Exhibit (h)(3)
Form of
AMENDMENT DATED OCTOBER 1, 2003 TO THE MUTUAL FUNDS SERVICE
AGREEMENT BETWEEN XXXXXXXXXX INSTITUTIONAL SERIES ("FUND")
AND X.X. XXXXXX INVESTOR SERVICES CO., (SUCCESSOR TO CHASE
GLOBAL FUNDS SERVICES CO.)
DATED OCTOBER 1, 1996 ("AGREEMENT")
Pursuant to Section 11 ("Amendments") of the above-referenced
Agreement, the Agreement is hereby amended and supplemented as follows:
1. Compliance with Laws / Delegation to X.X. Xxxxxx.
The Fund is a financial institution subject to the law entitled Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism ("U.S.A. Patriot") Act of 2001 and the Bank Secrecy Act
(collectively, the "AML Acts") and shall comply with the AML Acts and applicable
regulations adopted thereunder (collectively, the "Applicable AML Laws") in all
relevant respects, subject to the delegation of certain responsibilities to X.X.
Xxxxxx, as provided in the next paragraph below.
The Fund hereby delegates to X.X. Xxxxxx the performance, on behalf of
the Fund, of the duties set forth in the anti-money laundering program,
including customer identification procedures, attached hereto (the "AML
Program") and the services set forth in Schedule A to this Amendment as concerns
the shareholder accounts maintained by X.X. Xxxxxx pursuant to the Agreement
(including direct accounts; accounts maintained through FUND/SERV and
Networking, to the extent provided below; and omnibus accounts, to the extent
provided below) (collectively the "AML Services"). X.X. Xxxxxx agrees to the
foregoing delegation and agrees to perform the AML Services in accordance with
the AML Program, that has been adopted by the Fund. In connection therewith,
X.X. Xxxxxx agrees to maintain customer identification procedures and other
policies and procedures, and related internal controls, that are consistent with
the AML Program, and the requirement that the Fund employ procedures reasonably
designed to achieve compliance with the applicable AML Laws, including the
requirement to have policies and procedures that can be reasonably expected to
detect and cause the reporting of transactions under Section 5318 of the Bank
Secrecy Act. X.X. Xxxxxx'x obligations under this delegation shall be subject to
Sections 3 and 4 of this Amendment, which require that the AML Program, adopted
by the Fund and any material amendments thereto be submitted to X.X. Xxxxxx.
The Fund agrees and acknowledges that, notwithstanding the delegation
provided for in the foregoing paragraph, the Fund maintains full responsibility
for ensuring that its AML Program is, and shall continue to be, reasonably
designed to ensure compliance with the Applicable AML Laws, in light of the
particular business of the Fund, taking into account factors such as its size,
location, activities and risks or vulnerabilities to money laundering.
In connection with the foregoing delegation, the Fund acknowledges
that the performance of the AML Services enumerated in Schedule A involves the
exercise of discretion, which in certain circumstances may result in
consequences to the Fund and its shareholders (such as in the case of the
reporting of suspicious activities and the freezing of shareholder accounts). In
this regard, (i) under circumstances in which the AML Program authorizes the
taking of certain actions, X.X. Xxxxxx is granted the discretion to take any
such action as may be authorized, and consultation with the Fund shall not be
required in connection therewith unless expressly required by the AML Program or
the Fund, and (ii) the Fund instructs X.X. Xxxxxx that it may avail the Fund of
any safe harbor from civil liability that may be available under applicable AML
Laws for making a disclosure or filing a report thereunder.
As concerns Networking Level III accounts and omnibus accounts, the AML
Services performed by X.X. Xxxxxx are subject to a more limited scope, as
contemplated under the interim final rule of the Department of the Treasury, 31
CFR 103, effective April 24, 2002 (the "Interim Final Rule") and the performance
by the Fund of the risk-based evaluation of entities holding such accounts, as
contemplated under the Interim Final Rule. The foregoing reference to the
Interim Final Rule shall be deemed to include laws and regulations adopted
subsequent to the Interim Final Rule, if and to the extent consistent therewith.
2. Instructions / Procedures.
The Fund acknowledges and agrees that deviations from X.X. Xxxxxx'x
written transfer agent compliance procedures with respect to anti-money
laundering may involve a substantial risk of loss. In the event an authorized
representative of the Fund requests that an exception be made from any written
compliance or transfer agency procedures adopted by X.X. Xxxxxx with respect to
the AML Program ("Exception"). X.X. Xxxxxx may, upon notice to the Fund, refuse
to permit such Exception, provided that such refusal is reasonable under the
circumstances. In the event X.X. Xxxxxx determines to permit such Exception
concerning the requirements of the AML Program, it shall be authorized by the
Fund's anti money laundering compliance officer ("AML Compliance Officer"). An
Exception shall be deemed to remain effective until the relevant instrument
expires according to its terms (or if no expiration date is stated, until X.X.
