EX-99.B(e)scuadel
AMENDMENT TO PRINCIPAL UNDERWRITING AGREEMENT
This Amendment ("Amendment") is made as of July 24, 2002 between
Xxxxxxx & Xxxx Advisors Small Cap Fund, Inc. (the "Fund"), an open-end
investment management company registered under the Investment Company Act
of 1940, and Xxxxxxx & Xxxx, Inc. ("W&R"), the Fund's Principal
Underwriter. The parties hereby amend the Principal Underwriting Agreement
dated as of August 18, 1999 ("Agreement"), as set forth below. Unless
otherwise provided, capitalized terms used herein shall have the same
meanings given to such terms in the Agreement.
WHEREAS, the Bank Secrecy Act, as amended by the USA PATRIOT ACT,
requires the Fund to develop and implement and institute an anti-money
laundering program ("AML Program"); and
WHEREAS, the Fund has adopted the AML Program set forth in Schedule 1
hereto; and
WHEREAS, W&R processes investor account applications, approves and
qualifies prospective investors, accepts investor funds, and/or services
investor accounts; and
WHEREAS, the Fund wishes to delegate certain aspects of the
implementation and operation of the Fund's AML Program to W&R; and
WHEREAS, W&R desires to accept such delegation.
NOW THEREFORE, in consideration of the mutual premises and covenants
set forth herein, the parties agree as follows:
1. Delegation. The Fund hereby delegates to W&R, as agent for the
Fund, responsibility for the implementation and operation of the
following policies and procedures in connection with the Fund's AML
Program, as applicable to W&R's functions as defined in the
Agreement: (i) know-your-customer policies; (ii) monitoring
accounts and identifying high risk accounts; (iii) policies and
procedures for reliance on third parties; (iv) policies and
procedures for correspondent accounts for foreign financial
institutions and for private banking accounts for non-U.S. persons;
(v) no cash policy; (vi) detecting and reporting suspicious
activity; and (vii) all related recordkeeping requirements, and W&R
accepts such delegation. W&R further agrees to cooperate with the
Fund's AML Compliance Officer in the performance of W&R's
responsibilities under the AML Program.
2. The AML Program. W&R hereby represents and warrants that W&R has
received a copy of the Fund's AML Program and undertakes to perform
all responsibilities imposed on W&R as a "Service Provider"
thereunder. The Fund hereby agrees to provide to W&R any
amendment(s) to the AML Program promptly after adoption of any such
amendment(s) by the Fund.
3. Consent to Examination. W&R hereby consents to: (a) provide to
federal examination authorities information and records relating to
the AML Program maintained by W&R; and (b) the inspection of W&R by
federal examination authorities for purposes of the AML Program.
4. Anti-Money Laundering Program. W&R hereby represents and warrants
that W&R has implemented and enforces an anti-money laundering
program ("AMLP") that complies with laws, regulations and
regulatory guidance applicable to the Fund and W&R, and includes,
if applicable:
a. know-your-customer policies;
b. due diligence policies for correspondent accounts for foreign
financial institutions and for private banking accounts for
non-U.S. persons;
c. reasonable internal procedures and controls to detect and
report suspicious activities;
d. monitoring accounts and identifying high-risk accounts;
e. a compliance officer or committee with responsibility for the
anti-money laundering program;
f. employee training, including that: (i) new employees receive
AML training upon the commencement of their employment; and
(ii) existing employees receive AML training at the time such
employees assume duties that bring them into contact with
possible money laundering activities;
g. an independent audit function; and
h. recordkeeping requirements.
5. Delivery of Documents. W&R agrees to furnish to the Fund the
following documents:
a. a copy of W&R's AMLP as in effect on the date hereof, and any
material amendment thereto promptly after the adoption of any
such amendment;
b. a copy of any deficiency letter sent by federal examination
authorities concerning W&R's AMLP; and
c. no less frequently than annually, a report on W&R's anti-money
laundering program that includes a certification to the Fund
concerning W&R's implementation of, and ongoing compliance
with, its anti-money laundering program and a copy of any
audit report prepared with respect to W&R's anti-money
laundering program.
6. Reports. W&R will provide periodic reports concerning W&R's
compliance with W&R's AMLP and/or the Fund's AML Program at such
times as may be reasonably requested by the Fund's Board of
Directors or the Anti-Money Laundering Compliance Officer.
