Anti-Money Laundering and OFAC Policy

Last updated: 10/04/16

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, comply with applicable economic sanctions or embargoes and to provide resources for reporting applicable situations to appropriate agencies, including FinCEN (the Financial Crimes Enforcement Network) and the Office of Financial Assets Control (“OFAC”), both divisions within the U.S. Department of Treasury.

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.

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;
     
  • 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. 

SAR/FINCEN Reporting

Reports of any suspicious transactions or other activity by employees, agents and brokers may be made to their manager or as directed in the applicable anti-money laundering procedures. Managers will coordinate suspicious transaction information with designated AML compliance contacts and, if in the U.S., the Corporate Ethics and Compliance 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., managers coordinate suspicious transactions with their designated compliance contacts.

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 lists of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country specific.   Such individuals and companies are collectively called "Specially Designated Nationals" or "SDNs". Assets of SDN’s are blocked and U.S. persons are generally prohibited from dealing with them.   Non SDN lists are also maintained by OFAC which list the names of individuals, groups and entities with whom transactions may be limited or restricted.  OFAC regulations must be complied with by all U.S. persons, including U.S. citizens regardless of where they are located in the world, all persons or entities within the United States, and all U.S. incorporated entities and their foreign branches. In the case of certain OFAC enforced sanctions, foreign subsidiaries and affiliates owned or controlled by U.S. companies may be required to comply.

In accordance with this Policy and to the extent required by the applicable requirements of OFAC, the companies of Principal have a legal obligation to comply with the applicable OFAC regulations, and to file timely reports as may be required with OFAC. Principal has policies and procedures in place to prevent doing business with individuals, entities, or countries subject to sanction and embargoes as required by law. Compliance with this Policy and the OFAC enforced sanctions is essential to protect the company against criminal and civil penalties as well as to maintain the company’s reputation and trust of our customers.