Xxxxxx receives written notice from the Fund that such instrument has been
terminated and the Exception is no longer in effect). As long as X.X. Xxxxxx
acts in good faith and without willful misconduct, X.X. Xxxxxx shall have no
liability for any loss, liability, expenses or damages to the Fund resulting
from the Exception, and the Fund shall indemnify X.X. Xxxxxx and hold X.X.
Xxxxxx harmless from any loss, liability, expenses (including reasonable
attorneys fees) and damages resulting to X.X. Xxxxxx therefrom.
3. Representations and Warranties.
The Fund represents and warrants that (a) the Fund has adopted the
written AML Program that has been submitted to X.X. Xxxxxx pursuant to Section
4, and has appointed the Fund's AML Compliance Officer, who is, an officer of
the Fund; (b) the AML Program and the designation of the AML Officer have been
approved or will be ratified by the Fund's Board of Trustees (c) the delegation
of certain services thereunder to X.X. Xxxxxx, as provided in Section 1 of this
Amendment, has been approved or will be ratified by the Board; and (d) the Fund
will submit any material amendments to the Fund's AML Program to X.X. Xxxxxx for
X.X. Xxxxxx'x review. Any amendment that would have a material impact upon the
AML Services to be rendered by X.X. Xxxxxx or the responsibilities of X.X.
Xxxxxx shall be provided to X.X. Xxxxxx prior to adoption. The Fund's AML
Compliance Officer need not be an officer of the Fund if not required by
applicable laws and regulations.
X.X. Xxxxxx represents and warrants to the Fund that it has adopted and
will maintain a written program concerning the AML Services (the AML Program
attached hereto) and that its policies and procedures are reasonable and
appropriate to provide the AML Services and comply with its obligations under
this Amendment.
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4. Information to be Furnished by the Fund/X.X. Xxxxxx.
The Fund has furnished to X.X. Xxxxxx the following:
(a) A list of all officers of the Fund, with the Fund's
AML Compliance Officer included among the officers
therein, and any other persons (who may be associated
with the Fund or its investment adviser), together
with specimen signatures of those officers and other
persons who (except as otherwise provided herein to
the contrary) shall be authorized to instruct X.X.
Xxxxxx in all matters.
(b) A copy of the Fund's written AML Program, as defined
in Section 1 of this Amendment, including related
Policies and Procedures, and any amendment thereto.
X.X. Xxxxxx has furnished the following to the Fund:
(c) The written program concerning AML Services and any
amendments thereto.
5. Privacy.
In accordance with the Securities and Exchange Commission's Regulation
S-P non-public personal information relating to consumers or customers of any
Fund provided by, or at the direction of the Fund to X.X. Xxxxxx, or collected
or retained by X.X. Xxxxxx in the course of performing its duties as transfer
agent, as well as non-public information of any Fund, shall be considered
confidential information. X.X. Xxxxxx agrees that it shall not use such
confidential information for any purpose other than to carry out its obligations
under this Agreement, and further agrees that it shall not disclose such
confidential information to any person or entity other than (i) affiliates of
X.X. Xxxxxx to the extent necessary to carry out its obligations under this
Agreement (ii) non-affiliated third parties who have entered into written
contractual arrangements with X.X. Xxxxxx and only to the extent necessary to
carry out X.X. Xxxxxx'x obligations under this Agreement (iii) at the direction
of any Fund, or (iv) as required by law. X.X. Xxxxxx shall not disclose
confidential information to any person or entity unless such person or entity
has agreed to keep such information confidential.
The Fund represents to X.X. Xxxxxx that the Fund has adopted a
Statement of its privacy policies and practices as required by the Securities
and Exchange Commission's Regulation S-P and agrees to provide X.X. Xxxxxx with
a copy of that statement annually.
6. Access to be Provided.
X.X. Xxxxxx shall maintain, appropriate records regarding the AML
Services as set forth in the AML Program, and shall promptly deliver such
records to the Fund upon termination of the Agreement. X.X. Xxxxxx shall grant
reasonable access to each of the Fund, the AML Compliance Officer, and
regulators having jurisdiction over the Fund, to the books and records
maintained by X.X. Xxxxxx as the same relates to the AML services. Records may
be edited or redacted to maintain confidentiality of materials related to other
clients of X.X. Xxxxxx. X.X. Xxxxxx shall have appropriate and relevant
personnel available to the Fund's AML Compliance Officer and for the Board
concerning the AML Services at least annually or at such other intervals as may
be reasonably requested by the Compliance Officer or Board.
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7. Audits of AML Services
(a) In coordination with X.X. Xxxxxx, from time to time,
the Funds may review and/or audit the performance and
effectiveness of the AML Services provided by X.X.
Xxxxxx to the Funds, including through any
Subtransfer Agent. Any audit of any Subtransfer Agent
shall be consistent with any applicable Agreement
between X.X. Xxxxxx and the Subtransfer Agent. X.X.
Xxxxxx promptly will take remedial steps necessary to
address any deficiencies identified in the reviews or
audits and will advise the Funds' AML Compliance
Officer of the steps taken to address any such
deficiencies.