7. Miscellaneous. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Except
as specifically set forth herein, all other provisions of the
Agreement shall remain in force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be fully executed as of the day and year first written above.
Xxxxxxx & Xxxx Advisors Small Cap
Fund, Inc.
By: /s/Xxxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxx
Title: Vice President and Secretary
Xxxxxxx & Xxxx, Inc.
By: /s/Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
Title: President
XXXXXXX & XXXX ADVISORS GROUP OF MUTUAL FUNDS
W&R FUNDS, INC.
W&R TARGET FUNDS, INC.
XXXXXXX & XXXX INVESTED PORTFOLIOS, INC.
ANTI-MONEY LAUNDERING PROGRAM
July 24, 2002
[These Procedures are based on the provisions of and regulations issued
under the USA PATRIOT Act of 2001, as they existed on June 28, 2002. Many
of these regulations are still in proposed form or "interim final" form
and may be altered when finally adopted. In addition, regulations have not
yet been proposed to address a variety of issues raised by the Act. In
light of this uncertainty, these Procedures reflect the Funds'
understanding of the law as it currently exists. Accordingly, these
Procedures will require revisions as new regulations are issued and
pending regulations are finalized.]
ANTI-MONEY LAUNDERING PROGRAM
INTRODUCTION
On October 26, 2001, the USA PATRIOT Act[1] ("Act") became law. Title
III of the Act amended the Bank Secrecy Act ("BSA") to require all
"financial institutions" to develop and institute anti-money laundering
programs that, at a minimum:
* include internal policies, procedures, and controls;
* designate a compliance officer to administer and oversee the
program;
* provide for ongoing employee training; and
* include an independent audit function to test the program.
The Act also expanded the definition of "financial institution" under
the BSA to include, among others, investment companies and broker-dealers.
Interim final regulations issued by the Department of the Treasury
("Treasury") prescribe minimum standards for the anti-money laundering
programs of open-end investment companies.[2] Regulations to be prescribed
by the Secretary of the Treasury may expand the definition of a financial
institution to include investment advisers, transfer agents and other
entities that are not currently covered by the Act.
Money laundering is a serious threat to all financial institutions.
Although banks have been subject to some form of anti-money laundering
requirements since the passage of the BSA in 1970, the Act imposes
substantial new anti-money laundering requirements on investment
companies. The drafters of the Act, however, may not have focused
specifically on the unique circumstances of investment companies, the
majority of which conduct their business almost entirely through external
service providers, do not have employees of their own and do not have
direct contact with investors. Because of this structure, investment
companies must rely on their service providers to have adequate anti-money
laundering programs in place to monitor for money laundering activities of
investment company investors. Nonetheless, investment companies have
certain anti-money laundering responsibilities that, according to
Treasury, they cannot delegate and, therefore, must also implement their
own anti-money laundering programs to meet the requirements of the law.
[1]Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001.
[2]Financial Crimes Enforcement Network, "Anti-Money Laundering Programs
for Mutual Funds," 67 Fed. Reg. 21117 (April 29, 2002).
STATEMENT OF POLICY
This anti-money laundering program ("AML Program" or "Program")
applies to each of the registered investment companies listed on Appendix
A (each, a "Fund" and, collectively, the "Funds"). The Funds are committed
to complying with all applicable anti-money laundering laws and guarding
against money laundering and the financing of terrorist activities. To
this end, the Funds shall take all reasonable steps and exercise
reasonable diligence to prevent the use of the Funds by money launderers
or to finance terrorist activities. Accordingly, each of the Funds has
developed this anti-money laundering program ("AML Program") to:
* protect the Fund against the risks of unscrupulous persons
attempting to fund terrorist or other criminal activities or
launder the proceeds of illegal activities through the Fund;
* conduct the business of the Fund in a manner consistent with
applicable laws and regulations designed to combat money laundering
activities;
* endeavor to ensure that the Fund's service providers ("Service
Providers") conduct their businesses in a manner consistent with
applicable laws and regulations designed to combat money laundering
activities and take all reasonable and appropriate steps to prevent
use of the Fund by those engaged in money laundering activities;
and
* protect the Fund from potential liability under the Act.
