xpress money services inc. bank secrecy act and anti-money...

Policies and Procedures

BANK SECRECY ACT AND ANTI-MONEY LAUNDERING COMPLIANCE MANUAL


XPRESS MONEY SERVICES INC.

Version: 1.6


TABLE OF CONTENTS

OVERVIEW..............................................................................................................................................

THE BANK SECRECY ACT...................................................................................................................

THE MONEY LAUNDERING CONTROL ACT AND THE WILFUL BLINDNESS DOCTRINE .......

ILLEGAL MONEY TRANSMITTER STATUTE ...................................................................................

THE OFFICE OF FOREIGN ASSET CONTROL (OFAC) ……….........………………..…...............…

SUSPICIOUS TRANSACTIONS……………………………………………………….…............…...

"KNOW YOUR CUSTOMER” POLICY………………………………………………..........….....…..

POLITICALLY EXPOSED PERSONS ...................................................................................................

IMPLEMENTATION……………………………………………………………….........…….....…….

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Currency Reporting RequirementsRecord Keeping Requirements for Funds TransfersReports of Transportation of Currency or Monetary InstrumentsRecord Keeping Requirements for Transactions of More than $10,000 with Foreign PersonsStructuringForeign Agent and Foreign Counterparty ComplianceBSA PenaltiesResponses to Law Enforcement RequestsFederal Registration/Agent ListMSB Anti-Money Laundering ProgramCompliance CommitteeAgent Due DiligenceRisk AssessmentTrainingIndependent Testing of AML Compliance Program

A.B.C.D.E.F.G.H.I.J.K.L.M.N.O.

OVERVIEW

This manual states the policies and procedures implemented by Xpress Money Services Inc .(“Xpress Money”) to ensure compliance with the Bank Secrecy Act, anti-money laundering, anti-terrorism and other applicable state and federal money transmitter rules and regulations.

Money laundering is the attempt to conceal or disguise the nature, location, source, ownership or control of money or assets that are generated by illegal activity or legal source funds intended to be used to promote specific illegal activity. This definition is simple and covers a wide range of activity. The definition mentions both the source of money and ownership of money. A person may wish to hide their ownership of money whether or not the money or the ownership interest is illegal or involved in illegal activity. This definition does not limit itself to cash or currency. Any type of funds can be laundered, including wire transfers, payments into or out of consignment accounts, the receipt of bank checks, personal checks, money orders, travelers checks or payments made by international drafts.

Money laundering can be a complex process. It involves three different, and sometimes overlapping, stages:

Placement involves physically placing illegally obtained money into the financial system or the retail economy. Money is most vulnerable to detection and seizure during placement.

Layering involves separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source.

Integration involves moving the proceeds into a seemingly legitimate form. Integration may include the purchase of automobiles, businesses, real estate, etc.

An important factor connecting the three stages of this process is the "paper trail" generated by financial transactions. Criminals try to avoid leaving this “paper trail” by illegally avoiding reporting and recordkeeping requirements.

The anti-money laundering laws of the United States apply with equal force to any transaction conducted anywhere in the world if the transaction involves conduct by a US citizen or conduct occurring in part in the United States and the transaction or a series of related transactions involves funds or monetary instruments of a value exceeding $10,000.

Xpress Money will not knowingly allow its facilities to be used for the laundering of funds. Penalties for money laundering are very severe including civil and criminal fines, imprisonment and forfeiture. Xpress Money's existence as a business could be placed in jeopardy if money laundering activities were to occur. Therefore, all Xpress Money employees and agents dealing in any manner with any customers, their transactions or their records concerning same, must have a clear understanding of the requirements of this manual. All such Xpress Money employees, agents and foreign correspondents must read this manual in its entirety.


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Xpress Money has appointed Ms. Mary-Jo LaHood as its AML Chief Compliance Officer whose primary duty is to ensure the effective implementation and enforcement of the policies set forth in this manual. Xpress Money will conduct periodic training programs on Xpress Money's anti-money laundering policies and procedures. Xpress Money will also conduct random independent audits to verify compliance with the policies and procedures set forth herein.

Xpress Money intends to maintain the highest possible compliance with all anti-money laundering laws and regulations, including compliance with all currency reporting and record keeping laws as well as recognizing and reporting suspicious transactions when required.

Xpress Money's board of directors is fully committed to complete compliance with all anti-money laundering laws and regulations and expects and will require a similar level of commitment from all of its officers, employees, agents and representatives.


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THE BANK SECRECY ACT

The Bank Secrecy Act, 31 U.S.C. §5311 et. seq. (“BSA”), in general, requires large currency transactions to be documented and reported. Please find attached as Exhibit A, a copy of the Bank Secrecy Act and its implementing regulations which include all relevant amendments and regulations enacted and required by the USA Patriot Act. The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of Treasury, administers and issues regulations pursuant to the BSA. Through certain BSA reporting and recordkeeping requirements, paper trails of transactions are created that FinCEN and other law enforcement agencies can use in criminal, tax and regulatory investigations.

