ANTI-MONEY LAUNDERING AND ANTI-TERRORIST FINANCING POLICY
Patagonia Gold Corp and its subsidiaries (“Patagonia”) is committed to ensuring that its business operations are not used by others to bring funds generated by illegal activities into legitimate commerce (money laundering).
Although Patagonia is not a financial institution, anti-money laundering (“AML”) requirements are applicable to our business. Money laundering also represents several risks for non-financial companies such as Patagonia, including: reputational damage; operational losses resulting from inadequate or failed internal processes, people and systems, or from external events; legal liabilities due to any of these risks resulting in the failure to comply with applicable laws which could have a negative legal impact on Patagonia; and financial losses due to any of these risks resulting in a negative financial impact for Patagonia.
It is therefore important to understand and comply with all AML regulations including: screening and monitoring requirements, “Know Your Customer” (KYC) procedures, sanction lists, record keeping requirements, reporting of suspicious circumstances and/or certain transactions in accordance with relevant laws, as well as AML training, if required.
PURPOSE
This Policy provides guidance for compliance with AML and counter terrorist financing laws. It intends to educate all Patagonia employees to detect red flags for being misused for money laundering, terrorist financing or other financial crimes purposes.
Patagonia will take the necessary measures not to be used in the channeling of resources from acts of corruption, money laundering or the financing of terrorism.
SCOPE
This Policy applies to Patagonia’s directors, officers, and employees, including any individual working for, on behalf of Patagonia worldwide regardless of the place where Patagonia operates or conducts business. Ignorance or misunderstanding of the rules is no excuse for violations.
DEFINITIONS
“Money Laundering” means the process of transforming the profits of serious crime, such as corruption, drug trafficking and terrorism activities into ostensibly ‘legitimate’ assets.
“Terrorist Financing” means the provision or collection of funds or resources of any kind, by any means, directly or indirectly, with the intention to use them or in the knowledge that they may be used, in full or in part, for terrorist purposes.
“Politically Exposed Person” (PEP) means an individual who is or has been entrusted with a prominent public function. Due to their position and influence, it is recognized that many PEPs can be potentially abused for the purpose of committing Money Laundering offences and related predicate offences, including corruption and bribery as well as conducting activities related to Terrorist Financing. This definition includes PEP´s family members and close associates.
“Ultimate Beneficial Owner” (UBO) generally means the person or group of persons that:
- By means of another person or any act, obtains the benefit derived therefrom and who, ultimately, exercises the rights of use, enjoy, benefit or dispose of a good or service, or
- Exercises the control of the legal entity that carries out acts or transactions with Patagonia, as well as the persons on behalf of which Patagonia enters into any of such acts or transactions.
PROVISIONS
I. Know Your Customer (KYC)
- Patagonia will perform due diligence on counterparties as required by local laws in order to make a formal identification of the Ultimate Beneficial Owners. Patagonia might conduct enhanced due diligence on high risk counterparties.
- Patagonia will undertake on-going monitoring of its business relationships with counterparties.
- Patagonia will retain relevant due diligence records for the period of time as required by applicable local laws.
- Patagonia will annually carry out a cross-check of its counterparties against international sanction lists (for example, OFAC List, UN Terrorists, FBI Most Wanted, etc.). In case of a positive match, further investigation will be conducted and appropriate action, including up to termination will be undertaken.
II. Suspicious Operations
- The following should be considered red flags which may be related to Money Laundering or Terrorism Financing activities:
- Use of shell-companies;
- Payments through accounts in shell banks;
- Use of nominees, trusts, family member or third party accounts;
- Difficulty to verify the identity of UBOs or reluctance to provide relevant details;
- Disconnected customer/suppliers/third parties sharing common address;
- The level of activity is not consistent with Patagonia’s understanding of the customer/supplier/
third party’s business or level of legitimate income; - Customers/suppliers/third parties based in countries where production of drugs or drug trafficking is prevalent;
- Business transactions involving countries where there is a high risk of Money Laundering and/or the Financing of Terrorism;
- Funds are sent or received via international transfers from or to higher-risk locations or offshore accounts;
- Cash intense businesses; and
- Requests to inflate invoices.
- Patagonia will refrain from executing any operation when there is a suspicion of Money Laundering until further investigation has been completed. Patagonia will not execute any transaction on which there is evidence or certainty that is related to Money Laundering, even before making the communication to the competent authorities.
III. Politically Exposed Persons (PEPs)
- When applicable, Patagonia will obtain the required authorization from relevant governmental authorities before entering into a transaction with any PEP.
- Patagonia will undertake enhanced due diligence for all PEPs. Such enhanced due diligence shall include approval at a higher level than the one required for non-PEP counterparties.
IV. Reporting Suspicious, Relevant or Unusual Operations
- Any employee who becomes aware of any suspicious operation or reasonably suspects that Money Laundering or Terrorism Financing may occur, shall immediately report it to Patagonia’s Legal Affairs Manager and refrain from continuing with the transaction until approval is granted.
- Whenever a suspicious transaction or activity is to be communicated to Patagonia’s Legal Affairs Manager or the competent authorities for appropriate investigation, it is forbidden to disclose information about the issue to the person to whom the suspicion refers to, another person or organization.
- Patagonia will cooperate with the national and international AML competent authorities or its supporting bodies, facilitating at all times, in accordance with current applicable legal provisions in each jurisdiction, the documentation and information required by such authorities.
REPORTING A CONCERN
Because we all have a stake in Patagonia´s success, it is in all of our interest to help ensure that our business is conducted to the highest ethical standards, and that our reputation remains untarnished. For this reason, we strongly encourage you to report any situation you know or suspect about that may involve illegal, unethical or otherwise improper business activity, as well as all instances of employee violations of this or any other of the Patagonia policies. Doing so will allow the company to address the issue and take appropriate corrective action.
If you have a good-faith belief or concern related to improper or illegal conduct, you should immediately contact Patagonia’s Legal Affairs Manager at the contact details below:
Email: margarate@patagoniagold.com
Phone: +54 11 52786950.
Patagonia will not tolerate retaliation against you due to your report or participation in any internal investigations, as long as you have acted in good faith and believe what you reported to be true.
Retaliation may be grounds for discipline up to and including dismissal, subject applicable local laws. Patagonia will treat any good-faith reports or discussions in confidence consistent with legal requirements and subject to the need to conduct a thorough investigation where appropriate. In certain cases, and consistent with applicable laws, information may be shared with local law enforcement or other authorities.
COMMUNICATION
This Policy and any standards and procedures adopted thereunder shall be communicated to all our directors, officers and employees and contractors, and other parties as appropriate.
AMENDMENTS AND WAIVERS
The Audit Committee will review this Policy on a periodic basis, evaluate its effectiveness, and update or amend this Policy as necessary.