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13/5/2016

ANTI-MONEY LAUNDERING AND COUNTER TERRORISM FINANCING POLICY

Public Use

May 13, 2016

http://www.bmfbovespa.com.br/produtos








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ANTI-MONEY LAUNDERING AND COUNTER

TERRORISM FINANCING POLICY

13/5/2016

CONTENTS

1 INTRODUCTION ......................................................................................... 3

2 SCOPE ........................................................................................................ 3

3 APPLICABILITY .......................................................................................... 5

4 ANTI –MONEY LAUNDERING AND COUNTER TERRORISM

FINANCING POLICY ................................................................................... 5

5 PENALTIES ............................................................................................... 10

6 FINAL PROVISIONS ................................................................................. 11

7 CONTROL INFORMATION ....................................................................... 11

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1 INTRODUCTION1

BM&FBOVESPA is duty-bound to prevent and combat terrorism financing and

the crimes of money laundering and concealment of assets, rights and property,

in compliance with Law 9613/98, article 9, sole paragraph, item (I), as amended

by Law 12683/02, and with CVM Instruction 301/99, articles 2 and 3.

In accordance with best practice in Anti-Money Laundering and Counter

Terrorism, BM&FBOVESPA has issued this Corporate Policy, which establishes

the Anti-Money Laundering and Counter Terrorism Program.

To prevent and combat use of the financial system and especially the markets

managed by BM&FBOVESPA for terrorism financing, money laundering and/or

concealment of assets, rights and property, the Company is disseminating this

document to all staff and officers, who undertake to comply with its guidelines

and determinations.

Through this Policy, which has been approved by its Executive Board,

BM&FBOVESPA undertakes to develop and maintain processes and effective

controls to prevent and combat terrorism financing, money laundering and

property concealment that reflect local and global best practices for service

providers with its characteristics.

2 SCOPE

Purpose

This Policy establishes the concepts, principles and guidelines of

BM&FBOVESPA’s Anti-Money Laundering and Counter Terrorism Program,

based on the applicable legal and regulatory requirements and international

best practice. The aim of the Program is to prevent use for unlawful purposes of

the services offered by the Company and the markets it manages.

1 This is a free translation provided solely for the convenience of English-speaking readers and is not legally binding. Any questions arising from the text should be clarified by consulting the original in Portuguese. In the event of any discrepancy, the original in Portuguese shall prevail.

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Related documents

This Policy should be read and construed in conjunction with the following

documents:

Law 9613 (March 3, 1998) (and updates)

Law 13170 (October 16, 2015)

Decree 5640 (December 26, 2005)

COAF Resolution 007 (September 15, 1999)

COAF Resolution 015 (September 28, 2007)

CVM Instruction 301 (April 16, 1999) (and updates)

Central Bank of Brazil (BACEN) Circular 3461 (July 24, 2009) (and

updates)

BACEN Circular 3542 (March 12, 2012)

CVM/SMI/SIN Circular Letter 04/2015 (December 22, 2015)

CVM/SMI/SIN Circular Letter 05/2015 (December 22, 2015)

CVM/SMI/SIN Circular Letter 01/2016 (January 18, 2016)

CVM/SMI/SIN Circular Letter 02/2016 (January 19, 2016)

Serasa – Politically Exposed Person List

Consolidated United Nations Security Council Sanctions List

Wolfsberg Anti-Money Laundering Principles

Recommendations of the Financial Action Task Force (FATF)

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As an entity that manages organized markets in compliance with CVM 461

Instruction and a clearinghouse considered systemically important by the

Central Bank of Brazil, as stipulated by Law 10214, National Monetary Council

Resolution 2882 and BACEN Circular 3057, BM&FBOVESPA disciplines the

functioning of the markets it manages through rulebooks and operating

procedures manuals, which establish rights and duties for BM&FBOVESPA and

its participants.

3 APPLICABILITY

This Policy applies to BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e

Futuros and its subsidiaries and affiliates in Brazil and abroad except Banco

BM&FBOVESPA, which has its own separate policy.