A.� Currency Reporting Requirements

The basic BSA currency reporting rule requires a financial institution to file a Currency Transaction Report (“CTR”) for any transaction involving an amount of currency of more than $10,000, inclusive of the service fees and/or other charges if any. Please find attached at Exhibit B, a copy of the CTR form required to be filed by this regulation. Transactions for, or on behalf, of the same customer, occurring at different branches or locations on the same day must be aggregated for purposes of calculating the $10,000 threshold. Multiple transactions in any form, at any branch or agent location, must be aggregated and a CTR filed if such aggregate amount exceeds $10,000 during any business day or over a weekend or holiday. Transactions not involving cash or currency (currency is defined as “the coin and paper money of the United States or of any other country that is designated as legal tender”) are not affected by this regulation, for example, checks, drafts, wire transfers or other similar instruments, do not involve the physical transfer of cash or currency.

If Xpress Money notices that multiple transactions have been made by or on behalf of the same person, the multiple transactions shall be treated as a single transaction. Xpress Money is said to have knowledge of multiple transactions under the following circumstances:

If any Xpress Money employee witnesses any customer making the multiple transactions If any person tells any employee that any customer has effected multiple transactionsIf any employee knows any given transaction is part of a multiple transactionIf any employee knows any customer is conducting a transaction for another party which the

employee knows has already conducted another transaction, or f any employee, in reviewing Xpress Money's daily transaction records, notices that any

single customer had currency transactions at two or more different times during the day.

Any multiple transactions undertaken by a same person shall be aggregated and treated as a single transaction for the BSA's CTR reporting requirement.

Before concluding any transaction for which a CTR must be filed, Xpress Money shall verify and record the name and address of the individual presenting the transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States must be made by passport, alien identification card, or other official document evidencing nationality or residence. Verification in any other case shall be made by examination of a document that is normally acceptable within the banking community as a means of identification when cashing checks for non-depositors (e.g., a driver's license or credit card). In each instance, the specific identifying information (i.e., account number of the credit card, driver's license number, etc.) used in verifying the identity of the customer shall be recorded on the report, and the mere notation of “known customer” on the report is prohibited.


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Xpress Money shall file a CTR for each currency transaction or aggregation of multiple transactions conducted by or on behalf of the same customer on the same day if these transactions involves, in aggregate, cash amounts exceeding $10,000, inclusive of the service fees and/or other charges if any. The CTR shall be filed electronically through FinCEN's BSA E-Filing System by the fifteenth (15th) calendar day after the day of the transaction.

Xpress Money shall also maintain a file of all CTR's filed for a period of not less than five (5) years from the date of each transaction.

B.� Record Keeping Requirements for Funds Transfers

Xpress Money shall maintain detailed records of all funds transmittals of $3,000 or more that Xpress Money sends or receives on behalf of its customers. When Xpress Money accepts $3,000 or more from a customer for any transmittal order, Xpress Money shall obtain and retain either the original or a microfilm or other copy or electronic record of the following details related to the transmittal order:

1. Name and address of the customer2. Date of Birth details3. Occupation4. Amount and date of the order5. Any payment instructions received from the customer6. The recipient's identity, financial institution (if any) and relationship with the Customer7. Social Security or Employer Identification number or, if none, alien identification number or

passport number and country of issuance, or a notation in the record of the lack thereof. 8. Xpress Money Send and Receive form completed by the customer when placing the order

with the following mandatory information:

I. Nameii. Addressiii. Date of Birthiv. Type of ID documentv. ID document number and name of issuervi. Account Number ( for Receive Form)

9. If received with the order, recipient's name, address, recipient's account number and any other specific identifying information concerning recipient.

To guard against structuring to avoid these requirements, Xpress Money will impose these requirements on all transactions of $2,500 or more as well.

Prior to accepting any such order, Xpress Money shall verify the person's identity by reviewing an appropriate identification document such as:

I. Driver's Licenseii. Passport iii. Military IDiv. Alien ID v. Mexican Matricula ID Cardvi. State IDvii. Valid record issued by provincial/Federal/Territorial governments


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Upon obtaining and reviewing any of the above appropriate identification documents the following information shall be retained:

1. Name and address2. Type of identifying document and state and/or country of issuance3. Number of the identifying document4. Taxpayer identification number of the transmitter (or if TIN not provided then alien

identification number, passport number and country of issue or a note in the record as to the lack of any such information)

5. A copy of the identifying document provided

If Xpress Money has knowledge that any customer placing an order is not the transmitter, but is acting on behalf of someone else who is the real transmitter, Xpress Money shall obtain and retain the transmitter's taxpayer identification number of the transmitter (or if TIN not provided then alien identification number, passport number and country of issue or a note in the record as to the lack of any such information). In addition, if payment is not made by cash payment (i.e., payment is made by check, wire transfer or other instrument), then Xpress Money shall obtain and retain a copy of the method of payment for the order.

C. Reports of Transportation of Currency or Monetary Instruments

Any person who physically carries or mails or ships more than $10,000 in currency or any other monetary instrument across the U.S. border must file a Currency and Monetary Instrument Report (CMIR). Please find attached at Exhibit C, a copy of the CMIR form. The CMIR must be filed within fifteen (15) days after receipt of the currency or money instruments with the Commissioner of Customs. Monetary instruments subject to this requirement include but are not limited to currency, traveler's checks, endorsed checks, checks payable to fictitious payees and signed blank checks. Xpress Money does not regularly engage in the business of physical transportation of currency or monetary instruments.

D. Record Keeping Requirements for Transactions of More than $10,000 with Foreign Persons

Xpress Money shall retain a record of each advice, request or instruction received or given regarding any transaction resulting in or intended to result in the transfer of currency or other monetary instruments, funds, checks or credits of more than $10,000, to or from any person, account or place outside the United States. Xpress Money's computer record keeping system maintains and retains this information for a period of not less than five (5) years from the date of such transaction.