(b) At least annually, X.X. Xxxxxx, in coordination with
the Funds, will conduct or arrange for independent
testing (audits) by qualified internal auditors or
outside auditors of the AML Services it provides to
the Funds directly and through any Subtransfer Agent
and for compliance with the AML Program, the Policies
and Procedures, and this Amendment. X.X. Xxxxxx will
provide the AML Compliance Officer with a summary of
the scope of such audits, the results of the audits
and testing, including any material deficiencies or
weaknesses identified, and any remedial steps that
will be taken or have been taken.
8. Reports to be Furnished to the Fund.
At least quarterly, X.X. Xxxxxx shall provide a report to the Fund
containing the information listed on Schedule B hereto and any other information
about the AML Services as may be reasonably requested by the Fund, the Board
and/or the Fund's AML Compliance Officer.
9. Miscellaneous.
(a) The provisions set forth in this Amendment supersede
all prior negotiations, understandings and agreements
bearing upon the subject matter covered herein,
including any conflicting provisions of the Agreement
or any provisions of the Agreement that directly
cover or indirectly bear upon matters covered under
this Amendment.
(b) Each reference to the Agreement in the Agreement (as
it existed prior to this Amendment) and in every
other agreement, contract or instrument to which the
parties are bound, shall hereafter be construed as a
reference to the Agreement as amended and
supplemented by this Amendment. Except as provided in
this Amendment, the provisions of the Agreement
remain in full force and effect (including, without
limitation, the term of the Agreement). No amendment
or modification to this Amendment shall be valid
unless made in writing and executed by both parties
hereto.
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In witness whereof, the parties hereto have caused this Amendment to be executed
by their duly authorized officers. This Amendment will be effective as of
October 1, 2003.
XXXXXXXXXX INSTITUTIONAL SERIES
By:_________________________
Title: _____________________
X.X. XXXXXX INVESTOR SERVICES CO.
By:_________________________
Title: _____________________
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TRANSFER AGENCY AMENDMENT
SCHEDULE A
DESCRIPTION OF SERVICES
The following is a general description of the AML services.
a. Verify shareholder identity upon opening new accounts.
b. Monitor, identify and report shareholder transactions and
identify and report suspicious activities that are required to
be so identified and reported, and provide other required
reports to the Securities and Exchange Commission, the U.S.
Treasury Department, the Internal Revenue Service or each
agency's designated agent, in each case consistent with the
Fund's AML Program.
c. Place holds on transactions in shareholder accounts or freeze
assets in shareholder accounts, as provided in the Fund's AML
Program.
d. Create documentation to provide a basis for law enforcement
authorities to trace illicit funds.
e. Maintain all records or other documentation related to
shareholder accounts and transactions therein that are
required to be prepared and maintained pursuant to the Fund's
AML Program, and make the same available for inspection by (i)
the Fund's AML Compliance Officer, (ii) any auditor of the
Fund's AML Program or related procedures, policies or controls
that has been designated by the Fund in writing, or (iii)
regulatory or law enforcement authorities, and otherwise make
said records or other documents available at the direction of
the Fund's AML Compliance Officer.
f. Arrange for periodic reviews, at least annually, to be
performed by internal auditors or other auditors chosen by
X.X. Xxxxxx concerning the X.X. Xxxxxx operations related to
the AML Services.
g. Perform such other related services as are required by the AML
Program.
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TRANSFER AGENCY AMENDMENT
SCHEDULE B
ANTI-MONEY LAUNDERING PROGRAM REPORTS
Following each quarterly period, X.X. Xxxxxx will provide a report to the
following effect pertaining to the AML Services rendered by X.X. Xxxxxx
hereunder during such quarterly period:
.. performed good order review for all new and reregistered accounts;
.. performed acceptance review for all monetary instruments received;
.. administered signature guarantee policy in accordance with prospectus
requirements;
.. administered escrow hold policy in accordance with prospectus requirements;
.. verified customer address changes;
.. verified customer identification for all new accounts and all name changes
on existing accounts;
.. monitored all purchase transactions made with cash equivalents totaling in
excess of $10,000, resulting in the filing of [x] Form 8300 reports during
the period. The Fund does not accept cash or currency;
.. monitored all accounts for suspicious activity resulting in the filing of
[x] Form SAR reports during the period;
.. reviewed shareholder names against lists of suspected terrorist and
terrorist organizations supplied by various governmental organizations,
such as the Office of Foreign Asset Control resulting in the freezing and
reporting of [x] accounts during the period;
.. created the documentation necessary to provide a basis for law enforcement
authorities to trace illicit funds;
.. maintained all records and other documentation related to shareholder
accounts and transactions required to be prepared and maintained pursuant
to the Fund's anti-money laundering program for all X.X. Xxxxxx transfer
agent services;
The following items will be provided if the Fund falls under the related USA
PATRIOT Act provisions:
.. performed any required due diligence to help prevent the opening of any
accounts for foreign shell banks during the period either directly or
through correspondent accounts; and
.. performed any required due diligence on any new correspondent accounts
opened during the period.
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