Exhibit h(6)
ADDENDUM TO TRANSFER AGENT AGREEMENTS
THIS ADDENDUM, dated as of July 24, 2002, modifies the Transfer Agent Agreements
by and between U.S. Bancorp Fund Services, LLC (the "Transfer Agent") and The
Tocqueville Trust (the "Funds"), such Agreements being hereinafter referred to
as the "Agreements."
WHEREAS, Section 352 of the USA Patriot Act (the "Act") and the Interim Final
Rule (Section 103.130) adopted by the Department of the Treasury's Financial
Crimes Enforcement Network (the "Rule") require the Funds to develop and
implement an anti-money laundering program and monitor the operation of the
program and assess the effectiveness; and
WHEREAS, Section 326 of the Act, as proposed, requires the Funds to develop and
implement a Customer Identification Program ("CIP") as part of the Funds'
overall anti-money laundering program to ensure, among other things, that the
Funds obtain certain information from each of its customers and to be reasonably
sure it knows each of its customers; and
WHEREAS, in order to assist its transfer agent clients with their anti-money
laundering compliance responsibilities under the Act and the Rule, the Transfer
Agent has provided to the Funds for their consideration and approval written
procedures describing various tools designed to promote the detection and
reporting of potential money laundering activity by monitoring certain aspects
of shareholder activity (the "Monitoring Procedures") as well as written
procedures for verifying a customer's identity (the Customer Identification
Procedures"), together referred to as the "Procedures"; and
WHEREAS, the Funds desire to implement the Procedures as part of their overall
anti-money laundering program and, subject to the terms of the Act and the Rule,
delegate to the Transfer Agent the day-to-day operation of the Procedures on
behalf of the Funds.
NOW THEREFORE, the parties agree, and the Agreements are hereby modified, as
follows.
1. The Funds acknowledge that they have had an opportunity to review, consider
and comment upon the Procedures provided by the Transfer Agent and the Funds
have determined that the Procedures, as part of the Funds' overall
anti-money laundering program, are reasonably designed to prevent the Funds
from being used for money laundering or the financing of terrorist
activities and to achieve compliance with the applicable provision of the
Bank Secrecy Act and the implementing regulations thereunder.
2. Based on this determination, the Funds hereby instruct and direct the
Transfer Agent to implement the Procedures on the Funds' behalf, as such may
be amended or revised from time to time.
3. It is contemplated that these Procedures will be amended from time to time
by the parties as additional regulations are adopted and/or regulatory
guidance is provided relating to the Funds' anti-money laundering
responsibilities.
4. The Transfer Agent agrees to provide to the Funds (a) prompt written
notification of any transaction or combination of transactions that the
Transfer Agent believes, based on the Procedures, evidence money laundering
activity in connection with the Funds or any shareholder of the Funds (b)
prompt written notification of any customer(s) that the Transfer Agent
reasonably believes, based upon the Procedures, to be engaged in money
laundering activity, provided that the Funds agree not to communicate this
information to the customer, (c) any reports received by the Transfer Agent
from any government agency or applicable industry self-regulatory
organization pertaining to the Transfer Agent's anti-money laundering
monitoring on behalf of the Funds as provided in this Addendum, (d) prompt
written notification of any action taken in response to anti-money
laundering violations as described in (a), (b), or (c) and (e), an annual
report of its monitoring and customer identification activities on behalf of
the Funds. The Transfer Agent shall provide such other reports on the
monitoring and customer identification activities conducted at the direction
of the Funds as may be agreed to from time to time by the Transfer Agent and
the Funds.
5. The Funds hereby direct, and the Transfer Agent acknowledges, that the
Transfer Agent shall (a) permit federal regulators access to such
information and records maintained by the Transfer Agent and relating to the
Transfer Agent's implementation of the Procedures on behalf of the Funds, as
they may request, and (b) permit such federal regulators to inspect the
Transfer Agent's implementation of the Procedures on behalf of the Funds.
6. Fees and expenses (other than those already set forth in the Agreements) for
services to be provided by the Transfer Agent hereunder shall be set forth
in a fee schedule agreed upon by the Funds and the Transfer Agent from time
to time. A copy of the initial fee schedule is attached hereto as Exhibit A.