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E.� Structuring

Any attempt to evade any of the rules and regulations set forth above by breaking up large sums of money into smaller amounts is illegal, is known as “structuring” and is punishable as a federal felony and 5 years or more in prison. Money transmitters are often the target of structuring because they are incorrectly perceived as being less stringent and knowledgeable than commercial banks. The anti-structuring law provides that no person shall, for the purpose of evading the reporting requirements of the BSA, cause or attempt to cause a financial institution to fail to file a CTR, cause or attempt to cause a financial institution to file a CTR that contains a material omission or misstatement, or structure, attempt to structure, assist in structuring or attempt to assist in structuring any transaction with a financial institution.

Xpress Money and its agents receive large sums of cash on a daily basis, and hence, all Xpress Money employees and agents must be ever vigilant and alert to the possibility that customers may be structuring transactions to evade or attempt to evade the currency reporting or record keeping requirements of the BSA. All Xpress Money employees and agents must pay particularly close attention to any customer who regularly conducts large transactions in amounts below the $10,000 and $3,000 thresholds, and especially if this regular activity does not appear to have any legitimate business purpose.

F.� Foreign Agent and Foreign Counterparty Compliance

Xpress Money has adequate and appropriate policies, procedures and controls in place commensurate with the risks of money laundering and the financing of terrorism posed by Xpress Money's relationships with its foreign agents or foreign counterparties (hereinafter “foreign counterparties” or “foreign counterparty”). Some possible risks associated with foreign counterparties include but are not limited to:

The location and jurisdiction of organization, chartering or licensing, including the extent to which the relevant jurisdiction is internationally recognized as presenting a greater risk for money laundering or terrorist financing.

The ownership of the foreign counterparty, including whether the owner or owners are known, upon reasonable inquiry, to be associated with criminal conduct or terrorism. For example, have the individuals been designated by Treasury's Office of Foreign Assets Control as Specially Designated Nationals or Blocked Persons.

The extent to which the foreign counterparty is subject to anti-money laundering requirements in its jurisdiction and whether it has complied with these requirements.

Information known or readily available about the foreign counterparty's anti-money laundering record, including public information in industry guides, periodicals and major publications.

The nature of the foreign counterparty's business, the markets it serves, and the extent to which its business and the markets it serves present an increased risk for money laundering or terrorist financing.

The types of products and services to be provided by or to the foreign counterparty. The nature and duration of the relationship with the foreign counterparty.


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Accordingly, Xpress Money shall conduct due diligence on all potential and existing foreign counterparties with which Xpress Money conducts business. This due diligence will ensure the foreign counterparties are not complicit in illegal activity involving Xpress Money's products or services and that they have in place appropriate anti-money laundering controls to guard against possible abuse. Accordingly, all foreign counterparties will be required to:

1. Identify all owners.2. Submit to periodic and ongoing reviews and evaluations of their operations including actions taken in relation to implementation of policies, procedures and controls to help ensure Xpress Money's products and services are not subject to abuse.3. Submit to risk-based monitoring and review of transactions from, to, or through the United States involving Xpress Money's products and services.4. Provide ongoing and immediate updates of any changes to the foreign counterparty's ownership structure, business, or the regulatory scrutiny to which it is subject in its home country.5. Allow Xpress Money to identify, through the monitoring and review of transactions, and, where appropriate, report as suspicious, all suspicious activity, including but not limited to: instances of unusual wire activity, bulk sales or purchases of sequentially numbered instruments, multiple purchases or sales that appear to be structured, and illegible or missing customer information.6. Allow Xpress Money to verify that the foreign counterparty is effectively implementing an anti-money laundering program and review and correct any and all difficulties or problems related thereto.

In addition to the foregoing, Xpress Money will also review foreign counterparty activity involving Xpress Money's products or services for signs of 1) structuring or unnecessarily complex transmissions through multiple jurisdictions that may be indicative of layering, or 2) attempts to evade the identification, reporting or other requirements, whether imposed by the Bank Secrecy Act, Xpress Money's own internal compliance program or other applicable law.

Through the implementation of these procedures and controls, Xpress Money will identify unreasonable risks of money laundering or terrorist financing posed by foreign counterparties and take necessary corrective action. Such corrective action will depend on the severity of the risk and the foreign counterparties response to Xpress Money's requests for changes in policies, procedures or activities designed to eliminate, or reduce to a reasonable level, such risk. If unreasonable risks are not addressed in a timely and acceptable manner, or if a foreign counterparty demonstrates systemic, willful or repeated lapses in compliance, then aggressive corrective action will be implemented immediately, including but not limited to termination of the relationship.


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G.� BSA Penalties

The BSA and its regulations have both civil and criminal penalties for violations of their provisions. Civil fines and forfeitures in amounts exceeding $1,000,000 are not uncommon. One provision permits forfeiture of the entire amount structured. Imprisonment and criminal convictions are imposed against businesses and employees as well. BSA criminal violations, including structuring, carry 5-year felony prison sentences per violation.