ANTI-MONEY LAUNDERING COMPLIANCE OFFICER
AND ANTI-MONEY LAUNDERING COMPLIANCE COMMITTEE
Appointment. The Board of Directors of each Fund has appointed the
Fund's Vice President, Secretary and Associate General Counsel to serve as
the Fund's Anti-Money Laundering Compliance Officer ("AML Compliance
Officer") to administer, oversee and enforce day-to-day compliance with
this AML Program. The AML Compliance Officer's contact information is set
forth in Appendix B.
Responsibilities. As more particularly described in this AML
Program, the AML Compliance Officer shall have overall responsibility to
administer and oversee the AML Program. In this capacity, the AML
Compliance Officer's responsibilities shall include, without limitation:
* negotiating and proposing appropriate contractual arrangements on
behalf of each Fund with Service Providers and evaluating
compliance by Service Providers with those contractual arrangements
and their own anti-money laundering programs as described herein;
* implementing, and reviewing no less frequently than annually,
policies and procedures for investigating and reporting suspicious
transactions;
* implementing, and reviewing no less frequently than annually, the
Fund's AML training;
* arranging for the independent audit of this AML Program;
* reporting to the Fund's Board of Directors, no less frequently than
annually, on compliance with this AML Program;
* maintaining the records required under this AML Program;
* coordinating all communication and information sharing with various
government agencies with respect to compliance with anti-money
laundering laws and regulations; and
* presenting to the Fund's Board of Directors for approval updates or
revisions to this AML Program as necessary to accommodate changes
in the BSA, applicable regulatory requirements, or the Fund's
business.
The AML Compliance Officer shall serve as a member of an AML
Compliance Committee that includes representatives of Xxxxxxx & Xxxx, Inc.
and Xxxxxxx & Xxxx Services Company ("AML Compliance Committee"). Except
as otherwise provided herein, the AML Compliance Officer and the AML
Compliance Committee shall work together to facilitate the performance of
the responsibilities assigned to the AML Compliance Officer.
Reporting. The AML Compliance Officer shall report directly to the
President of the Fund.
PROCEDURES AND POLICIES FOR
DELEGATION TO SERVICE PROVIDERS
Delegation. Because a Fund's Service Providers process investor
account applications, approve and qualify prospective investors, and
accept investor funds, the Fund must rely on these Service Providers to
implement and operate certain aspects of this AML Program on behalf of the
Fund. Accordingly, each of the Funds may delegate the implementation and
operation of the following policies and procedures to such Service
Providers: (i) know-your-customer policies; (ii) monitoring accounts and
identifying high risk accounts; (iii) policies and procedures for
reliance on third parties; (iv) policies and procedures for correspondent
accounts for foreign financial institutions and for private banking
accounts for non-U.S. persons; (v) no cash policy; (vi) detecting and
reporting suspicious activity; and (vii) all related recordkeeping
requirements. Each Fund shall obtain from each such Service Provider to
whom responsibilities under this AML Program have been delegated such
Service Provider's agreement to cooperate with the Fund's AML Compliance
Officer in the performance of such Service Provider's responsibilities
under this AML Program.
To effect this delegation, each Fund shall enter into appropriate
contractual arrangements with the Service Provider(s) that process
investor account applications, approve and qualify investors and accept
investor funds. Each Fund shall obtain, from each such Service Provider,
that Service Provider's consent to permit federal examination authorities
to obtain information and records relating to this AML Program and to
inspect the Service Provider for purposes of the Program.
Review and Evaluation. Before a Fund delegates any aspect of the
implementation of this AML Program to a Service Provider, and no less
frequently than annually thereafter, the AML Compliance Officer shall
review and evaluate the Service Provider's anti-money laundering program
as it relates to functions delegated to the Service Provider by the Fund.
Each such Service Provider to whom a Fund delegates any aspect of the
implementation and operation of this AML Program must have adopted and
implemented an anti-money laundering program that complies with all laws,
regulations and regulatory guidance applicable to the Fund and such
Service Provider as it relates to functions delegated to the Service
Provider by the Fund, and should include, at a minimum (to the extent
relevant):
* know-your-customer policies;
* due diligence policies for correspondent accounts for foreign
financial institutions and for private banking accounts for non-
U.S. persons;
* detecting and reporting suspicious activity;
* monitoring accounts and identifying high-risk accounts;
* a designated compliance officer or committee with responsibility
for implementing the anti-money laundering program;
* employee training;
* an independent audit function; and
* recordkeeping requirements.
