ANTI-MONEY LAUNDERING AND ANTI-TERRORIST FINANCING POLICY
Patagonia Gold Corp and its subsidiaries (“Patagonia”) is committed to ensuring that its business operations are not used by others to bring funds generated by illegal activities into legitimate commerce (money laundering).
Although Patagonia is not a financial institution, anti-money laundering (“AML”) requirements are applicable to our business. Money laundering also represents several risks for non-financial companies such as Patagonia, including: reputational damage; operational losses resulting from inadequate or failed internal processes, people and systems, or from external events; legal liabilities due to any of these risks resulting in the failure to comply with applicable laws which could have a negative legal impact on Patagonia; and financial losses due to any of these risks resulting in a negative financial impact for Patagonia.
It is therefore important to understand and comply with all AML regulations including: screening and monitoring requirements, “Know Your Customer” (KYC) procedures, sanction lists, record keeping requirements, reporting of suspicious circumstances and/or certain transactions in accordance with relevant laws, as well as AML training, if required.
This Policy provides guidance for compliance with AML and counter terrorist financing laws. It intends to educate all Patagonia employees to detect red flags for being misused for money laundering, terrorist financing or other financial crimes purposes.
Patagonia will take the necessary measures not to be used in the channeling of resources from acts of corruption, money laundering or the financing of terrorism.
This Policy applies to Patagonia’s directors, officers, and employees, including any individual working for, on behalf of Patagonia worldwide regardless of the place where Patagonia operates or conducts business. Ignorance or misunderstanding of the rules is no excuse for violations.
“Money Laundering” means the process of transforming the profits of serious crime, such as corruption, drug trafficking and terrorism activities into ostensibly ‘legitimate’ assets.
“Terrorist Financing” means the provision or collection of funds or resources of any kind, by any means, directly or indirectly, with the intention to use them or in the knowledge that they may be used, in full or in part, for terrorist purposes.
“Politically Exposed Person” (PEP) means an individual who is or has been entrusted with a prominent public function. Due to their position and influence, it is recognized that many PEPs can be potentially abused for the purpose of committing Money Laundering offences and related predicate offences, including corruption and bribery as well as conducting activities related to Terrorist Financing. This definition includes PEP´s family members and close associates.
“Ultimate Beneficial Owner” (UBO) generally means the person or group of persons that:
- By means of another person or any act, obtains the benefit derived therefrom and who, ultimately, exercises the rights of use, enjoy, benefit or dispose of a good or service, or
- Exercises the control of the legal entity that carries out acts or transactions with Patagonia, as well as the persons on behalf of which Patagonia enters into any of such acts or transactions.
I. Know Your Customer (KYC)
- Patagonia will perform due diligence on counterparties as required by local laws in order to make a formal identification of the Ultimate Beneficial Owners. Patagonia might conduct enhanced due diligence on high risk counterparties.
- Patagonia will undertake on-going monitoring of its business relationships with counterparties.
- Patagonia will retain relevant due diligence records for the period of time as required by applicable local laws.
- Patagonia will annually carry out a cross-check of its counterparties against international sanction lists (for example, OFAC List, UN Terrorists, FBI Most Wanted, etc.). In case of a positive match, further investigation will be conducted and appropriate action, including up to termination will be undertaken.
II. Suspicious Operations
- The following should be considered red flags which may be related to Money Laundering or Terrorism Financing activities:
- Use of shell-companies;
- Payments through accounts in shell banks;
- Use of nominees, trusts, family member or third party accounts;
- Difficulty to verify the identity of UBOs or reluctance to provide relevant details;
- Disconnected customer/suppliers/third parties sharing common address;
- The level of activity is not consistent with Patagonia´s understanding of the customer/supplier/
third party’s business or level of legitimate income;
- Customers/suppliers/third parties based in countries where production of drugs or drug trafficking is prevalent;
- Business transactions involving countries where there is a high risk of Money Laundering and/or the Financing of Terrorism;
- Funds are sent or received via international transfers from or to higher-risk locations or offshore accounts;
- Cash intense businesses; and
- Requests to inflate invoices.