H. Responses to Law Enforcement Requests Government regulators and law enforcement agencies may seek information and records from Xpress Money from time to time. Any person who receives or is served with a request, summons, subpoena, or court order related to Xpress Money should immediately contact the Compliance Officer for support and assistance. The Compliance Officer is the person in charge of receiving and responding to law enforcement requests. Xpress Money must comply with lawful requests from state or federal law enforcement authorities or regulators for information relating to Xpress Money's anti-money laundering compliance program or any other requested information including but not limited to specific information and related documents concerning any transaction or transactions sent or paid through Xpress Money. The Compliance Officer will ensure that responses are provided within the time requested or obtain additional time as needed. Xpress Money will maintain a log listing all requests received from law enforcement and the responses thereto.

I. Federal Registration/Agent List

The BSA regulations require Money Service Businesses (MSB) to register with FinCEN by the end of the 180 day period beginning on the day after the date it was established. Xpress Money is required to renew its registration every two years by December 31 at the end of the two calendar year period following its initial registration, or every time its agents increase by 50%.

Agents of Xpress Money are covered by the Xpress Money registration but only for those transactions relating to Xpress Money. If any agent conducts MSB transactions outside the scope of the Xpress Money Agent Agreement, that agent must independently be registered with FinCEN for such activity. Xpress Money shall also prepare and maintain a list of its agents. The list shall be revised on

stJanuary 1 of every year for the immediate preceding twelve (12) months. The list shall contain the following information about Xpress Money's agents:

1. Name, address and telephone number;2. Service the agent provides (i.e. check cashing, money transmission, etc.)3. Listing of the months in the preceding 12 months where the agent's gross transaction amount exceeds $100,000;4. Name and address of any depository institution where agent maintains a transaction account for all or part of the funds received for services issued by Xpress Money; 5. The year the agent first became an agent;6. Number of branches and subagents the agent has.

A copy of the initial list and each revised list shall be retained for a period of five (5) years. This list is not filed with the federal registration form. Upon request, Xpress Money shall make the list available to (1) FinCEN or its designee, (2) IRS, and (3) state regulators in the performance of their examination function.


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J.� MSB Anti-Money Laundering Program

Each MSB is required by law to have an effective anti-money laundering (AML) compliance program. Each program must be commensurate with the risks posed by the location, size, nature and volume of the financial services provided by the MSB. An effective program is one designed to prevent the MSB from being used to facilitate money laundering.

Each AML compliance program must be in writing and available for inspection by FinCEN upon request. The program must:

1.� Incorporate policies, procedures and internal controls reasonably designed to assure compliance with the BSA including but not limited to verifying customer identification, filing reports, creating and retaining records and responding to law enforcement requests;2. Designate a compliance officer responsible for day-to-day compliance with the BSA and the compliance program;3. Provide education and/or training of appropriate personnel; and4. Provide for independent review to monitor and maintain an adequate program.

Xpress Money agents are required to develop and implement their own AML compliance program. While Xpress Money may assist its agents in developing this program, each agent is responsible for ensuring an effective program is implemented, that adequately addresses the risks presented by each agent's particular business.

Every MSB must draft, implement and maintain current policies and procedures as set forth in section 1 above. Xpress Money maintains this manual as its fundamental BSA Compliance and AML Program Policies and Procedures Manual.

Each Xpress Money Agent is required to maintain their own Policies and Procedures Manual commensurate with their MSB operations and risks.

K. Compliance Committee

Xpress Money shall establish a Compliance Committee. The Compliance Committee shall be comprised of the Chief Compliance Officer and Debanshu Majumdar, Vice President of Xpress Money. The Compliance Committee shall be charged with the design, implementation and updating of all aspects of Xpress Money's compliance program and this manual. The Compliance Committee shall meet not less than twice annually.

L.� Agent Due Diligence

Xpress Money will conduct due diligence on any and all businesses desiring to become an agent of Xpress Money. This due diligence will consist of Xpress Money requiring or obtaining the following from each prospective agent:

1. Xpress Money Agent Application which will require: Full name and address of business, Tax identification number, telephone and fax numbers, social security numbers of owners, two personal references, one banking and one business reference, information on prior agent relationships with other money transmitters.

2. Copy of valid state issued identification for each owner. 3. Copy of lease for business location. 4. Copy of certificate of incorporation or other proof of legal status. 5. OFAC check on each owner.


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6. Credit report on each owner. 7. Criminal record check on each owner. 8. Name and contact information of the Agent's Compliance Officer. 9. List of all MSB activities this Agent participates in. 10. List of all other money transmitters this Agent conducts business with.

M. Risk Assessment

Xpress Money's Compliance Officer shall perform and document an initial Risk Assessment to adequately address the risks presented by Xpress Money's proposed business including but not limited to risks associated with Xpress Money's products, services, customers, agent relationships, operations, geographic locations and employees. The Risk Assessment should identify Xpress Money's risk exposure and develop appropriate policies, procedures and processes to monitor, mitigate and control these risks. The Compliance Officer will periodically update the Risk Assessment as needed but not less than once per year.

N.� Training

1. Preparation of Training Program

The Compliance Officer is responsible for AML/BSA compliance training for the employees of Xpress Money by establishing and maintaining an effective training program. The training program shall cover the overall scope of AML/BSA related regulatory issues that is necessary for all employees to be aware of. To the extent Xpress Money relies on employees located in call centers or otherwise in foreign jurisdictions, all such employees will be subject to appropriate AML/BSA compliance training as needed the same as any other employee of Xpress Money.

2. Frequency

The training for the employees will be held on an annual basis.

