist financing, as well as to avoid conflicts of interest. Said Code shall be approved by the Board of Directors or Administrative Council. Shareholders, directors, legal representatives, administrators, officials and employees shall be subject to compliance with this Code to prevent the institution's services from being used to legitimize or conceal funds destined for money laundering and terrorist financing. Likewise, the obligation to provide full cooperation to national authorities to combat the aforementioned crimes shall be established.

OBLIGATION OF STOCK EXCHANGES: Stock Exchanges shall have the necessary means that allow them to carry out, in an adequate and sufficient manner, the monitoring and control of the provisions of this Regulation, by the brokerage houses.

SUPERVISION: The Commission, within its supervision plans, shall include procedures aimed at verifying compliance with the current regulations regarding the prevention of money laundering and financing of terrorism for participants in the securities market.

SANCTIONS: When subjects fail to comply with the responsibilities and obligations contained in this regulation, it shall give rise to the application of the sanctions stipulated in the Securities Market Law, Financial System Law, Law Against Money Laundering Crimes, Law Against Financing of Terrorism, and other legal provisions issued on the matter.

UNFORESEEN CASES: The Commission, by means of a Resolution, shall resolve cases not provided for in this Regulation.

EFFECTIVE DATE: This Regulation shall become effective from its publication in the Official Gazette La Gazeta. 2. Communicate this Resolution to the participants of the securities market. 3. This Resolution shall become effective from its publication in the Official Gazette La Gazeta, in the meantime Resolution No. 1238/07-12-2004 remains in effect, F) VILMA C. MORALES M., President, FRANCISCO ERNESTO REYES, Secretary". FRANCISCO ERNESTO REYES Secretary 3 S. 2011.