GENERAL STEP-BY-STEP PROCEDURES TO APPLY FOR INVITATION INTO A PRIVATE PLACEMENT PROGRAM. READ THIS FIRST

GENERAL STEP-BY-STEP PROCEDURES TO APPLY

FOR INVITATION INTO A PRIVATE PLACEMENT

PROGRAM

READ THIS FIRST

This document is designed to help you understand some of the steps that go into the creation of a customized application for inclusion in a particular Private Placement Program. Since the regulations around these programs change often, what is presented here is not a definitive list as a result.

As we cover each of these steps, it is meant to give you an overall feeling for the manystep process that each Client application goes through. As conditions and regulations change frequently, at the time you are ready to submit your Know Your Customer “KYC”, which is the application, some of these steps may change. This document is only meant as a guideline for what (as of its writing), are generally current.

What may appear to be a daunting task, when faced with a set of documents that can be as many as 28 pages, each “package” contains forms necessary to have a complete submission. In this very unforgiving world, the importance of a complete set of KYC documents is as essential as being able to demonstrate financial qualifications to engage in this endeavor. These are all required by regulations and rules which the program must follow.

The questions may seem intrusive. They are. But in this day and age of intensified scrutinization by the various financial and law enforcement authorities, every “i” must be dotted and every “t” crossed to pass through the Compliance gauntlet.

Let’s start with the most important package of documents.

The Know Your Customer pages, or “package” which are provided to a corporation for completion, with the signatory on the bank account of the corporation signing each page where requested. In trading, the only one who can be under contract to trade is the actual Principal who owns the supporting assets, be they cash, a cash-backed standby letter of credit, bank-vaulted gold bullion, or medium-term note on Euroclear.

Proof of Funds accompanies the completed KYC to show that the Client is financially qualified to be included in a program. Proof of funds can be in the form of:

1. A current (meaning no older than 5 banking days) tear sheet showing funds ina commercial cash bank account.

2. The cash must not be encumbered by something such as a time deposit or certificate of deposit.

3. A bank draft must be cashed in, with the funds being placed into a cash commercial account.

4. A Ready, Willing and Able Letter from the bank office that funds are available either for 

a) administrative blocking or 

b) to effect the purchase of a cashbacked standby letter of credit. The RWA is a form of Proof of Funds which allows the Compliance review to go forward. Once the Client has been vetted by the due-diligence checks, then a document will be attached to the Asset Management Agreement (The “AMA”) which is created afterwards. This attachment to the AMA is the full language of the SBLC for the Client bank to prepare, including the name of the trading group as the Beneficiary of the SBLC.

Approval of AMA (trade contract) comes when the AMA has been signed by the Client and returned to the trade group’s principal officer. But that isn’t the end of the process—not yet.

After the AMA is signed, it is packaged up and sent to IMF/World Bank for final approval and for them to arrange the bank debentures that will be traded for the next 12 months.

This can take 2 to 3 weeks for completion, as there are several steps that take place during this time frame.

Finally once all of the components that constitute the trade program are finished, and the final approvals have been received, trading can begin in earnest.

Profits are paid out in accordance with the terms and conditions of the Asset Management Agreement.

The illustration below may help you understand the flow of a Client application.