Anti-Money Laundering and OFAC Policy
Last updated: 12/4/18
Principal Financial Group® (Principal®) has established an anti-money laundering policy to assist with the detection of transactions that may involve money laundering, terrorist financing, or other illicit activity and to provide resources for reporting applicable situations to FinCEN (the Financial Crimes Enforcement Network), a division of the United States (U.S.) Treasury Department) or as otherwise required by applicable law.
This policy is part of the Corporate Ethics and Compliance program at Principal, assures the Company satisfies all legal and regulatory requirements and maintains ethical business practices.
The Chief Compliance Officer (CCO) of Principal monitors and supports company-wide compliance with the policy and reports regularly to senior management and to the Audit Committee of the Board of Directors of Principal.
Anti-Money Laundering program requirements
Money laundering is a crime. It involves the movement of money from illegal sources or unlawful activities into legitimate businesses or activities.
The Compliance Directors and/or designated AML Compliance Officers of each member company, business unit and area are responsible for developing, implementing, and maintaining an anti-money laundering program tailored to satisfy company-wide policies and the requirements of applicable laws and regulations to their business operations. Subject to conforming to industry specific regulations, such program will generally address the following items:
- Collecting and verifying appropriate identifying information about customers, beneficial owners, and control persons, and maintaining records of such information;
- Comparing the names of customers, beneficial owners, business associates, and payees with the lists maintained by FinCEN and the Office of Foreign Assets Control (OFAC) (and any other similarly mandated lists) and reporting any matches or otherwise complying with legal requirements;
- Refusing to accept funds from, or to do business with, shell banks or customers whose funds the company reasonably believes are derived from criminal activity or from a sanctioned source;
- Training employees, agents, and brokers to identify red flag activities and report them to their manager or as directed in their AML procedures;
- Designating an AML Compliance Officer who, in conjunction with applicable compliance personnel, will review red flag activities and determine appropriate measures to be taken, consistent with applicable law. Examples of measures would include refusing to open an account, severing relations with the customer or vendor, closing or freezing accounts, and, when appropriate, filing a suspicious activity report (“SAR”) with FinCEN;
- Understanding the nature and purpose of the customer relationships and implementing appropriate risk-based procedures for conducting ongoing due diligence; and
- Conducting annual independent audits to evaluate the effectiveness of the Company's AML policies and procedures.
Employees and company representatives should report any suspicious transaction or other activity by employees, agents, and brokers, as directed in the applicable anti-money laundering procedures. Leaders will coordinate suspicious transaction information with designated AML compliance contacts and, if in the U.S., the Corporate Ethics, Compliance and Investigations team in the Law Department to determine appropriate action to be taken and file reports when applicable.
For Principal’s operations outside the U.S., leaders should coordinate suspicious transactions information with the designated compliance contact.
Office of Foreign Assets Control (OFAC) Policy
The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.
In connection with its administration of these sanctions programs, OFAC maintains and publishes a list of countries, individuals, and organizations that are subject to sanction as a result of actions including those hostile to national security, engagement in terrorist activities and arms or narcotics trafficking. This includes a list of individuals and entities that are called “Specially Designated Nationals” or “SDNs” (SDNs, sanctioned countries and other non-SDN or similar lists, are together referred to herein as “Sanctions Targets”). OFAC regulations must be complied with by all US persons and entities, including US Citizens regardless of where they are located in the world, all persons or entities within the United States, and all US incorporated entities and their foreign branches. In the case of certain OFAC enforced sanctions, such as those applying to Iran, foreign subsidiaries owned or controlled by US companies may also be required to comply.
In accordance with this Policy and to the extent required by the applicable sanction program, Principal’s companies have a legal obligation to avoid doing business with Sanctions Targets, and take action as required by OFAC regulations, which may include freezing accounts, blocking payments, and filing necessary reports with OFAC. Compliance with this Policy and the OFAC enforced sanctions is essential to protect Principal against criminal and civil penalties as well as to maintain Principal’s reputation and trust of our customers.