3. Scope of the Training

a. For the MSB Employees

At a minimum, the training must cover all the regulatory requirements under the applicable laws and regulations of the BSA and USA PATRIOT ACT. It shall also include recent issuances from the appropriate supervisory authorities. Xpress Money's AML/BSA Program shall also be covered.

b. For the MSB Compliance Officer

Xpress Money shall require that the Compliance Officer to participate in outside training for AML/BSA, OFAC, and applicable sections of the PATRIOT ACT on an annual basis. Changes in the above-cited regulations will also require Compliance Officer training.

4. Training Material and Attendance List

The Compliance Officer shall be responsible for the preparation of the training material for employees. The Compliance Officer shall keep the training material and the attendance list.


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5. Agent Training

Xpress Money shall develop and deliver an active training program for all agents. Each Agent will be required to provide proof of BSA Compliance, AML Training and Training on the Xpress Money Compliance and AML Program upon being brought into active status. Agents will be provided training by Xpress Money on Xpress Money Policies and Procedures on an ongoing basis. Each Agent will be instructed to provide BSA Compliance, AML Program and Xpress Money policies and procedures training to all of their personnel.

6. Report

The Compliance Officer shall report the training results to management after conducting each of the AML/BSA training modules.

O. Independent Testing of AML Compliance Program

It is a general understanding that the independent testing of Xpress Money's AML Program should be performed by individuals who are not responsible for the execution or monitoring of the MSB Program. Additionally, the individuals performing the independent review must be qualified to execute the testing, i.e., they must have sufficient knowledge of BSA and AML laws and regulations to enable them to perform an effective review. Considering the unique business structure and limited number of employees of Xpress Money, it is Xpress Money's policy to engage outside professionals to perform the independent testing required by this section.

1. Scope and Frequency

The objective of the independent testing is to assess compliance with BSA and AML laws and regulations. The testing should incorporate an assessment of the Compliance Officer's adherence to his or her designated roles and responsibilities. It should also include an assessment of the adequacy of the current AML program, training program, and reliability of the systems used for AML compliance.

The testing shall be implemented on an annual basis.

2. Report of Testing

Upon completion of the independent testing, a written report should be issued to summarize the findings of the testing. Any recommendation arising from the testing should also be documented.

The written report should be provided to senior management, and the Compliance Officer as well as any relevant individuals.

3. Corrective Actions

The Compliance Officer should take the appropriate actions for the correction of the findings and/or the prompt incorporation of the recommendations. The corrective actions taken should be reported to management.


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THE MONEY LAUNDERING CONTROL ACT AND THE WILFUL BLINDNESS DOCTRINE

Congress passed the Money Laundering Control Act (MLCA) in 1986. The MLCA provides that it is illegal for any person or corporation to conduct or attempt to conduct a financial transaction while knowing that the property involved represents the proceeds of any form of unlawful activity if the person conducts the transaction:

1. With the intent to promote the carrying on of the unlawful activity,2. With the intent to violate certain Internal Revenue laws,3. Knowing the transaction is designed to conceal or disguise the nature, location, source,

ownership or control of the proceeds of the unlawful activity, or4. Knowing the transaction is designed in whole or in part to avoid a transaction reporting

requirement under state or federal law.

A money laundering offense also includes the use of legal source funds for the same purposes set forth above. If legal source funds are used to promote a specified unlawful activity, this is a money laundering offense.

In order to violate this statute, a person does not need to know which unlawful activity is occurring, all that needs to be known is that the transaction is promoting an unlawful activity or is meant to conceal an unlawful activity or to cause a report required by law not to be made. While a person must know the unlawful activity is occurring or being concealed, a person cannot purposefully avoid knowing. The law is violated where a person is willfully blind to the unlawful activity or concealment thereof. Thus, if you are suspicious about a customer or a transaction, and you intentionally fail to inquire about a suspicious transaction, the MLCA will likely have been violated by your willful blindness.

Therefore any employee, agent or subagent of Xpress Money who is suspicious about any transaction involving Xpress Money's products or services, must immediately report the transaction to your supervisor before completing, and, if possible, before accepting the transaction.

A second section of the money laundering law makes it illegal to send funds into the U.S. or send funds from the U.S. to a foreign jurisdiction for the purpose of promoting a specified unlawful activity.

The third arm of the money laundering law is the “sting” provision. This section allows a law enforcement officer or an individual acting under the direction of a law enforcement officer, to conduct a financial transaction with proceeds alleged to be from a specified unlawful activity or alleged to be legal source funds, to be used to promote a specified unlawful activity or conceal the source or origin if illegal activity.

The money laundering law has a civil provision that permits the US Government to file a law suit against any individual or business for the amount of money laundered by that individual or through that business.

A violation of the money laundering laws is a felony punishable by imprisonment of up to 20 years per count. Cash and other assets associated with money laundering activity is subject to seizure and forfeiture.


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ILLEGAL MONEY TRANSMITTER STATUTE

It is a federal felony to operate a money transmitting business without licensing or registration where required by law. This includes conducting money transmitting activity in a state that requires a state license without having a current state license. This also includes conducting money transmitting activity without being properly registered with FinCEN.

Most agents of Xpress Money are legally covered by the Xpress Money license in each state in which Xpress Money is licensed and under Xpress Money's FinCEN Registration, but only for those MSB transactions, including money transmitting activity, flowing under and through the Xpress Money agreement and system.

