ANTI-MONEY LAUNDERING AND ANTI-TERRORISM FINANCING POLICY
PAG SEGURO TECNOLOGIA LTDA
Effectiveness and Revision
This Policy is effective for one (1) year as of the date of the last revision written on the chart at the end hereof. It shall be revised and updated before it expires, in case of changes in the applicable legislation and/or strategic management of PAG SEGURO Tecnologia S.A.
INTRODUCTION AND PURPOSEThis Anti-Money Laundering and Anti-Terrorism Financing Policy (“AMLATFP” “Policy”) of PAG SEGURO Tecnologia Ltda(“PAG SEGURO” or “Company”) was developed pursuant to applicable law and as the best market practices, with the purpose of establishing standards to prevent and detect money laundering crimes or concealing assets, rights and values by customers, partners and suppliers, by their employees or even through transactions.
This Policy is an integral part of PagSeguro’s corporate governance structure and it establishes procedures and standards that shall be complied with when providing services to customers.
The main purposes of this Policy are to:
a) Establish the principles, standards, guidance and procedures to prevent and detect transactions and business practices with the intention of using PAG SEGURO, whether directly or indirectly, as a mechanism to launder money and/or as a platform to finance terrorism;
b) Ensure that all of PAG SEGURO’s employees are aware of the rules provided herein and that they are able to apply the due AMLATFP procedures in favor of PAG SEGURO.
This Policy covers the interactions and all stages of the relationship of PAG SEGURO’s departments with their customers, partners and suppliers, as well as their directors and employees.
Registration: accreditation process for new customers, which shall comply with the requirements established by PAG SEGURO and applicable law. Customers: Natural persons and legal entities, who are registered to use PAG SEGURO’s various payment.
Code of Ethics: code of ethics of Grupo UOL, adhered by all of PagSeguro’s employees at their admission.
Employee: all and any employees, officer under the articles of incorporation, internet, contractor of PAG SEGURO.
Board: Anti-Money Laundering and Anti-Terrorism Financing Board. The forum used is that of PAG SEGURO.
Law No. 9,613/98: Provides for money laundering crimes or concealment of assets, rights and values; as well as it prevents the use of the financial system for unlawful acts and determined the constitution of the Brazilian Council for Financial Activities Control – COAF.
Law No. 12,683/12: Amendment to Law No. 9,613/98 to make the criminal prosecution of money laundering crimes more effective.
Law No. 12,846/13: Anticorruption Law.
PEP: politically exposed persons, as provided by Bacen Circular 3,461/09.
Policy/AMLATFP: Anti-Money Laundering and Anti-Terrorism Financing Policy.
MONEY LAUNDERING DEFINITIONLaw No. 120683/12, in Brazil, defines money laundering crime as the crime of concealing or disguising the nature, origin, location, disposition, movement or ownership of assets, rights or values from criminal violation, whether they were received directly or indirectly.
The money laundering crime is usually committed in various stages with the purpose of:
a) Hindering the tracking of transactions;
b) Precluding the association of funds to criminal acts;
c) Concealing the identity of the involved parties; and
d) Providing the return of funds directly to the criminals, or reversion in favor of them.
Money laundering stages may be developed throughout a certain period of time or simultaneously, and they may be defined as follows:
- Placement: application of funds from unlawful acts in bank deposits, purchase of trade securities or trade assets, or in transactions where cash is accepted as payment.
- Layering: the second stage of the process is to make the transaction cycle and the accounting tracking more difficult to trace. During this stage, the criminal tries to break the evidence chain that traces transactions of the funds.
- Integration: in the last stage, the unlawful funds are formally merged into the economic system.
Regarding Terrorist Financing, all transactions that are or will be used for terrorist purposes are considered, even if the source of the appeal is lawful.
REGULATORY AND MONITORING BODIESDue to the need of stricter monitoring and control practices, official regulatory and monitoring bodies, from Brazil and abroad, have been expanded. Entities and bodies were created to disseminate, regulate and oversee the actions of detection, prevention and reporting of money laundering and associated crimes.
In Brazil, the main regulatory and monitoring bodies are:
a) BACEN – Central Bank of Brazil;
b) COAF – Brazilian Council for Financial Activities Control: entity incorporated under the Ministry of Finance to regulate, apply administrative penalties, receive, analyze and detect allegedly money laundering cases.