7. This Addendum constitutes the written instructions of the Funds pursuant to
the terms of the Agreements. Except to the extent supplemented hereby, the
Agreements shall remain in full force and effect.
IN WITNESS HEREOF, the undersigned have executed this Addendum as of the date
and year first above written.
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The Tocqueville Trust U.S. Bancorp Fund Services, LLC
(the "Funds") (the "Transfer Agent")
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx (Illegible)
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Authorized Officer Authorized Officer
Anti-Money Laundering Fee Schedule
The fees associated with USBFS's assigned duties and responsibilities are
threefold: a base annual fee based on the number of shareholder accounts, a new
account fee, and out-of-pocket fees for required database searches on both new
and existing accounts. These fees are set forth below:
AML Base Service (excluding network level three accounts)
0-999 accounts - $500.00 per year
1,000-4,999 accounts - $1,000 per year
5,000-9,999 accounts - $2,500 per year
10,000 accounts - $5,000 per year
AML New Account Service - $1.00 per new domestic account
$2.00 per new foreign account
Out-of-pocket expenses - at cost of database search engine
used
- all other out-of-pocket expenses
Exhibit A
LOGO
MONITORING OF HIGH RISK ACCOUNTS
USBFS will monitor both new and existing accounts within each of its customer
types - investment companies, U.S. based domestic partnerships and Offshore
Trusts. We intend to monitor accounts based upon the methods and reports
outlined and discussed in our AML policies and procedures and in accordance with
the risk rating scale below. All new accounts will be analyzed to assess if they
present a high money laundering risk using the criteria and characteristics
described in our risk rating scale. Once this determination has been made, the
account will be specifically coded as a high risk account on our transfer agency
system and this designation will be used in monitoring these accounts for
possible suspicious transactions.
Monitoring "High Risk" Shareholder Accounts
Accounts that meet the characteristics for higher risk for possible money
laundering activity will be flagged on the shareholder account transfer agency
system. This designation will result in USBFS management being alerted to any
financial activity (purchase or liquidation) that occurs on the account.
As these alerts occur, management will review the activity to determine if the
transaction is suspicious in nature. Special attention will be paid to
transactions that may involve movement of funds into or out of the U.S.,
especially involving a country identified as "high risk" for money laundering.
If the transaction for the "high risk" account does not appear suspicious, USBFS
management or their designee will either indicate this fact on the transfer
agency system or will notate a comment to this effect on the actual transaction
(or the report on which it appears).
Further, an ISAR (internal suspicious activity report) may be filed if the facts
and circumstances warrant. An example of this may be if we open an account
registered to an owner in a FATF country.
Ongoing Transaction Monitoring for Suspicious Activity
In addition to the focused monitoring of accounts deemed "high risk" for money
laundering discussed above, USBFS will maintain an ongoing monitoring process
for other shareholder account activity. This monitoring will be targeted at
identifying other unusual activity that may be indicative of suspicious activity
including fraud or money laundering.
All existing accounts will also be monitored by use of daily unusual activity
reports that will be triggered for the following events:
1. Any transaction in an account (excluding an omnibus account)
of $100,000 or more
2. Any liquidation transaction sent to 3rd party address
3. Any liquidation transaction sent to an unregistered owner
(this is a separate manual procedure)
4. Any series of cash equivalent transactions totaling $5,000 or
more within a twelve months rolling period
These daily reports will be reviewed either on-line or in hard copy by USBFS'
compliance department. The reviewer will initial the daily reports and will also
notate on any reports where additional investigation or a filing of an ISAR took
place. These daily reports will be maintained for future review by Auditors and
Examiners.
As a result of the investigation triggered from the daily reports and, depending
upon the circumstances, we may designate an existing account as a high risk
account. Also, if other account transaction activity appears suspicious,
regardless of whether this activity appears on the unusual activity reports, we
may code the account as high risk based on all the factors described in our risk
rating scale.