THE OFFICE OF FOREIGN ASSET CONTROL(OFAC)

The Office of Foreign Assets Control (OFAC) is an office of the U.S. Department of the Treasury. OFAC is empowered by the President to administer and enforce the U.S. government's sanction programs. These programs include both country sanctions and sanctions placed on individuals and entities who are placed on the Specially Designated Nationals and Blocked Persons (“SDN”) list.

To ensure that illicit transactions involving targeted countries and SDNs are not processed, Xpress Money has developed and will maintain an OFAC compliance program to flag questionable transactions for review. Under that program, Xpress Money will:�

Designate the Anti-Money Laundering and Compliance Officer as the person responsible for day-to-day OFAC compliance.

Use software that cross-references the names and addresses of senders and recipients against OFAC's “Special Designated Nationals” (“SDN”) list before the transaction is conducted. The software shall allow for automatic updates of OFAC's SDN list.

Disseminate through its branches and agents the list of countries, persons, and entities whose assets OFAC requires to be blocked.

Require that correspondent payers ensure that no OFAC-listed country, entity or individual is serviced through Xpress Money.

If Xpress Money's software system detects a name appearing on the SDN List, then the transaction referencing such name will be immediately held for further review. Xpress Money officers will review any transactions on which administrative holds are placed to ensure the name is a match and then contact OFAC's compliance hotline at (800) 540-6322 to confirm the name and any identifying information is a match and that the funds relating to the transaction should be blocked. Upon confirmation of a matching name, Xpress Money will immediately block the funds and transfer same to a special blocked interest-bearing account in a domestic bank. If the match concerns a Specially Designated Terrorist, OFAC's compliance hotline will be advised immediately of the blocking and the details of the transaction. The blocked account will be an account opened by Xpress Money and labeled as a blocked account established in the name of, or containing a means of clearly identifying the interest of, the individual or entity subject to blocking.

Xpress Money will file a report of blocking with OFAC within ten business days from the date the property becomes blocked. Xpress Money will file annual reports of all blocked property being held by September 30th of each year. The annual report of blocked property will be filed using the official OFAC Form TDF 90-22.50. If Xpress Money rejects requested transfers because a designated person or country would have an interest in the transaction before receiving funds or holding property relating to the transaction, then within ten business days of rejection, Xpress Money will report the rejection to OFAC.


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SUSPICIOUS TRANSACTIONS

Under the Bank Secrecy Act, Xpress Money, as well as its agents, shall report suspicious transactions to FinCEN whenever it knows, suspects or has reason to suspect that the transaction (or pattern of transactions to which the transaction is a part):

Involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation;

Is designed, whether through structuring or other means, to evade any requirements of the Bank Secrecy Act and the Regulations promulgated thereunder; or

Serves no business or apparent lawful purpose, and the reporting Money Transmitter knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

Deciding whether to report a transaction as suspicious will turn on the facts and circumstances relating to each transaction. However, the following types of transactions tend to be indicative of serving no business or apparent lawful purpose:

The contemporaneous purchase of multiple remittances to the same beneficiary or city by the same purchaser;

The purchase of multiple instruments or remittances in the same or similar amounts by the same person;

A large volume of transactions, sequential invoices, or both, directed to one correspondent from one agent (operating either through a single or multiple offices) on a single day;

Patterns of remittances to the same city or correspondent purchased at approximately the same time;

The deposit of large numbers of instruments, especially sequentially-numbered instruments, into or through the same or related bank or other financial institution accounts;

Patterns of instruments or remittances purchased just below the dollar thresholds for particular Bank Secrecy Act reporting or record keeping requirements;

Presentation for redemption or encashment of third-party endorsed instruments, or of blocks of instruments purchased by the party seeking redemption, in either case in sums outside of normal commercial or personal usage;

Significant changes or fluctuations in volume at one or more of the business' agents or branches;

Significant variations in the size of the average remittance at a business' agents or branches; or

Multiple senders of remittances using the same recipient's last name, address, or telephone number.


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Whenever Xpress Money, or one of its agents, detects a Suspicious Transaction, it has thirty (30) calendar days to file a Suspicious Activity Report (“SAR”) with FinCEN's BSA E-Filing System, wherein it must set forth the facts constituting the basis for filing the SAR. It is critical that the information Xpress Money or one of its agents provides in an SAR form is as accurate and complete as possible. Therefore the following steps will be followed by Xpress Money or one of its agents when filling out an SAR form:

Describe, as fully as possible, why the activity or transaction is unusual for the customer, taking into consideration the types of products and services offered by Xpress Money and the nature and typical activities of similar customers;

Accurately and completely explain the nature and circumstances of suspicious activity; Follow the SAR form instructions on how to correctly complete fields of critical value (these

sections are typically marked with an asterisk); Properly input the filer's Employer Identification Number (EIN) as well as the filer's telephone

number and the telephone number of the location where the suspicious transaction was conducted;

Ensure that the method used to identify the subject is as complete as possible and includes both the number and issuer of the identification card or documents; and

Correctly characterize the suspicious activity.

Please find attached at Exhibit D, a copy of the SAR form. In situations involving possible links to terrorist activity against the United States, Xpress Money and its agents, in addition to filing the SAR must immediately call the Financial Institutions Hotline, toll-free at 1-866-556-3974. In other situations involving suspected violations, such as ongoing money-laundering schemes, requiring immediate attention, Xpress Money and its agents must notify an appropriate law enforcement agency in addition to filing the SAR. In addition to filing the SAR, Xpress Money is also required to maintain documentation of the facts which support the filing of the SAR, which must be appropriately identified as such and accessible to the authorities upon demand, for a period of five (5) years following the report of the Suspicious Transaction. Xpress Money must, upon request, make all supporting documents available to FinCEN or any other appropriate law enforcement or supervisory agency. All SAR forms must be filed electronically with FinCEN. Paper SARs are no longer acceptable.