Abroad, the main regulatory and monitoring boards are:
a) OFAC – Office of Foreign Assets Control;
b) Vienna Convention;
c) FATF – Financial Action Task Force on Money Laundering;
d) CICAD – Inter-American Drug Abuse Control Commission;
e) FIU – Financial Intelligence Unit; and
f) GPML – Global Plan Against Money Laundering.
MAIN PROCEDURES ADOPTED FOR AMLATFP
In order to prevent and fight money laundering and terrorism financing, and pursuant to legal and regulatory requirements applicable to PAG SEGURO, we have adopted of the following procedures and internal controls:
a) Process of Identification of customers and registration of their personal information;
b) Monitoring and recording of payment transactions;
c) Freezing and detection of transaction attempts in non-cooperative Countries;
d) Detecting and reporting suspicious transactions within 24 hours;
e) Performance of previous analysis of new products and services in order to prevent money laundering and terrorism financing crimes;
f) Proper training of our Employees to prevent money laundering; and
g) Periodic revision of AMLATFP controls;
h) Monthly AMLATF board; and
i) Reporting of suspicious transaction (COAF).
The Head of AMLATF, through his/her team, is responsible for implementing and monitoring compliance with the rules and procedures provided herein.
6.1 Monitoring and registration of payment transactions
The team responsible for AMLATFP (“team”) monitors transactions carried out by the customers in order to assess situations where they may find traces of money laundering or terrorism financing.
The system that monitors and detects suspicious money laundering or terrorism financing transactions follows several standards that meet regulatory requirements and take into account the profile, origin and destination of funds and the financial capacity of the customers. In addition, it triggers warnings when unusual activities are detected, which shall be handled by the Board.
For cases where it is not possible to identify the customer or the final beneficiary of the transaction and in the event customers are identified as PEP, PagSeguro shall adopt stricter analysis procedures.
The team will maintain records of all financial services rendered and all financial operations performed with clients.
The records of the activities must include all information necessary for the analysis, negotiation and reporting of suspicious cases.
6.2 Reporting of suspicious transactions to regulatory bodies
Transactions or proposals with traces of money laundering or terrorism financing must be taken to the AMLATFP Board and reported to the competent regulatory bodies, as applicable, pursuant to the legal and regulatory provisions.
Communications will be made through PagSeguro Internet S.A. (“PagSeguro”), a company of the Uol Group, which provides services to PAG SEGURO. Reporting made in good faith does not result in civil or administrative liability to PAG SEGURO, nor to its directors and employees. If reporting to COAF is necessary, it shall be done within the next business day after the analysis by the Head of AMLATF.
Any employee who notices traces of Money Laundering or Terrorism Financing must immediately report to the Anti-Money Laundering and Anti-Terrorism Financing department for analysis. Such employee shall report such fact immediately after he/she becomes aware of it
The AMLATFP training program is continuous and it shall apply to all of employees of PAG SEGURO and, if needed, Grupo UOL, with the purpose of:
b) To train employees, as per their position, on how to detect, prevent, handle and report risky situations or situations with trace of money laundering or terrorism financing in their business.
The program shall be applied through institutional actions and in the business areas, including in-class courses or e-learning, workshops, video calls, conference calls, campaigns, notifications, publications, among other methods developed by PAG SEGURO. Such training is comprised by a theoretical part and another part to assess the acquired knowledge. For employees to pass, they shall get at least eighty percent (80%) of right answers. If they do not achieve the required percentage, they must take another quiz until the minimum approval percentage is obtained.
6.4. Periodic revision of AMLATFP controls
The AMLATFP department shall periodically revise the AMLATFP controls, with the purpose of:
b) Assessing if the risk management structure is in compliance with this Policy and other standards associated to PAG SEGURO’s risk management, and with regulatory requirements; and
c) Annually developing a Report with (i) general monitoring aspects; (ii) results of monitoring in AMLATFP; and (iii) AMLATFP training for the employees.
The conclusions, recommendations and opinions included in such Report will be submitted to PAG SEGURO’s Head of AMLATF.
