We wish to inform you that Petersburg Social Commercial Bank (Open Joint-stock Company) has introduced and is implementing customer screening and monitoring procedures designed to prevent any business interaction with entities and persons engaged in any form of illegal activity.

In this respect the Bank day-to-day operations are guided by its internal document “Rules of internal control on counteractinglegalization (laundering) of income derived through illegal activities” (The Rules), a brief summary of which is attached hereto. This document constitutes an integral part of the Bank Customer Service procedures. It is obligatory for all business units of the Head Office and branches engaged in conclusion and documentation of deals involving funds and property of legal entities and private individuals.

The Rules have been prepared in full compliance with the Federal Law No. 115-FZ "On Countermeasures with Respect to Legalization (Laundering) of Income Derived from Criminal Activity" enacted on 7 August 2001 and subsequent regulatory acts issued by the Central Bank of the Russian Federation.

The Rules comprise linked Programs detailing “know your customer” procedures and measures aimed at identification and reporting transactions, that may relate to money laundering at all stages of the Bank operation, as well as a dedicated Personnel Training Program.

Having in mind that the Rules are drawn in Russian we enclose herewith a short summary of the Regulations in English. Please feel free to contact us should you require any additional details or comments.

Scope of Application: All divisions of the Head Office, its branches and additional offices of Petersburg Social Commercial Bank (Open Joint-stock Company) engaged in conclusion and documentation of deals involving operations with funds and property of legal entities and private individuals.

Objectives:

• prevention of the Bank involvement in operations related to legalization (laundering) of income derived through illegal activities (money laundering);
• timely identification of customers and transactions bearing signs of possible money laundering activities;
• collection and storage of information pertaining to such customers and transactions to facilitate efficient assistance to competent authorities of the Russian Federation within the framework of the legislation currently in effect.

Legal Framework:

• Federal Law No. 115-FZ "On Countermeasures with Respect to Legalisation (Laundering) of Income Derived from Criminal Activity";
• Federal Law of 06.03.2006 No 35-FZ “On Countering Terrorism”;
• Federal Law of 25.07.2002 No 114-FZ “On Countering Extremist Activity”;
• Guidelines of the CBR No. 207-P “Procedures for Supervision by the CBR of Compliance with the Federal Law “On Countermeasures with Respect to Legalisation (Laundering) of Income Derived from Criminal Activity" by Credit Organizations”;
• Regulations of the Bank of Russia dated 19.08.2004 No. 262-P "On identifying by lending institutions clients and beneficiaries for purposes of prevention of legalization (laundering) of proceeds derived from criminal activity and funding of terrorism".

Organizational Structure:

Position
Responsibilities Chairman of the Board
General responsibility for organizing anti-money laundering work and procedures in the Bank

Compliance Officer (reports directly to the Chairman of the Board)
Overall responsibility for implementation of the Rules

Heads of Departments
Responsibility for awareness of the staff, training and routine implementation of the Rules in line with the their departments functions

Internal Control Service
Monitoring of internal control system with respect to money laundering, including the Bank compliance with the relevant legislation, as well as implementation of the Rules

Programs “Know your customer” program

This program puts forward requirements to collect, verify and update information about customers with respect to their identity, ownership, management, business activity, reputation and internal control arrangements in line with anti-money laundering policy. The Bank also evaluates the potential risk that the customer may be engaged in money laundering. Investigation into suspicious information/customer transactions This program describes detailed procedures of routine monitoring and reporting on suspicious/irregular customer transactions. Moreover, this article defines the principles of manual review of account activity and supervision of all other operations that appear irregular or suspicious.

Identification of transactions, involving funds or other property, which could be connected with money laundering
This part of the Rules contains the list of typical indicators, which may evidence customer’s engagement in money laundering:

• General behaviour signs;
• Specific indicators in connection with:
  • Wire transfers and cash transactions;
  • Lending;
  • Clearing/settlements;
  • Insurance schemes;
  • Export/import transactions;
  • Transactions involving securities and derivatives;
  • E-commerce and plastic cards.

Reporting procedures

This program details the organizational process of preparation and filing of reports on customer transactions that are subject to compulsory control and monitoring as required by Russian law. According to adopted internal procedures the Bank must report to the Federal Authority empowered to take measures for Prevention of Legalization (Laundering) of Proceeds Derived from Criminal Activity and Funding of Terrorism (Rosfinmonitoring) about each transaction that appears suspicious or irregular as well as provide the collected documentation, related to such operation.

Documentation and data storage program

The program defines the requirements related to collection and storage of documentary evidence, electronic reports, as well as security measures in the sphere of IT.

Personnel training with respect to anti-money laundering issues

This part of the Rules determines the education procedures that the Bank staff undergoes. According to this program staff training should be conducted on a regular basis, at least once a year.

Supplements

• Customer Profile Forms (Private individuals, Legal entities, Financial institutions)
• Criteria for evaluation of the risk that a customer may be involved in money laundering
• Reporting Forms
• Procedures prescribing notification of competent authorities of these incidents

Program for repudiation of accounts (deposit) agreements conclusion with private individuals and legal entities and refusal to effect certain types of transactions involving cash or other assets

The Program includes a range of circumstances, the existence of which enables the Bank to refuse a private individual or a legal entity to conclude a bank account (deposit) agreement, as well as to refuse execution of instructions provided by a customer for any transactions involving the account.