- Patagonia will refrain from executing any operation when there is a suspicion of Money Laundering until further investigation has been completed. Patagonia will not execute any transaction on which there is evidence or certainty that is related to Money Laundering, even before making the communication to the competent authorities.
III. Politically Exposed Persons (PEPs)
- When applicable, Patagonia will obtain the required authorization from relevant governmental authorities before entering into a transaction with any PEP.
- Patagonia will undertake enhanced due diligence for all PEPs. Such enhanced due diligence shall include approval at a higher level than the one required for non-PEP counterparties.
IV. Reporting Suspicious, Relevant or Unusual Operations
- Any employee who becomes aware of any suspicious operation or reasonably suspects that Money Laundering or Terrorism Financing may occur, shall immediately report it to Patagonia’s Legal Affairs Manager and refrain from continuing with the transaction until approval is granted.
- Whenever a suspicious transaction or activity is to be communicated to Patagonia’s Legal Affairs Manager or the competent authorities for appropriate investigation, it is forbidden to disclose information about the issue to the person to whom the suspicion refers to, another person or organization.
- Patagonia will cooperate with the national and international AML competent authorities or its supporting bodies, facilitating at all times, in accordance with current applicable legal provisions in each jurisdiction, the documentation and information required by such authorities.
REPORTING A CONCERN
Because we all have a stake in Patagonia´s success, it is in all of our interest to help ensure that our business is conducted to the highest ethical standards, and that our reputation remains untarnished. For this reason, we strongly encourage you to report any situation you know or suspect about that may involve illegal, unethical or otherwise improper business activity, as well as all instances of employee violations of this or any other of the Patagonia policies. Doing so will allow the company to address the issue and take appropriate corrective action.
If you have a good-faith belief or concern related to improper or illegal conduct, you should immediately contact Patagonia’s Legal Affairs Manager at the contact details below:
Phone: +54 11 52786950.
Patagonia will not tolerate retaliation against you due to your report or participation in any internal investigations, as long as you have acted in good faith and believe what you reported to be true.
Retaliation may be grounds for discipline up to and including dismissal, subject applicable local laws. Patagonia will treat any good-faith reports or discussions in confidence consistent with legal requirements and subject to the need to conduct a thorough investigation where appropriate. In certain cases, and consistent with applicable laws, information may be shared with local law enforcement or other authorities.
This Policy and any standards and procedures adopted thereunder shall be communicated to all our directors, officers and employees and contractors, and other parties as appropriate.
AMENDMENTS AND WAIVERS
The Audit Committee will review this Policy on a periodic basis, evaluate its effectiveness, and update or amend this Policy as necessary.
As at 24 August, 2019
Code of Ethics for Personnel
The Code of Ethics for Personnel (hereinafter, the “Code”) sets outs the principles that govern the behavior of personnel acting in the name and on behalf of the Organization or any conduct in their private life that may have a bearing on the Organization’s activity.
SCOPE OF APPLICATION – INDIVIDUALS RESPONSIBLE
These principles apply to in-house employees of the Organization’s Controlled Companies and contracted third parties (hereinafter, the “Personnel”).
The Organization will continue to uphold the highest ethical principles to which it has strictly adhered at all times in the various spheres of action. For such purpose, it requires that personnel discharging duties in the name and on behalf of the Organization observe and comply with the laws and the highest basic principles governing ethical behavior.
All the activities of the Organization must be ultimately focused on satisfying the needs of the individuals, in their role as customers, consumers, vendors, employees, executives, shareholders and citizens. It is therefore essential to live by entrepreneurial ethical principles based on a behavior that does not give up a far-seeing mission in pursuit of opportunism, striving to establish fair and transparent relations in accordance with the rules of public and private law.