In conducting a review and evaluation of each Service Provider's
anti-money laundering program, the AML Compliance Officer shall obtain and
consider:
* a copy of the Service Provider's anti-money laundering program and
any material amendment thereto promptly after the adoption of any
such amendment;
* a copy of any deficiency letter sent by federal examination
authorities concerning the Service Provider's anti-money laundering
program; and
* no less frequently than annually, a report on the Service
Provider's anti-money laundering program that includes a
certification to the Fund concerning the Service Provider's
implementation of, and ongoing compliance with, its anti-money
laundering program and a copy of any audit report prepared with
respect to Service Provider's anti-money laundering program.
The AML Compliance Officer shall retain records memorializing this
evaluation.
Reporting. The AML Compliance Officer shall report to each Fund's
Board of Directors no less frequently than annually regarding the
delegation by the Fund of the implementation of this AML Program to any
Service Provider and the AML Compliance Officer's evaluation of each such
Service Provider's anti-money laundering program.
PROCEDURES AND POLICIES FOR RELIANCE
ON THIRD PARTIES
"Third Parties" include insurance companies, broker-dealers, banks,
pension administrators, other funds and other financial intermediaries
that sell a Fund's shares, either directly or through insurance products,
and maintain an omnibus account with the Fund. As a result, Third Parties
may have contact with investors, process investor account applications and
documentation, and accept investor funds. Neither the Funds nor their
Service Providers typically know the identity of individual investors
participating in these programs; indeed, the nature of these programs
usually prohibits the Funds and Service Providers from learning the
identity of the investors. Accordingly, the Funds and Service Providers
must rely on Third Parties to have adequate anti-money laundering programs
in place.
Each Fund, directly or through its Service Providers, shall seek to
obtain reasonable assurances, through contractual obligations,
certifications, program evaluations, and/or other appropriate means, that
each Third Party has established appropriate anti-money laundering
programs reasonably designed to protect the Fund against the risks of
money laundering activities and the financing of terrorist activities.
These anti-money laundering programs should include, at a minimum:
* know-your-customer policies;
* due diligence policies for correspondent accounts for foreign
financial institutions and for private banking accounts for non-
U.S. persons;
* detecting and reporting suspicious activity;
* monitoring accounts and identifying high-risk accounts;
* a designated compliance officer or committee with responsibility
for implementing the anti-money laundering program;
* employee training;
* an independent audit function; and
* recordkeeping requirements.
As a general matter, and in the absence of contrary indications, the
Fund and its Service Providers may rely on Third Party investor
identification procedures performed by:
* a U.S. financial institution, subject to the BSA, with respect to
its customers;
* a U.S. financial institution, subject to the BSA, acting as
intermediary, nominee, fund of funds or assets aggregator; and
* a regulated foreign financial institution organized in a FATF-
compliant jurisdiction.
The Fund and its Service Providers shall apply a risk-based approach
in determining the type and degree of assurances necessary from each Third
Party regarding such Third Party's anti-money laundering program. Factors
relevant to this determination could include:
* the nature of the services provided to the Fund, including the
level of contact with actual or prospective investors;
* whether the Third Party is itself a financial institution subject
to the Act, or a different type of entity;
* if the Third Party is not a financial institution subject to the
Act, the regulation to which it is subject;
* the location of the Third Party and the jurisdiction in which the
Third Party conducts its business;
* the Third Party's history and reputation; and
* the viability of the Third Party's anti-money laundering program.
The Funds and/or the Service Providers shall retain records
memorializing this determination on behalf of each Fund.
POLICIES AND PROCEDURES FOR CERTAIN FOREIGN ACCOUNTS
Due Diligence of Correspondent Accounts for Foreign Financial
Institutions. Each Fund, through its Service Providers, shall undertake
reasonable efforts to detect and report any known or suspected money
laundering conducted through or involving any correspondent account[3]
maintained by the Fund for a foreign financial institution. Service
Providers shall undertake reasonable efforts to:
* determine whether the correspondent account is subject to the
enhanced due diligence requirements that apply to accounts
maintained for certain foreign banks;
* conduct a risk assessment to determine whether the correspondent
account poses a significant risk of money laundering activity;
* consider any publicly available information from U.S. governmental
agencies and multinational organizations with respect to regulation
and supervision, if any, applicable to the foreign financial
institution;
* consider any guidance issued by the Department of Treasury or the
Securities and Exchange Commission regarding money laundering risks
associated with particular foreign financial institutions and types
of correspondent accounts; and
* review public information to ascertain whether the foreign
financial institution has been the subject of any criminal action
of any nature, or of any regulatory action relating to money
laundering, to determine whether the circumstances of such action
may reflect an increased risk of money laundering through the
correspondent account.