USBFS AML RISK RATING SCALE
The risk rating scale utilized by U.S. Bancorp Fund Services, LLC is a blend of
two critical components:
1. The USBFS client themselves; and
2. The unique risks associated with that client and the client's
customers or shareholders. It is important to note that any
USBFS customer, in and of itself, does not pose a money
laundering risk. This is true because the customer is a legal
shell entity that cannot exist without one or more customers
of its own to function. However, the nature of our customer
and how it chooses to conduct its business through its
customers (increasing risk due to types of transactions and
cash equivalents for instance) may create an environment that
presents a higher risk for money laundering activities.
Conversely, we may discover money laundering activities
within a customer type that is generally not associated with
these types of activities. Although we may lack sufficient
information to determine whether money laundering activities
are occurring due to the presence of omnibus or other
accounts where the beneficial owners are not known, we will
be able to scrutinize these accounts and certain types of
transactions that may be indicative of money laundering
activities. The following characteristics shall be considered
in determining the presence or absence of money laundering:
1. Ownership of account is clearly defined. These
accounts are checked against OFAC and fraud
databases. Generally, we can also verify the
identity of the owner(s).
2. Ownership of account is NOT clearly defined. Example
of these accounts are omnibus, nominee, corporate
and partnerships. In certain instances, we may be
provided underlying beneficial owner information but
this is not normally the case. We will look for
other documentary evidence in assessing the risk
associated with these accounts such as corporate
resolutions, IRS certification forms,
certificate of incumbancies, partnership agreements,
trust agreements, signature guaranteed letters
signed by officers of the entity, use of business
letterhead and corporate seals. Also relevant is
whether our Fund client has received certification
from any omnibus account concerning their AML
program.
3. Foreign ownership. These accounts,
especially those where the underlying owners are not
known, may pose a greater risk. These accounts are
generally outside the subpoena power of the United
States and so we have less control over them.
However, we may receive IRS documentation
(W-8BEN/IMY) that may provide more information about
the account and its underlying owners.
4. Transactions over $100,000. We must analyze high
dollar transaction flows both into and out of
accounts. For certain accounts, these high dollar
transactions are normal for their business; for
others, this may not be the case and will warrant
further inquiry.
5. Frequency of transactions. There are some accounts,
particularly within money market funds, that will
naturally have more frequent activity. However,
there may be other accounts where frequent activity
will warrant further inquiry. An extreme example may
be a $5,000 dollar account that suddenly begins
receiving and sending hundreds of thousands of
dollars into and out of the country.
6. Transactions coming from or going to, countries
outside the U.S. For foreign shareholders this will
be common but for U.S. based shareholders, this may
not be and will warrant further inquiry.
7. Liquidation transactions where the proceeds are
being sent to a 3rd party who is not one of the
registered owners on the account.
8. Transactions coming from or going to a country
listed by FinCen/FATF or OFAC as being high risk for
money laundering.
High Risk Category*: Characteristics may include, but are not limited to, the
following:
1. Account is typically foreign but could also be domestic
2. Account is omnibus or where owner(s) are not known (entities such as
nominee, corporate, partnership, foundations, trusts)
3. No other documentation is provided (follow up required)
4. No response to request for AML program certification (for U.S. based
entities)
5. Proceeds are coins out of the country (OFAC check required)
6. Proceeds are being made payable to other than the registered owner
(signature guarantee required)
7. High transaction volume abnormal for the type of account (further
inquiry/analysis required)
8. High dollar transactions abnormal for the type of account (further
inquiry/analysis required)
9. Series of cash equivalent transactions exceeding $5,000 over a 12
month period.
o Presumption of high risk will attach to any account (new or existing)
in a FATF country.
Any account, whether new or existing will considered a low risk account UNLESS
one or more of the characteristics mentioned above apply. USBFS will apply the
analysis outlined above and will look for the characteristics for a high risk
account on any new account that is established. Once an account is determined to
be high risk, a flag will be placed on the account for future monitoring. For
the existing account base, we will consider any account to be high risk that
already has been flagged for possible fraud (including potential money
laundering). In addition, we will run a query on any open account that has been
established in a FATF country and consider these accounts to be high risk as
well. These accounts will also be flagged for future monitoring.