It is the Organization’s policy to:
- deter the performance of illegal or unethical acts
- stop any illegal or unethical act as soon as it may be possibly detected, and
- enforce the relevant disciplinary sanctions.
All personnel must behave in an honest, fair and respectful manner in their relationships with other members of the Organizations and likewise with all third parties who may interact with it, including customers, vendors, contractors, governmental officials concerned, mass media or any other individuals and/or organizations, as applicable.
All personnel must be faithful to the Organization and avoid giving any assistance to competitors or third parties in matters that are contrary to the interests of the Organization.
COMPLIANCE WITH THE LAW
All personnel must comply with the laws and regulations in all areas and countries where the Organization carries out its activities.
EQUAL TREATMENT OF INDIVIDUALS
All personnel must avoid offensive behavior and conducts contrary to the law, including discrimination on grounds of racial or ethnic origin, skin color, religion or belief, nationality, gender, age, ancestry, national origin, civil status, physical disability, etc.
All decisions proper to the labor relationship between personnel and the Organization must be exclusively based on evaluations related to the activity and performance.
All personnel must avoid any action that may lead to provocation or incitement of violence of any kind, either physical or otherwise, in their workplace. In this sense, it is of the essence that the conduct of all individuals be respectful to all members of the company.
It is the responsibility of all those concerned to preserve a safe and respectful working environment, free from abusive or unprofessional behavior, abiding by ethically correct and sound practices and avoiding unbecoming situations both at the workplace and resting areas.
It is worth pointing out that personnel should discharge duties in each working place in a rightful manner. Particular care should be given to their behavior while performing their tasks and after the completion thereof, during their time off from work.
All personnel must avoid spreading of information, acceptance, marketing and/or use of addictive substances that may influence their normal and habitual behavior.
DISQUALIFICATION BY REASON OF FAMILY TIES
Measures should be taken to avoid engaging and/or promoting the engagement of immediate family members in the same Company.
In the event family members discharge duties in the same company, care must be taken to avoid that one family member be assigned to a position where he could possibly control, review and/or approve the work done by another family members or exert influence in obtaining or promoting a salary increase in their favor.
If the foregoing grounds for disqualification arise in connection with those already in the employment of the Company (for example: marriage), one of them should be reassigned to another Manager’s Office or Company of the Organization.
USE OF THE INFORMATION
All personnel must avoid the use or disclosure, either directly or indirectly, of the Organization’s proprietary information for their own benefit and/or that of third parties, save for information already in the public domain or in respect of which the express authorization from the relevant managerial level had been previously obtained.
All personnel must report any attempt by third parties to obtain restricted and/or secret information to their immediate superiors. Likewise, any unauthorized use or disclosure of information by other employees should be notified, as soon as this circumstance is verified.
The term Organization’s proprietary information shall be deemed to include any data, idea, concept, improvement, discovery, development, invention or the like, conceived, performed, developed or acquired by an employee, individually or collectively, while performing tasks for the Organization, during or after working hours and both in or outside the working environment, that may be related to the Organization’s business.
CONFLICTS OF INTEREST
Personnel must avoid any kind of investment, participation or association that interferes or may interfere with the discharge of their duties in furtherance of the Organization’s interests, as concerns, in particular, the following matters:
- All personnel must treat vendors, customers and any other persons doing business with the Organization in a fair and objective manner, without showing favoritism or preference based on personal considerations.
- All personnel and their immediate family members must avoid accepting from vendors, customers, competitors or any other third parties and/or delivering to them gifts and/or entertainment, except as authorized under the title “Acceptance of gifts and/or entertainment” and/or”Delivery of gifts and/or entertainment”.
- All personnel must avoid
- Engaging in business deals with immediate family members (parents, children, spouses, siblings), unless the transaction is carried out on an arms´ length basis and is disclosed in writing to the relevant managerial level for the purpose of determining whether it is inconsistent with the principles of this Code
- Having any direct or indirect interest in any company that competes against or intends to engage in business with the Organization, provided that such interest may influence the performance of their tasks, in which case this circumstance should be promptly disclosed to their immediate supervisor.
