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Anti-Money Laundering and Office of Foreign Assets Control (OFAC) Policies

Anti-Money Laundering (AML) Policy

The Principal Financial Group has established this AML Policy to assist with the detection of transactions that may involve money laundering or terrorist financing and to provide resources for reporting applicable situations to FinCEN (the Financial Crimes Enforcement Network, a division of the U.S. Treasury Department).

Money laundering is a crime. It involves the movement of money from illegal sources or unlawful activities into legitimate businesses or activities. There are generally three stages of money laundering: placement, layering and integration. In the placement stage, money obtained from criminal acts is introduced into the financial system. Through the process of layering, the source of the money is hidden. The integration stage involves passing off the money as being from a legitimate source. It is also a crime to take money from legitimate sources and use it for unlawful purposes, such as providing funds to terrorists. The Principal Financial Group has adopted this Policy to protect the company and its employees from involvement in money laundering. This Policy is part of the company's Ethics and Compliance Program, established to assure the company satisfies all legal and regulatory requirements and maintains ethical business practices. The Chief Compliance Officer monitors and supports company-wide compliance with the Policy and makes regular reports to senior management and to the Audit Committee of the Board of Directors of Principal Financial Group, Inc.

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 their specific business operations and that satisfy company-wide policies and the requirements of applicable laws and regulations. Subject to conforming to industry specific regulations, such program will generally address the following items:

• Collecting and verifying appropriate identifying information about customers and maintaining records of such information;
• Comparing the names of customers, 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 processing any matches as required by law;
• Refusing to accept funds from or to do business with shell banks or customers whose money, the company reasonably believes, is 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 anti-money laundering 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; and
• Conducting periodic independent, internal audits (through Business Risk Consulting) to evaluate the effectiveness of the company's anti-money laundering policies and procedures.

All anti-money laundering policies and procedures are subject to review by in-house legal counsel and approval by the Chief Compliance Officer.

SAR Reporting/Company Contacts

Employees, agents and brokers should report any suspicious transaction to their manager or as directed in the applicable anti-money laundering procedures. Managers will coordinate suspicious transaction information with designated AML compliance contacts, in-house legal counsel and Business Risk Consulting investigators to determine appropriate action to be taken and file reports when applicable.

Office of Foreign Assets Control (OFAC) Policy

The Office of Foreign Assets Control (OFAC) is an office of the U.S. Treasury Department that maintains and publishes a list of countries, individuals and organizations that are hostile to the national security of the United States. The Principal Financial Group has a legal obligation to avoid doing business with these persons and entities; to freeze all property and block payment of funds to anyone and any entity on the list; and to file timely reports of all such actions with OFAC.

In accordance with this Policy and applicable law, the Principal Financial Group does not do business with individuals, entities, or countries on the OFAC list. This Policy applies to all operating companies of the Principal Financial Group, Inc., as required by applicable law. Compliance with this Policy is essential to protect the company against criminal and civil penalties as well as to maintain the trust of our customers and the company's reputation.