Xpress Money, its directors, officers, employees, and agents are forbidden from notifying any person involved in the transaction that an SAR has been filed regarding the transaction.

It is a federal violation to disclose the filing of an SAR. If any person at or agent of Xpress Money is served with a subpoena or asked for information relative to an SAR, they must decline to respond and coordinate immediately with the Compliance Officer.

However, law enforcement is entitled to view the backup documentation associated with an SAR filed by Xpress Money upon request. A subpoena is not required, but the information to be provided is only that of the backup documentation for the specific SAR. Additional information or data requires a subpoena or other compulsion order.

Xpress Money will maintain a log of all unusual or suspicious activities that are reviewed for potential SAR filing. This log will document the basis for not filing an SAR on an otherwise investigated unusual or suspicious activity. This log will also document the date a SAR is filed when the decision is ultimately made to file an SAR.


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“KNOW YOUR CUSTOMER” POLICY

While familiarity with this manual and the attached laws and regulations is a crucial component to effective compliance with the government's anti-money laundering program, preventing money laundering can only be accomplished if Xpress Money and its agents institute measures to “Know” its customers. Although there is no official “Know Your Customer” statute or regulation, it is Xpress Money's policy that it is absolutely necessary for Xpress Money and its agents to take all reasonable steps to understand how the facts and circumstances of each transaction relate to the particular customer executing the transaction. This is accomplished by:

Accurately identifying Xpress Money's customers through the effective gathering of information;

Understanding the normal and expected transactions typically conducted by those customers; and

Consequently, identifying those transactions conducted by Xpress Money's customers that are suspicious in nature.

In other words, Xpress Money and its agents shall not only understand the various Rules and Regulations designed to combat money laundering, but Xpress Money and its agents shall also be able to evaluate the facts and circumstances surrounding each customer and transaction, so that it can make an informed decision as to whether a transaction is suspicious and is therefore required to be reported to the government.

Xpress Money already has several mechanisms in place for developing a clear and concise understanding of its customers so that it may be able to detect suspicious and illicit activity. For example, the Identification Requirements for Sale of Monetary Instruments, as well as the Record Keeping Requirements for Funds Transfers provide sources of information from which Xpress Money can better know its customers.

Clearly in most instances Xpress Money handles remittances from customers who are transmitting small dollar amounts, and who often do so only sporadically. Nonetheless, in order to complete a transaction, all customers, regardless of the frequency of transmissions or the amounts transmitted, are required to provide Xpress Money with the name, address and telephone number of both the sender and beneficiary of each transaction. Xpress Money and its agents must make sure that this information is completed accurately. By doing so, Xpress Money creates an information resource for detecting suspicious activity if these customers should begin to use Xpress Money's services more frequently, and make remittances in greater amounts, so as to suggest Suspicious Activity.

For every transaction, regardless of the amount, Xpress Money requires the sender to provide:1. source of funds2. purpose of the transaction3. sender & receiver's names, addresses and nationalities4. at least one form of valid government issued ID and retain the ID number, ID Type, state and/or country of issuance, and ID expiration date.

The most important aspect of Xpress Money's Know Your Customer policy is that Xpress Money and its agents are forbidden from acting as a mere conduit for the funds that it receives for transfer abroad. Xpress Money and its agents are charged with the responsibility of being aware of both the nature of its customers, as well as the various types of transactions that Xpress Money's customers execute. By adhering to this policy, Xpress Money will greatly reduce its chances of being found responsible for violations of the laws and regulations governing money laundering.


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POLITICALLY EXPOSED PERSONS

Xpress Money will take all reasonable steps to ensure that Xpress Money will not knowingly or unwittingly assist in hiding or moving the proceeds of corruption by senior foreign political figures, their families, and their associates (“PEPs”). The term “politically exposed person” generally includes a current or former senior foreign political figure, their immediate family, and their close associates. A PEP is:

1. A “senior foreign political figure” who is a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a senior foreign political figure includes any corporation, business, or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

2. The “immediate family” of a senior foreign political figure typically includes the figure's parents, siblings, spouse, children, and in-laws.

3. A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

The definition of PEPs must remain sufficiently flexible to capture the range of individuals who, by virtue of their office or position, potentially pose a risk that their funds may be the proceeds of foreign corruption. Titles alone may not provide sufficient information to determine if an individual is a PEP, because governments are organized differently from jurisdiction to jurisdiction.

Initially, Xpress Money will review each transaction against commercially available PEP lists. If a customer or beneficiary is a match to a person on a PEP list, Xpress Money will conduct additional due diligence to determine if the person is a PEP, and if so, whether the transaction can be completed or, if after the fact, whether the transaction should be reported as suspicious. When determining if an individual is a PEP, XM shall consider:

Official responsibilities of the individual's office. Nature of the title (e.g., honorary or salaried). Level and nature of authority or influence over government activities or other officials. Access to significant government assets or funds.