USE OF PROPERTY AND SERVICES OF THE ORGANIZATION
All personnel must avoid using, directly or indirectly, property and/or services of the Organization for their own benefit and/or that of third parties, unless the express authorization from the relevant managerial level had been previously obtained.
PROHIBITION AGAINST MAKING DEALS BASED ON THE INFORMATION OBTAINED FROM THE ORGANIZATION
All personnel must avoid making deals, for their own benefit and/or that of third parties, using property, services or securities of the Companies controlled by or related to the Organization or companies in which it is contemplated to make deals, for as long as they have information in their possession that has not become publicly known.
Information is deemed to be known by the general public when same has been disclosed as public information to third parties; for example, when it has been revealed to controlling authorities such as the Argentine Securities and Exchange Commission [Comisión Nacional de Valores (CNV)], the Buenos Aires Stock Exchange [Bolsa de Comercio de Buenos Aires (BCBA)], the Securities and Exchange Commission (SEC) or any similar institution.
Personnel must be particularly cautious and prudent at the time of trading in securities of controlled or related Companies or of other companies that may be materially affected by the actions of the Organization. Therefore, securities may be purchased or sold after at least two business days have elapsed since the date the information became public domain.
ACCURACY AND COMPLETENESS OF BOOKS AND RECORDS
Personnel must ensure that all books, records and accounts of the Organization completely, accurately and timely reflect the nature of the transactions:
- All assets, liabilities and income/losses from the Organization’s transactions must be recorded in the books of account.
- The existence of funds and/or assets unrecorded or hidden for any purpose whatsoever must be avoided.
- Artificial or false accounting entries must be avoided.
- Payments and/or payment agreements intended for any party thereto to use same for purposes other than those described in the supporting documentation must be avoided.
EXPOSURE OF MEMBERS OF THE ORGANIZATION
All personnel must avoid the cult of personality, unnecessary showing-off or arrogating to themselves the representativeness vested in the Organization. The position held must be used as a service and they should set an example of behavior for peers, superiors and co-workers within the Organization and for all members of the community in general.
ACCEPTANCE OF GIFTS AND/OR ENTERTAINMENT
Neither personnel nor their immediate family members are allowed to accept items, services, fees, loans or the like from any individual, entity or company as a condition for or as a result of making business deals with the Organization, at that time or in the future.
No gifts and/or entertainment entailing sums of money or any equivalent thereof (for example: securities and shares of stock) shall be accepted, irrespective of the amount involved.
In the event such gifts and/or entertainment do not entail sums of money or any equivalent thereof, the individual receiving the gifts and/or entertainment, considering the significance thereof, must report this circumstance to his immediate superior, who must evaluate whether same should be accepted or not.
DELIVERY OF GIFTS AND/OR HOSPITALITY
Personnel may offer gifts and/or entertainment, at the Organization’s expense, to any individual, institution or company with which it has business relations, always provided that the following requirements be met:
- Gifts and/or entertainment should not entail any sums of money or the equivalent thereof, regardless of the amount involved.
- Gifts and/or entertainment should not be offered as a condition or as a result of making business deals with the Organization, at that time or in the future.
- Gifts and/or entertainment should be reasonable and commensurate with business practices.
- Gifts and/or entertainment should be duly authorized and correctly recorded in the relevant books of account.
In appropriate and duly authorized circumstances, personnel may offer entertainment, at the Organization’s expense, to any individual, institution or company with which it has business relations, always provided that such practices are not in violation of the ethical principles of the Organization.
In the case of governmental officials, hospitality should be avoided if same could jeopardize the integrity of such officials or the Organization.
The action of giving, offering or promising, directly or indirectly, any type of bribes, gratuities or payoffs to officials, employees or representatives of the national, provincial or municipal governments, political parties or individuals or companies, as a means to obtain any kind of business benefit is prohibited.
