Compliance

The Group recognizes compliance as one of the most important issues for management. Under the supervision of the Board of Directors, we have established a "Basic Compliance Policy ", and executives and employees work together to enhance the compliance system. The formulation and revision of this policy have been deliberated and approved by the Board of Directors.

The Group’s Chief Compliance Officer is in charge of the Risk Management Department and is responsible for overall group compliance (including legal affairs) , while the Risk Management Department, as the department responsible for compliance, centrally manages and guides compliance-related operations for the entire group and reports any serious matters to the Board of Directors.

In order to ensure compliance throughout the Group, the Group continuously conducts training for all officers and employees (including part-time and temporary employees). In addition, as a specific plan of practice to achieve compliance, we establish a Compliance Program for each financial year in accordance with the Basic Compliance Policy, and establish action principles for the realization of this program. In our compliance program in FY2024, we are focusing our efforts on the following areas: strengthening compliance awareness and maintaining integrity in business practices; implementing customer-centric services; ensuring robust information management; and appropriately responding to anti-money laundering, counter financing of terrorism, and counter- proliferation financing, as well as addressing anti-social forces or financial crimes.

In addition, in order to raise the effectiveness of the compliance program, we hold Compliance Conferences attended by directors, executive officers, and general managers regularly to monitor the progress of the program and the status of compliance, including the handling of whistleblowing and corrupt practices, and we report to the Board of Directors. The Board of Directors also receives the above reports and supervises the group companies.

In order to facilitate early detection and correction of compliance-related problems, such as violations of laws and regulations, fraud, corruption (^*1), violation of internal rules, and harassment, the Group has established a Compliance Hotline, which is an internal reporting desk, at the Company, at the Bank of Yokohama, and at Higashi-Nippon Bank so that all employees in the Group (including part-time and temporary employees) can directly report and consult about problems related to compliance (^*2).

The reporting desk is operated in accordance with the spirit and intent of the revised Whistleblower Protection Act and its guidelines, which went into effect in June 2022. For the protection of whistleblowers, information is accepted from both anonymous and confidential whistleblowers. A limited number of whistleblower response personnel handle the information and do so under strict information management. Investigations are carried out so as not to identify the whistleblower, and the whistleblower is not investigated or subject to unfair personnel or other treatment because of their whistleblowing activity.

When a whistleblowing report is received, an investigation is carried out to determine the facts of the case in accordance with the information received. If a violation of compliance is confirmed, corrective measures are taken and recurrence prevention measures are formulated, personnel measures such as disciplinary action against the subject of the whistleblowing are considered and implemented, and feedback is provided to the whistleblower to the extent necessary. Reports are also received at an external contact point set up at a lawyer’s office and forwarded to the risk management personnel of each Group company via the Company’s Risk Management Depart-ment. Each company takes action to resolve the problem after consulting with its lawyer.

The Group is making efforts to disseminate knowledge of the whistle-blowing system, including the protection of whistleblowers, by displaying posters, making a user’s manual, and holding study sessions for all officers and employees.

With the increasingly widespread transfer of funds by criminal groups, terrorists, and other such groups, with international terrorist organizations showing more activity, and with the trend to the global proliferation of weapons of mass destruction, there is an increasing risk that financial institutions will become enmeshed in money laundering, terrorist financing, and proliferation financing.

To counter these risks, we comply with basic requirements, such as identification and verification at the time of transactions, which are prescribed in the Act on Prevention of Transfer of Criminal Proceeds, the Foreign Exchange and Foreign Trade Act, and other relevant laws and regulations. We also undertake effective countermeasures against money laundering, terrorist financing, and proliferation financing based on the Guidelines for Anti-Money Laundering and Combating the Financing of Terrorism issued by the Financial Services Agency. Through these efforts, we do our part to maintain the soundness of the financial system.

Specifically, each company within the Group prepares the document prepared by specified operator based on the Act on Prevention of Transfer of Criminal Proceeds as its risk assessment document, comprehensively and concretely identifies and assesses risk, and takes risk reduction measures, such as proper notification of suspicious transactions. In addition, we continue our efforts to enhance our risk mitigation measures through the “Anti-Money-Laundering Program,” which is established annually to verify the effectiveness of our risk mitigation measures.

The Group is always aware of the importance that banks must place on their public mission and social responsibilities. The Group absolutely refuses financing for antisocial elements that pose a threat to the order and safety of civil society. Our organization as a whole works towards the elimination of all relationships, including transactions, with antisocial elements, and takes a firm stance against unjustified demands and intervention by such elements.

Specifically, the Concordia Financial Group has used this basic principle to formulate a Basic Policy on Anti-Social Forces from the perspective of preventing harm caused by antisocial forces. Executives and employees are provided with training and guidance, and the department responsible for action in each Group company works with lawyers and public administration agencies such as law enforce-ment to prevent transactions and interactions with anti-social elements.

The Group considers the management of customer protection to be one of the most crucial areas of corporate management. We stand in the customer’s perspective, strictly follow all laws and regulations, and conduct our corporate activities fairly and in good faith.

The Group is working to ensure thorough customer protection and compliance by providing e-learning and group training every year to all officers and employees (including part-time and temporary employees), according to their duties and positions, on topics such as fiduciary duty, management of customer information, abuse of dominant bargaining position, conflict of interest management, etc.

The Group has established a central department to centrally manage complaints in accordance with its regulations, and accepts consultations and complaints from customers. The Complaints Management Department consolidates complaints that have occurred, and provides instructions and guidance to the departments complained about and others to resolve the complaints. The Compliance Committee and the Compliance Conference (Management Committee) deliberate on analysis of the details and causes of complaints and the status of measures for improvement, then report to the Board of Directors. Ongoing efforts are made for improvement based on instructions and guidance by the Compliance Conference, the Board of Directors, etc. In addition, we have entered into a basic agreement with the Japanese Bankers Association, which is a “designated dispute resolution organization” under the Banking Law, to conduct the Financial ADR System, a procedure for resolving disputes with customers through the involvement of a third party.

As part of our efforts to protect personal information, we publicly announce the purpose of our use of personal information on our web-site etc. in accordance with laws and regulations, and we manage such information appropriately.

Our Group Anti-Corruption Policy prohibits bribery of public officials, both directly and indirectly, in Japan and overseas, ensures fair and sound relationships with all stakeholders, including customers, shareholders, outsourcing partners, and business partners, and prohibits all forms of corrupt behavior, including embezzlement, breach of trust, and offering or receiving entertainment or gifts that exceed socially accepted norms.

In order to disseminate and ensure compliance with our Group Anti-Corruption Policy, the Group conducts e-learning sessions on the policy for all officers and employees (including part-time and temporary employees), as well as study sessions on specific examples of corrupt behavior, such as embezzlement and breach of trust. In addition, in order to prevent corrupt practices, the Company prepares accounting records for all transactions, expenditures, and disposition of assets in a timely and accurate manner in accordance with various laws, accounting regulations, and company rules, and properly maintains relevant documents. In addition, we conduct appropri-ate due diligence when selecting and renewing outsourcing and business partnerships.

Thanks to these efforts, there were zero disciplinary actions or dismissals for corruption in FY2023 and no fines or settlement expenses were incurred. We also comply with laws and regulations regarding donations for political activities. We did not make any donations for political activities in FY2023.

The Audit Department conducts internal audits of all departments at least once every three years, independent of the executive divisions, concerning the status of compliance with the Group Anti-Corruption Policy and compliance initiatives, and makes recommen-dations for correction and improvement in problem areas.