4 ANTI –MONEY LAUNDERING AND COUNTER TERRORISM

FINANCING POLICY

4.1 Guidelines

The following guidelines are established:

The Company shall develop knowledge regarding the prevention and

combating of terrorism financing, money laundering and concealment of

assets, rights and property, permanently disseminating the knowledge

and culture in question to its staff and officers.

The Company shall clearly define the roles and responsibilities of staff

and officers in the prevention and combating of terrorism financing,

money laundering and concealment of assets, rights and property.

The Company shall permanently evaluate the products and services it

offers from the perspective of the risk that such products and services

could be misused for the purposes of terrorism financing, money

laundering and/or concealment of assets, rights and property, and shall

take the necessary action to mitigate this risk.

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The Company shall develop and maintain robust monitoring processes to

detect unusual and/or suspicious transactions that may relate to

terrorism financing, money laundering or property concealment, and

whenever appropriate report such transactions to the competent

authorities in compliance with the applicable legal and regulatory

requirements.

4.2 Roles and responsibilities

4.2.1 Anti-Money Laundering and Counter Terrorism Committee (“Committee”)

The Committee is a permanent non-statutory collegiate body with decision-

making powers and governed by its own bylaws. Its members are professionals

employed by BM&FBOVESPA and appointed by the Chief Executive Officer.

The Committee is responsible for:

Approving norms, procedures and measures relating to

BM&FBOVESPA’s Anti –Money Laundering and Counter Terrorism

Program, and assuring their compliance with the applicable legal and

regulatory requirements;

Establishing roles and duties for those areas of the Company whose

activities are affected by the Program’s implementation;

Approving the models, criteria and parameters used by the Company to

monitor and detect suspicious or unusual transactions that may relate to

terrorism financing or money laundering, and evaluating the performance

of such models, criteria and parameters in accordance with the

applicable legal and regulatory requirements at least once a month.

4.2.2 Responsible Officer

In compliance with article 10 of CVM Instruction 301 (April 16, 1999),

BM&FBOVESPA hereby appoints its Chief Operating Officer to act as officer

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responsible for the implementation and enforcement of the measures

established in this document.

4.2.3 Executive Operations, Clearinghouse & CSD Department

The Chief Operating Officer heads the Operations, Clearinghouse & Central

Securities Depository Department, which is responsible for securities trading,

registration, settlement and risk management in the environments managed by

BM&FBOVESPA and for centralized safekeeping of deposited securities.

The activities for which this department is responsible are carried out by a

number of units subordinated to it, as detailed below. All units shall maintain

processes and controls designed to prevent and combat terrorism financing,

money laundering and concealment of assets, rights and property, within their

respective spheres of competence and in accordance with the guidelines

established by the Committee.

4.2.3.1 Operations

Responsible for implementing and managing (i) controls designed to mitigate

the risk that BM&FBOVESPA’s electronic trading platform could be used for

terrorism financing or money laundering, and (ii) monitoring processes designed

to detect suspicious or unusual transactions potentially involving terrorism

financing or money laundering performed via the electronic trading platform.

The controls should be built on the basis of related documents cited in 2.2,

without prejudice to lists drawn up internally.

4.2.3.2 Settlement


the risk that BM&FBOVESPA’s settlement, open interest management and

securities lending (BTC) registration services could be used for terrorism

financing or money laundering, and (ii) monitoring processes designed to detect

suspicious or unusual transactions relating to settlement, open interest

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management and securities lending registration processes and potentially

constituting evidence of terrorism financing or money laundering.



4.2.3.3 Risk Management


the risk that the central counterparty services provided by BM&FBOVESPA

could be used for terrorism financing or money laundering, and (ii) monitoring

processes designed to detect suspicious or unusual transactions relating to the

collateral posting, withdrawal and execution processes and potentially

constituting evidence of terrorism financing or money laundering.



4.2.3.3.1 Superintendency of Credit Risk

The Superintendency of Credit Risk and Anti-Money Laundering is responsible

for: (i) communicate to the Council for Financial Activities Control (COAF) - and

BM&FBOVESPA Market Supervision (BSM) - suspicious or atypical

transactions can set up terrorist financing or evidence of money laundering

detected in the Company's monitoring process under its disposal by the laws

and regulations in force; (Ii) maintain a record of all communications made to

COAF and BSM, as well as their justification; (Iii) generation, control and supply

of monitoring lists and (iv) reporting, timely, to the Audit Committee and the

Board of Directors communications made to COAF, communicating them

immediately in case of serious events.