[3]Proposed rules issued by Treasury define a "correspondent account" as
"an account established to receive deposits from, make payments on behalf
of a foreign financial institution, or handle other financial transactions
related to such institution." In the release accompanying the proposed
rules, Treasury explained that in the case of U.S. bank, the definition
would include most types of banking relationships between a U.S. bank and a
foreign bank. Additionally, in the case of securities broker-dealers,
futures commission merchants and introducing brokers, a correspondent
account would include any account that permits the foreign bank to engage
in securities or futures transactions, funds transfers or other types of
financial transactions. Financial Crimes Enforcement Network, "Due
Diligence Anti-Money Laundering Programs for Certain Foreign Accounts," 67
Fed. Reg. 37736 (May 30, 2002).
The following additional steps may be taken when dealing with any
correspondent account for certain foreign banks:[4]
* enhanced scrutiny, including (a) performing due diligence on the
foreign bank's anti-money laundering program, and (b) when
appropriate, monitoring transactions through the correspondent
account and obtaining information about persons that will have
authority to direct those transactions;
* determining whether the foreign bank maintains correspondent
accounts for other foreign banks and, if so, document the identity
of these other foreign banks and establish policies and procedures
for assessing and minimizing risks associated with these accounts;
and
* in the case of foreign banks whose shares are not publicly traded,
identifying each person who owns, controls or has voting power over
5% or more of any class of the foreign bank's securities and the
nature and extent of each such person's ownership interest.
Due Diligence for Private Banking Accounts for Non-U.S. Persons.
Each Fund, through its Service Providers, shall undertake reasonable
efforts to detect and report to the AML Compliance Officer and/or
appropriate law enforcement authorities, any known or suspected money
laundering conducted through or involving any private banking account[5] that
the Fund maintains for or on behalf of a non-U.S. person. Service
Providers shall undertake reasonable efforts to:
* ascertain the identity of all nominal holders and holders of any
beneficial ownership interest in the private banking account,
including the lines of business and source of wealth of such
persons;
* ascertain the source of funds deposited into the account;
* ascertain whether any such holder may be a senior foreign political
figure;[6] and
* report to the AML Compliance Officer and/or appropriate law
enforcement authorities, any known or suspected violation of law
conducted through or involving the private banking account.
Senior Political Figures. Additional due diligence shall be
conducted by each Fund, through its Service Providers, in the case of any
private banking account maintained for a senior foreign political figure,
including whether transactions in such account involve the proceeds of
foreign corruption.[7]
Incomplete Due Diligence. If the AML Compliance Officer is notified
by a Service Provider that the above procedures cannot be adequately
performed, the AML Compliance Officer shall consult with the Service
Provider to determine what course of action, if any, should be followed.
Examples of such actions include refusing to open an account, filing
suspicious activity reports, or closing the account.
[4]Under proposed Treasury rules, this would include all foreign banks
operating under the following types of licenses: (1) an offshore banking
license; (2) a banking license issued by a foreign country that is
designated a noncooperative by an intergovernmental group or organization
of which the United States is a member (e.g., the Financial Action Task
Force on Money Laundering) with which designation the United States
representative to the group or organization concurs; or (3) a banking
license issued by a foreign country that has been designated by the
Department of Treasury as warranting special measures due to money
laundering concerns. Id.
[5]Proposed Treasury rules define a a "private banking account" as "an
account (or any combination of accounts) that: (1) Requires a minimum
aggregate amount of funds or other assets of not less than $1,000,000;
(ii) Is established on behalf of or for the benefit of one or more
individuals who have a direct or beneficial ownership interest in the
account; and (3) Is assigned to, or is administered or managed by, in
whole or in part, an officer, employee, or agent of a covered financial
institution acting as a liaison between the covered financial institution
and the direct or beneficial owner of the account." Id.