ROLES AND RESPONSIBILITIES OF THE DEPARTMENTSAll employees within their activities have duties and responsibilities associated to the AMLATF Program. The following positions, regardless of its role with the Uol Group structure, are identified as having direct roles and responsibilities to the Program:
7.1. Money Laundering Monitoring and Prevention
a) To prepare, revise and apply the policies, procedures, routine and controls ensuring that PAG SEGURO complies with applicable laws and regulation, as well as the internal guidelines applicable to AMLATFP, including, but not limited to:
Risk assessment and compliance with requirements and procedures applicable to clients who demand special attention, pursuant to Circular 3,461/09;
ii. Risk assessment of PEP Customers, pursuant to Circular 3,461/09;
iii. Checking information provided by the customers;
iv. Annual training of good practices and risks associated to AMLATF;
v. Daily monitoring of fraud and money laundering;
vi. Keeping whistleblowing channels for money laundering and terrorism financing, for PAG SEGURO’s internal departments; and
vii. Customer economic-financial analysis procedures versus financial activity performed.
b) To establish procedures and criteria to analyze, establish and safekeep files on unusual/suspicious cases in the registration;
c) To report to COAF, when needed, any suspicion on customers and customer’s transactions with a risk of money laundering and/or terrorism financing and to safekeep the reported information for at least five (5) years;
d) To submit to PAG SEGURO’s board for resolution and/or ratification of rules and specific cases presenting high risk.
e) To establish the content of training sessions to disseminate among employees the proper guidance on their duties and responsibilities associated to AMLATFP;
f) To submit this Policy for approval of the Officer in charge;
g) To interact with regulatory bodies (when needed);
h) To maintain records and systems under applicable regulation; and
i) To keep, for five (5) years, documents related to the analysis that substantiated the decision on whether or not reporting the Customer to COAF.
7.3 Employees and other Departments
a) To keep the secrecy, especially in public location, all and any information on customers, their proposals, transactions, amounts and/or communications to regulatory bodies; and
b) To take part in training programs, provided by PAG SEGURO, that will allow them to:
Get to know legislation and supplementary regulations applicable to AMLATFP;ii. Detect unusual, irregular or suspicious situations;
iii. Get to know the best practices to apply proper KYC procedures; and
iv. Identify the attempts of dodging internal controls and regulations in force, applicable to the AMLATFP.
7.4. Commercial Department
a) It shall be fully aware of the transaction performed by the customers and their portfolios, acting to prevent operations and/or situations with traces of direct or indirect association with the money laundering or terrorism financing crimes; and
b) It shall be aware that the maintenance and relationship with the customer must always be guided by transparency and honesty of their activities, under the “Know Your Customer” concept, and not only by the commercial interest and/or profitability that the customer may provide.
7.5. Board of Executive Officers
The Board of Executive Officers fosters this Policy and shall ensure that the program receives proper support. The actual liability for the compliance of provisions hereof is assigned to the officer of each department. Such officers are also responsible for establishing institutional guidelines based on the amounts and principles set in this Policy, in the internal control standards, in the standards provided by regulatory and self-regulatory entities and bodies, and applicable best practices. Additionally, the PAG SEGURO Directors are responsible for:
a) To implement procedures ensuring that our products and services comply with the legislation and supplementary regulation applicable for AMLATF, as well as the established internal policies;
b) To report to the competent bodies the situations with traces of money laundering and terrorism financing in the registration.
7.6. Information Technology
This department shall ensure that the Company’s systems are working properly, as well as the resolution of any failures as soon as possible.
7.7. Affiliated companies, suppliers and partners
They must comply with this Policy, as applicable, as well as applicable laws and regulations.
Questions arising from this Policy or any situation that may involve money laundering and terrorism financing must be submitted to the Anti-Money Laundering and Anti-Terrorism Financing department, as well to e-mail l-PAG SEGUROfirstname.lastname@example.org.
Law No. 9,613/98, amended by Law 12,683/12, establishes strict penalties for those who do not comply with the AMLATF procedures, both under criminal and administrative sphere. The main penalties to which PAG SEGURO and its directors are subject to are:
b) Variable monetary fine not to exceed: (i) twice the transaction amount, (ii) twice the actual profit achieved or that would presumably be achieved through the operation; or (iii) the amount of R$ 20,000,000.00 (twenty million Reais);
c) Temporary restriction to exercise their duties, up to ten years, applicable to the officer under the articles of incorporation; and
d) Revocation or suspension of the authorization to exercise the activity, operation or duty.
In addition, the Employees are subject to internal disciplinary actions, including possibility of dismissal with cause, in case of violation of the rules provided by applicable law and this Policy. Negligence and involuntary failure are considered violation to this Policy and the Code of Ethics, subject to disciplinary measures provided by PAG SEGURO’s internal rules or by the Committee, if there is no specific provision for the case.
This Policy was approved by PAG SEGURO’s Board of Executive Officers, at meeting held December 20, 2019.
CONTROL AND CHANGESRevision Changes Date 00 First release | AMLATFP & Compliance December/2019
PAG SEGURO TECNOLOGIA LTDA. – AMLATFP & COMPLIANCE