4.2.3.4 Central Securities Depository & OTC Registration


the risk that the central securities depository and OTC registration services

provided by BM&FBOVESPA could be used for terrorism financing or money

laundering, and (ii) monitoring processes designed to detect suspicious or

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unusual transactions relating to CSD and OTC registration systems and

potentially constituting evidence of terrorism financing or money laundering.

Also responsible for maintaining and keeping up to date the register of

BM&FBOVESPA’s participants (Clearing Members, Trading Participants,

Settlement Agents, Custodians, Registrars, Registration Participants,

Correspondent Banks, SELIC Participants, Collateral Issuers, Agribusiness

Depositories, Gold Depositories, and Gold Refiners) in compliance with the

applicable legal and regulatory requirements.



4.2.3.5 Distributor Relations

Responsible for managing relations with broker-dealers, banks, vendors and

other distributors, and for onboarding new financial institutions and vendors.

4.2.4 Internal Controls, Compliance & Corporate Risk Department

Responsible for the Company’s compliance processes and as such for assuring

compliance with the legal and regulatory requirements relating to the prevention

and combating of terrorism financing, money laundering and concealment of

assets, rights and property, among others.

4.2.5 Executive Product Department

Responsible for prior analysis of new product development projects with the aim

of identifying and mitigating the risks that new products could involve or be used

to commit the crimes of terrorism financing, money laundering or concealment

of assets, rights and property.

4.2.5.1 Product Engineering

Responsible for prior analysis of new product development projects with the aim

of identifying and mitigating the risks that new products could involve or be used

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to commit the crimes of terrorism financing, money laundering or concealment

of assets, rights and property.

4.2.6 Human Resources

Responsible for reputational analysis of candidates during the hiring process

(“know your employee”), tracking employees’ economic and financial situation,

and developing and implementing training processes relating to the Anti-Money

Laundering and Counter Terrorism Program in accordance with the guidelines

established by the Committee.

4.2.7 Auditing

Responsible for verifying compliance with this Policy by the Company.

4.2.8 Legal

Responsible for the Company’s legal processes, especially assuring

compliance with the legal and regulatory requirements relating to Anti Money

Laundering and Counter Terrorism

5 PENALTIES

Failure to comply with regulatory requirements subjects management and staff

to administrative penalties and possible prosecution for money laundering and

property concealment.

Negligence and willful blindness (intentional or knowing involvement in illicit

activities or transactions funded by illicit activities, such as structuring or

advising others to structure transactions with the aim of bypassing the obligation

to report them to the regulatory authorities) are considered violations of this

Policy and BM&FBOVESPA’s Code of Conduct. Any such offenders are subject

to the disciplinary measures specified in the Company’s normative documents.

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6 FINAL PROVISIONS

The above provisions apply to the entire Company immediately upon

publication of this Policy.

7 CONTROL INFORMATION

Validity: From July 20, 2016-July 20, 2016

1st Version: October 23, 2013

Areas responsible for this document:

Responsible for:

Area

Drafting Credit Risk Unit

Revision Credit Risk Division

Approval Board of Directors

Change log:

Version Item changed Change Rationale Date

1 NA NA NA 10/23/2013

2 4.2 Roles &

Responsibilities

Responsibilities of CSD Dept. and OTC Registration Dept.

combined

Adjustment to organizational

structure 2/21/2014

3 4.2 Roles &

Responsibilities

Combating terrorism financing included

Responsibilities of Product Engineering and Legal Depts.

included

Completeness 4/30/2015

4

2.2 Related Documents

4.2 Roles & Responsibilities

Inclusion of legal devices and Consolidated United Nations

Security Council Sanctions List reference

Change Credit Risk

Management (name) and responsibilities

Inclusion of report prevision for Audit Committee and the Board

of Directors communications made to COAF; and

References updates

Adjustment to organizational

structure

07/20/2016

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Inclusion of responsibilities for Operations, Settlement, Central

Securities Depository & OTC Registration and Risk

Management to carry out controls using internal lists, national and international.

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