[6]"Senior foreign political figure" is defined in the proposed Treasury
rules as "(i) A current or former 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
commercial enterprise; (ii) A corporation, business or other entity that
has been formed by, or for the benefit of, any such individual; (iii) An
immediate family member [spouse, parent, sibling, child, or spouse's parent
or sibling] of any such individual; and (iv) A person who is widely and
publicly known (or is actually known by the relevant covered financial
institution) to maintain a close personal or professional relationship with
any such individual." Id.
[7]Proposed Treasury rules define "proceeds of foreign corruption" to mean
"assets or property that are acquired by, through, or on behalf of a senior
foreign political figure through misappropriation, theft or embezzlement of
public funds, or the unlawful conversion of property of a foreign
government, or through acts of bribery or extortion, and shall include
other property into which such assets have been transformed or converted."
Id.
NO CASH POLICY
No Fund will accept or disburse cash in connection with an investment
in the Fund or the establishment of an account for an investor. For the
purposes of this policy, cash includes currency and credit card
convenience checks.
EDUCATION AND TRAINING
In General. The AML Compliance Officer shall attend, and the Funds
shall require that other members of the AML Compliance Committee and all
relevant employees of the Service Providers to whom the Fund has delegated
compliance with this AML Program to attend, anti-money laundering training
no less frequently than annually. The purpose of anti-money laundering
training is to educate those individuals to recognize the indicia of
possible money laundering and to take appropriate actions when such a risk
is identified.
AML training may be conducted at third-party or in-house seminars and
may include computer training. The Funds shall require that the level,
frequency and focus of the training shall be determined by the
responsibilities of the attendees and extent to which their functions
bring them into contact with possible money laundering activity. The Funds
also shall require that training be relevant to the functions of the
attendees and include job-specific guidance.
AML training shall cover, at a minimum:
* what money laundering is and how it is carried out;
* federal anti-money laundering statutes and regulations, with a
particular emphasis on laws and regulations since the last training
session;
* the civil and legal penalties associated with money laundering
activities;
* what the Fund's obligations are under federal anti-money laundering
statutues and regulations;
* reporting and recordkeeping requirements under the Act and BSA;
* an overview of this AML Program, with a particular emphasis on
changes in the Program since the last training session;
* potential indicators of money laundering activities and suspicious
activity, including recent money laundering schemes;
* steps that should be followed when suspicious activities arise; and
* consequences for not following this AML Program.
Initial and Continuing Education. A Fund shall require of a Service
Provider to whom the Fund has delegated compliance with this AML Program
that: (i) new employees of such Service Provider receive AML training upon
the commencement of their employment; and (ii) existing employees of such
Service Provider receive AML training at the time such employees assume
duties that bring them into contact with possible money laundering
activities.
Periodic updates on the subject matter covered in the AML training
program shall be provided either in the form of a training session or a
written bulletin that may be disseminated in paper or electronic format.
Review. The AML Compliance Officer shall be responsible for
reviewing, no less frequently than annually, the AML training described
herein.
AUDIT
Required Annually. This AML Program shall be audited no less
frequently than annually.
Independence Requirement. The audit may be performed by trained
members of a Service Provider's audit department who are independent of
the personnel working in the areas that are exposed to potential issues
related to money laundering activities, or by an independent third party.
The audit personnel must be knowledgeable regarding the requirements of
the Act, the BSA and money laundering activities.
Required Items. As part of the audit, the auditor shall:
* test all affected areas to obtain reasonable assurance that the AML
Compliance Officer and Fund officers understand and are complying
with anti-money laundering policies and procedures;
* annually review the flow of investor funds, account and trading
information into and within and among the Funds to determine
whether additional elements should be added to the Program;
* review contractual arrangements with Service Providers and the AML
Compliance Officer's ongoing evaluation of compliance by Service
Providers with their own anti-money laundering programs;
* review the suspicious activity referral, investigation and
reporting process;
* review and test compliance with the recordkeeping and record
retention procedures; and
* review the substantive adequacy of the training sessions.
Written Report. The auditor shall prepare a written report
documenting the results of the audit, including any deficiencies and
recommendations for enhanced compliance with this AML Program. Copies of
the report shall promptly be provided to the AML Compliance Officer and
each Fund's Board of Directors for their review and consideration and may
be provided to the AML Compliance Committee.
APPROVAL & REVIEW
Initial and Annual Approval. The Board of Directors of each Fund
shall approve or ratify the adoption of this AML Program for the Fund and
shall review and approve this AML Program no less frequently than
annually. The Board of Directors may request and evaluate such information
as it deems reasonable and appropriate in connection with its review and
approval of this AML Program.
