EXHIBIT (h)(2)
THIRD AMENDMENT TO CO-ADMINISTRATION AGREEMENT
EFFECTIVE AS OF SEPTEMBER 17, 2003
First American Funds, Inc., a Minnesota corporation (the "Fund"), is
party to a Co-Administration Agreement dated October 1, 2001, as amended on June
5, 2002 and July 24, 2002, with and among U.S. Bancorp Asset Management, Inc., a
Delaware corporation ("USBAM"), and U.S. Bancorp Fund Services, LLC, a Wisconsin
limited liability company ("USBFS" and, together with USBAM, the
"Administrator").
WHEREAS, the parties originally entered into a Co-Administration
Agreement (the "Agreement") on October 1, 2001, for the Administrator to provide
administrative and other services to the Fund and its separate portfolios
("funds");
WHEREAS, the parties agreed to an amendment of the Agreement as of June
5, 2002;
WHEREAS, the parties agreed to a second amendment of the Agreement as
of July 24, 2002; and
WHEREAS, the parties have, as of the Effective Date first set forth
above, agreed to this Amendment as a result of recent regulatory changes
codified under the Section 326 of the Understanding and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 ("USA PATRIOT Act").
NOW THEREFORE, the parties agree as follows:
1. The following paragraph shall replace the last paragraph under
Paragraph (B) of Article 2: "The Administrator has and will
maintain all registrations required under applicable law in
order for it to perform such transfer agency services and
maintains and will maintain such records as are required under
applicable law in connection with the provision of such
services. Although USBAM and USBFS are both authorized to
provide transfer agency and dividend disbursing services for
the Fund, USBFS is the named transfer agent for all reporting
and record keeping purposes under applicable law. As named
transfer agent, USBFS is responsible for the implementation
and operation of certain anti-money laundering compliance
functions."
2. The following shall replace Paragraph (D) of Article 2:
(D) Anti-Money Laundering Program. USBFS, as named transfer agent for
the Fund, has established and implemented an anti-money laundering program
reasonably designed to prevent the Fund from being used to launder money.
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(1) Policies and Procedures. USBFS has implemented
policies, procedures, and internal controls that
achieve compliance with the applicable provisions of
the Bank Secrecy Act ("BSA") and are reasonably
designed to detect activities indicative of money
laundering, including but not limited to detection of
the following transactions:
o An investment in a fund by check or checks drawn on
the account of a third party or parties unrelated to
the investor;
o An investment in a fund by one or more wire transfers
from an account of a third party or parties unrelated
to the investor;
o Frequent wire transfer activity to and from a cash
reserve account, coming from or sent to the same
bank;
o Payments that indicate structuring occurring at
another financial institution, such as large amounts
of sequentially numbered money orders or travelers
checks or cashiers checks in amounts under the
$10,000 currency reporting threshold;
o Large deposits with relatively small fund
investments;
o Frequent purchases of Fund shares followed by large
redemptions; and
o Transfers to accounts in countries where drugs are
known to be produced or other high-risk countries.
USBFS will file all reports that are required by law or
regulation in order to report certain types of transactions.
USBFS will also analyze the money laundering risks posed by
particular omnibus accounts based on a risk-based evaluation
of relevant factors. In addition, USBFS will follow its
procedures to prohibit transactions with individuals, entities
or jurisdictions identified on any list of known or suspected
terrorists or on the Treasury's Office of Foreign Assets
Control ("OFAC") List.
USBFS agrees that federal examiners will have access to
information and records relating to its anti-money laundering
program and consents to any inspection authorized by law or
regulation in connection thereof.
USBFS will amend its anti-money laundering program as
necessary to reflect future implementing regulations
applicable to the Fund.
(2) Customer Identification Program ("CIP"). USBFS has
implemented risk-based procedures designed to ensure
that the Fund verifies the identity of new customers
to the extent reasonable and practicable, including
but not limited to:
o Procedures for opening an account that specify the
identifying information that will be obtained with
respect to each customer prior to opening an account;
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o Procedures for verifying the identity of the customer
within a reasonable time after the account is opened;
o Procedures for making and maintaining certain records
relating to the identification and verification of
customers;
o Procedures for determining whether the customer
appears on certain lists of known or suspected
terrorists or terrorist organizations; and
o Procedures for providing mutual fund customers with
adequate notice that the mutual fund is requesting
information to verify their identities.
USBFS will certify annually to the Fund that it has
implemented an anti-money laundering program and will perform
the specified requirements of the Fund's CIP.
(3) Training. USBFS will provide ongoing training to
employees that is relevant to their functions,
including but not limited to BSA requirements. The
level, frequency, and focus of the training will be
determined according to the responsibilities of the
employees. Training will be provided whenever
employees, including new employees, assume duties
that bring them in contact with BSA requirements or
potential money laundering activities. The ongoing
training program will include periodic updates and
refresher courses regarding the anti-money laundering
program.
(4) Quarterly Reports. USBFS will report to the Fund
Board of Directors, at least quarterly, any
anti-money laundering compliance exceptions,
including the resolution of such exceptions. Summary
reports will include but not be limited to "OFAC
hits" and any Suspicious Activity Report filings.
(5) Inspection. USBFS agrees that federal, state and
other self-regulatory organization examiners will
have access to information and records relating to
any anti-money laundering activities performed by
USBFS for the Fund, and USBFS consents to any
inspection authorized by law or regulation in
connection thereof.
(6) Annual Audit. USBFS agrees to an annual independent
audit of its anti-money laundering program. Any
recommendation resulting from such review will be
promptly implemented or submitted to the Fund's Board
of Directors for consideration.
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IN WITNESS WHEREOF, the parties have signed this Amendment, to be
effective as of the Effective Date set forth above. All signed copies of this
Amendment shall be deemed to be originals.
FIRST AMERICAN FUNDS, INC. U.S. BANCORP ASSET MANAGEMENT, INC.
BY /s/ Xxxxxxx X. Xxxxxx BY /s/ Xxxxxxx X. Xxxxxx
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NAME: Xxxxxxx X. Xxxxxx NAME: Xxxxxxx X. Xxxxxx
TITLE: Vice President TITLE: Senior Vice President
U.S. BANCORP FUND SERVICES, LLC
BY /s/ Xxx X. Xxxxxxx
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NAME: Xxx X. Xxxxxxx
TITLE: President
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