All personnel must avoid activities that may give rise to a violation of the anti-trust laws in force in those countries where the Organization carries out commercial activities.
SAFETY AND OCCUPATIONAL HEALTH
All personnel must comply with the laws, labor regulations and rules of the Organization in connection with safety and occupational health matters enforceable in each working environment.
All personnel must ensure that the applicable environmental laws, rules and regulations be observed in the facilities and in the development of the operations and actions of the Organization, in compliance with the Environment, Quality, Occupational Safety and Health Policy and Principles.
In addition to the express requirements in the foregoing paragraphs, the Organization intends that all personnel should abide by and comply with the laws and the highest basic principles governing ethical behavior.
3. IMPLEMENTATION OF THE CODE
The responsibility to ensure effective enforcement of this Code and compliance with its provisions lies with the Chief Executive Officers (CEOs), Managers and Functional Managers of the Companies. The Human Resources areas in controlled Companies have general responsibility for the implementation, control and enforcement of this Code.
QUESTIONS, COMMUNICATION AND INVESTIGATIONS OF VIOLATIONS OF THE CODE
In case of questions by personnel regarding the enforcement or interpretation of any provisions of this Code in connection with a particular situation, or if any violation or threatened violation of the Code comes to their knowledge, they must promptly report such circumstance to their immediate superior, as applicable, and/or as follows:
|Administrative or financial in the case of attempted willful misconduct or fraud||Chief Executive Officer and CFO|
Each area listed above shall forthwith start investigation proceedings with respect to all reported violations of the Code and shall periodically inform progress made in such investigations and any findings to the Organization’s CEO.
ETHICS COMMITTEE FOR PERSONNEL
The Organization shall have an Ethics Committee for Personnel made up of the individuals responsible for the Human Resources, Legal and Operations areas and the Chief Executive Officer of the Controlled Companies.
When necessary, the Committee shall meet to:
- resolve issues inherent in the implementation of the Code
- recommend improvements and/or changes in the Code.
ACKNOWLEDGMENT OF RECEIPT
All personnel must be informed about the provisions of the Code and must sign a statement to be appended to their personal files:
- On the date of receiving the Code
- Upon joining the Organization to discharge duties therein
- At the time any changes or amendments are made to the Code
- Whenever it is expressly established by the Organization
Mention should be made in such statement that they:
- have read and understood the Code in its entirety
- have been given the opportunity to make questions about its contents
- shall observe and comply with the provisions of the Code, and commit to:
- preserve the confidential nature of all information of the Organization used in the discharge of their duties or of which they may be aware
- comply with the applicable regulations regulating Information Safety, and
- take custody of all user accounts to access the systems provided to them for the performance of their tasks
COMPLIANCE WITH THE CODE
The Organization demands that its personnel comply in all respects with the provisions of this Code.
It is personnel´s great responsibility to the shareholders and public in general to ensure that transactions and dealings in which they are involved be made in compliance with ethical standards and business practices.
The most effective manner to discharge such responsibility is by complying with and enforcing strict compliance with this Code.
Any violation of the principles set forth in the Code may result in the imposition of disciplinary sanctions by the Organization, including termination of employment and, in some circumstances, the infringer may be subject to the penalties set forth in the laws and codes enforced by courts of law with different competent jurisdictions such as labor, criminal, civil, tax, commercial administrative and/or international courts, as applicable.
The Organization may take disciplinary measures in cases of involvement in activities in violation of the Code:
- Violation of the duty to maintain the confidentiality of information.
- Actual non-compliance with the duty to report any violation of the Code.
- Lack of cooperation in the investigation of a violation of the Code.
- Failure by any individual directly responsible for an area or sector to detect and/or report a violation of the Code by personnel under his direction, provided such omission entails inappropriate supervision or lack of control.
- Retaliation against any individual for having reported violations of the Code.