In determining whether to allow a transaction to proceed, Xpress Money must obtain sufficient information to determine whether an individual is or is not a PEP. For example, when conducting due diligence on a possible PEP, Xpress Money should review the customer's income sources, financial information, and professional background, including past and present employment as well as general references that may identify a customer's status as a PEP, or not. Moreover, identification of a customer's status as a PEP should not automatically result in a rejection of a transaction or reporting of a transaction as suspicious; it is only one factor Xpress Money should consider in evaluating the matter.


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Ascertaining whether a customer has a close association with a senior foreign political figure can be difficult, although focusing on those relationships that are “widely and publicly known” provides a reasonable limitation on expectations to identify close associates as PEPs. However, if Xpress Money has actual knowledge of a close association, it must consider the customer a PEP, even if such association is not otherwise widely or publicly known. Xpress Money is expected to follow reasonable steps to ascertain the status of an individual.

In high-profile cases in the past, PEPs have used financial institutions as conduits for their illegal activities, including corruption, bribery, and money laundering. However, not all PEPs present the same level of risk. This risk will vary depending on numerous factors, including the PEP's geographic location, industry, or sector, position, and level or nature of influence or authority. Risk may also vary depending on factors such as the purpose of the transaction, the actual or anticipated activity, products and services used, and size or complexity of the relationship.

As a result of these factors, some PEPs may be lower risk and some may be higher risk for foreign corruption or money laundering. If Xpress Money conducts business with dishonest PEPs, Xpress Money will face substantial reputational risk, additional regulatory scrutiny, and possible supervisory action. Xpress Money should be alert to a PEP's access to, and control or influence over, government or corporate accounts; the level of involvement of intermediaries, vendors, shippers, and agents in the industry or sector in which the PEP operates; and the improper use of corporate vehicles and other legal entities to obscure ownership.

Commensurate with the identified level of risk, due diligence procedures should include, but are not necessarily limited to, the following:

1. Identify the customer, including the nominal and beneficial owners of companies, trusts, partnerships, private investment companies, or other legal entities that are accountholders.

2. Seek information directly from the customer regarding possible PEP status.

3. Identify the customer's countr(ies) of residence and the level of risk for corruption and money laundering associated with these jurisdictions.

4. Obtain information regarding employment, including industry and sector and the level of risk for corruption associated with the industries and sectors.

5. Check references, as appropriate, to determine whether the customer is or has been a PEP.

6. Identify the customer's source of wealth and funds.

7. Obtain information on immediate family members or close associates either having transaction authority over the account or benefiting from transactions conducted through the account.

8. Determine the purpose of the transaction and the expected volume and nature of activity the customer expects.

9. Make reasonable efforts to review public sources of information. These sources will vary depending upon each situation; however, Xpress Money should check the customer and any beneficial owners of legal entities against reasonably accessible public sources of information (e.g., government databases, major news publications, commercial databases and other databases available on the Internet, as appropriate).


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If Xpress Money determines after-the-fact that a customer is a PEP, it will evaluate the risks and take appropriate steps. Xpress Money will exercise additional, reasonable due diligence with regard to such customers. For example, Xpress Money may increase reference inquiries, obtain additional background information on the PEP from employees, agents or foreign correspondents, and make reasonable efforts to consult publicly available information sources. Ongoing risk-based monitoring of PEP customers is critical to ensuring that the customers are conducting appropriate activities.


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IMPLEMENTATION

Xpress Money has appointed Ms. Mary-Jo LaHood as its chief Compliance Officer whose primary duty is to ensure the effective implementation and enforcement of the policies set forth in Xpress Money's Anti-Money Laundering Compliance Manual. It will be the compliance officer's responsibility to supervise all aspects of Xpress Money's anti-money laundering compliance and to further:

Implementing this AML Compliance Program Ensuring ongoing compliance with Federal and state specific AML regulations Conduct weekly examinations of all transactions which fall within the scope of the compliance

manual; Ensure the proper reporting and filing of Currency Transaction Reports, Currency and

Monetary Instrument Reports and Suspicious Activity Reports; Ensure random independent audits are performed to verify compliance with the policies and

procedures set forth herein; Reviewing and updating the AML Compliance Program as necessary due to changes in laws

or regulations and ensuring that all affected employees have been advised of these changes Ensure that all Xpress Money employees undergo anti-money laundering compliance

training programs. Ensuring all training is documented, including the date of the training, name of the

trainer/trainee and topics discussed. Ensuring all employees are trained on AML compliance requirements before conducting MSB transactions Cooperating with law enforcement and Xpress Money on AML reviews, audits and

investigations.

The Compliance Officer is also required to be available to answer any questions regarding potential money laundering and suspicious transactions, and is the person to whom all such questions and any money laundering related problems should be directed. It is extremely important to understand that although Xpress Money has a compliance officer who is “in-charge” of Xpress Money's anti money-laundering compliance, the compliance officer is not the only person responsible for ensuring that Xpress Money effectively detects and reports instances of money laundering or potential money laundering. Rather, the compliance officer should be thought of as Xpress Money's “last line of defense” who is available to answer questions, provide guidance and supervise Xpress Money's anti-money laundering compliance system. Under no circumstances should the compliance officer be thought of as being solely responsible for addressing money laundering issues. For this reason all Xpress Money officers, directors, employees and agents of Xpress Money, must not only read and be familiar with the provisions of this manual but must also undergo periodic Anti-Money Laundering training programs, at the direction of the compliance officer. Furthermore, it is Xpress Money's policy that it is incumbent upon everyone associated with Xpress Money to take responsibility for, and to actively partake in, Xpress Money's anti-money laundering compliance program.


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