Interim Amendments. The AML Compliance Officer, in consultation
with the AML Compliance Committee, may adopt interim amendments to this
AML Program as necessary to comply with legal requirements, subject to
ratification by the Board of Directors.
Record. Any approval or ratification shall be noted in the minutes
of the meeting at which such action was taken.
RECORDKEEPING
General. Each Fund shall maintain records in order to (1) provide an
audit trail for law enforcement officials investigating potential money
laundering schemes and (2) document the Fund's compliance with all
applicable legal and regulatory requirements relating to money laundering.
Required Records. The AML Compliance Officer shall maintain records
documenting each Fund's compliance with this AML Program, including:
* the assurances received from Service Providers regarding the nature
and extent of their anti-money laundering programs, as well as
other records relating to the evaluation of Service Providers;
* all Suspicious Activity Referral Forms and Suspicious Activity
Investigation Forms, and any SARs filed by the Fund, along with all
supporting documentation;
* the AML Compliance Officer's annual report to the Board of
Directors;
* the minutes from any meeting of the Board of Directors at which
this Program was reviewed and approved;
* all documentation relating to education and training under this
Program, including the date of each training session, the
attendees, the topics covered and the training materials
disseminated; and
* the annual audit report prepared by an independent third party.
Length of Time to Retain Records. The above records must be
maintained for a period of five years from the event they document, or
such other period as may be required by law, in a readily accessible
place. All Suspicious Activity Reports and related documents must be
retained for five years from the date of filing.
CERTIFICATION
Fund officers and such other persons designated by the AML Compliance
Officer shall be required, on an annual basis, to certify their knowledge
of, and compliance with, the Fund's AML Program. Each such individual
shall be asked to execute a statement affirming that he or she has read
and understands the policies set forth herein.
APPENDIX A
ADOPTION OF ANTI-MONEY LAUNDERING PROGRAM
The following funds have adopted this Anti-Money Laundering
Program:
1. Xxxxxxx & Xxxx Advisors Group of Mutual Funds
Xxxxxxx & Xxxx Advisors Asset Strategy Fund, Inc.
Xxxxxxx & Xxxx Advisors Cash Management, Inc.
Xxxxxxx & Xxxx Advisors Continental Income Fund, Inc.
Xxxxxxx & Xxxx Advisors Fixed Income Funds, Inc.
Government Securities Fund
Limited-Term Bond Fund
Xxxxxxx & Xxxx Advisors Funds, Inc.
Accumulative Fund
Bond Fund
Core Investment Fund
Science & Technology Fund
Xxxxxxx & Xxxx Advisors Global Bond Fund, Inc.
Xxxxxxx & Xxxx Advisors High Income Fund, Inc.
Xxxxxxx & Xxxx Advisors International Growth Fund, Inc.
Xxxxxxx & Xxxx Advisors Municipal Bond Fund, Inc.
Xxxxxxx & Xxxx Advisors Municipal High Income Fund, Inc.
Xxxxxxx & Xxxx Advisors New Concepts Fund, Inc.
Xxxxxxx & Xxxx Advisors Retirement Shares, Inc.
Xxxxxxx & Xxxx Advisors Small Cap Fund, Inc.
Xxxxxxx & Xxxx Advisors Tax-Managed Equity Fund, Inc.
Xxxxxxx & Xxxx Advisors Value Fund, Inc.
Xxxxxxx & Xxxx Advisors Vanguard Fund, Inc.
2. W&R Funds, Inc.
3. W&R Target Funds, Inc.
4. Xxxxxxx & Xxxx InvestEd Portfolios, Inc.
APPENDIX B
ANTI-MONEY LAUNDERING COMPLIANCE OFFICER
Xxxxxxx X. Xxxxxxxx serves as the Anti-Money Laundering Compliance
Officer for each Fund pursuant to the Anti-Money Laundering Program. She
may be contacted as follows:
Name: Xxxxxxx X. Xxxxxxxx
Address: 0000 Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxx Xxxxxxx, Xxxxxx 00000-0000
E-Mail Address: xxxxxxxxx@xxxxxxx.xxx
Telephone Number: (000) 000-0000
Fax Number: (000) 000-0000
Dated: July 24, 2002
