CSR / Compliance

Social Contribution through Business
Policy on Initiatives Related to Management Support for SMEs (Basicpolicy concerning promotion of regional financing)As its corporate principles, the Company strives to “Remain firm in selfdriven sound management to develop in step with regional society byproviding unwavering trust and superior comprehensive financial services.”
By providing superior comprehensive financial services to regionalcustomers, the Company will work to contribute to the revitalization andcontinuous growth of regional society.
To achieve this, in addition to its role as a provider of funds marked mostsignificantly by loans, the Company recognizes as an important issue therevitalization of regional economies through consulting that corresponds tothe life stage of customers, which includes start-up and new businesssupport, growth support, management improvement and businessrenovation support, and business continuity.
The following three items have been defined as the “policy on initiatives
concerning promotion of regional financing,” and the Company will work to
expand its activities in these areas.
Making Full Use of Our Consulting Function According to the Life Stage of Our Customers● T he Company’s policy is to fully comprehend customer Companies’
management challenges on business and financial terms by evaluating
their commercial viability, and also to commit to fulfilling our consulting
function in coordination with outside experts.
● In “supporting start-ups/new businesses, growth support such as
development of sales channels and support for overseas expansion, andbusiness continuity support,” we are strengthening our consulting functions
through unified support from the start-up consideration stage untilcommercialization, various business meetings, and business matching, etc.
● In “management improvement and business rehabilitation supporting,” wefurther enhance our supporting activities for management improvement
through integration among the Company’s branches and headquarters topropose the right solutions at the right time, based on comprehension of thebusiness content of our customers. In addition, we actively employ outside
expert organizations such as REVIC and the Revitalization Support Council
and various funds to provide more advanced methods of assistance in themanagement improvement and business rehabilitation supporting field.
Contributing to Regional Creation and Revitalization of Regional Economies● By setting up a “Comprehensive Town, Person, and Work Creation StrategyStructure,” the Company actively participates in each local government
from the regional comprehensive strategic planning stage.
● In the strategy execution stage as well, the Company continues to work incooperation with local governments for regional creation via initiatives suchas new business proposals and participation in business operation
conferences that leverage its knowledge and networks.
● The Company collects and analyzes various forms of information from theregion, and actively promotes industry-academia-government-financecooperation. In addition, the Company is strengthening efforts to support
the cultivation of growth fields and efforts to promote the region.
Actively Offering Information to the Regional Society and Our Customers● The Company actively offers information about specific activities and theirresults with regard to efforts related to community-based financial services.
We will strive to improve our services even further in order to earn the trustand support of our regional customers.

23CHUGIN FINANCIAL GROUP, INC.

Compliance System Overview
The Group believes that compliance means observing not only laws, regulations,and internal rules, but also meeting the expectations of local communities andcustomers through actions that conform to social norms.
All Group officers and employees are aware of our social responsibility andpublic mission as a comprehensive services group focused on finance. In order
to meet the expectations of a constantly changing society in terms ofrevitalization of regional economies and the SDGs, we are committed topracticing proactive and autonomous compliance that goes one step beyond
legal compliance to think and act independently.
Specifically, we are involved in the following compliance activities.
1. We have established a Group Compliance Committee as an organization todeliberate compliance-related matters across the Group, and we are working
to improve and strengthen the Group-wide compliance framework.
In addition, the Corporate Administration Department, which oversees
compliance, receives reports on compliance-related matters from themanagement and Legal Compliance Supervisors at each Group company andprovides guidance and advice based on a timely and accurate understandingof the situation, thereby promoting mutual cooperation within the Group.
2. We create a Group Compliance Program each fiscal year as a plan for thepractical implementation of compliance, and through the steady
implementation of such plans, we ensure proactive and autonomouscompliance is practiced by officers and employees.
The Group Compliance Committee regularly monitors the progress of Group
Compliance Program plans.
3. We have enacted a Group Corporate Code of Conduct as the basis for
conduct that conforms to social norms in the course of management andoperations; the Group Behavioral Guidelines to be followed by officers andemployees in the course of their duties and private lives; and a Compliance
Manual that serves as a compliance handbook.
In addition, we have put together a Compliance Card containing a summary of
the rules and manuals which form the basis for practicing proactive andautonomous compliance, and we distribute the card to all officers andemployees so that they can refer to it at any time.
4. Through the implementation of various compliance-related training sessions
and seminars, we are working to instill compliance practices that meets
society’s expectations in all officers and employees.
5. With the objective of preventing inappropriate behavior by officers andemployees and facilitating the early detection of unethical activities, weoperate a Management Helpline which is an internal reporting system thatenables direct reporting to top management.
6. We take a firm stance against anti-social forces that threaten social orderand safety and prevent the development of a sound economy and society. We
deal with inappropriate demands by such anti-social forces as an organization
and we collaborate with external specialized organizations, such as thepolice.

Guidelines for Anti-Money Laundering and Combating theFinancing of Terrorism
As global threats of nuclear weapons, missiles, and terrorism continue toincrease, cutting off financial sources leading to criminals and terrorists is an
issue that needs to be addressed jointly by the Japanese and international
communities, and measures to prevent money laundering and terrorist financing
now bear greater importance.
The Financial Services Agency established and released the Guidelines for
Anti-Money Laundering and Combating the Financing of Terrorism whichoutlines the basic approach that financial institutions should take inimplementing effective countermeasures. In such climate, the Companyformulated the following policy and takes measures to prevent the flow of funds
to criminal syndicates, to maintain bvsafe and convenient financial services, andto create an environment making it difficult for criminal syndicates to engage inactivities.

6.	Management of Correspondent Banks	The Group shall endeavor to collect sufficient information about its
correspondent banks, conduct an appropriate assessment on them, and carryout appropriate measures that are proportionate to the risks involved.	No relationship shall be established or maintained with any shell banks
without a physical presence or operations.

Policy on Anti-Money Laundering and Combating theFinancing of Terrorism

7.	Development Training of Directors and Employees	The Group shall continually conduct training or other programs for all of its
Directors and employees to deepen their understanding and raise theirawareness of AML/CFT, in an effort to develop and retain human resourceshaving expertise and fitness for the given roles.

The Chugin Financial Group (hereinafter, the “Group”) recognizes that measures
for anti-money laundering and combating the financing of terrorism (hereinafter,“AML/CFT”) is a priority task required not only domestically but also from therest of the global community. Based on this recognition, the Group shall takethe initiative in establishing the management system in which it shall execute
agile and effective responses to ever-changing international situations and therisks facing the Group, and set forth the following policy as a basis for executionof operations.

8.	Verification of Status of Compliance	The Group shall inspect the status of compliance with regard to AML/CFT,and based on the results of such inspections, shall continually make efforts
to improve its risk management system against ML/FT.

1.	Management Policy	In order to execute agile and effective responses to changes in internationalsituations, the Group shall take proactive steps to establish and maintain themanagement system based on the concept of “risk-based approach,” inwhich it shall identify and assess its money laundering and the financing ofterrorism (hereinafter, “ML/FT”) risks in a timely and appropriate manner andtake mitigation measures that are proportionate to the risks.
2.	Organizational Structure and Officer	The Group shall define AML/CFT as one of its critical management agendaand shall clarify the internal roles and responsibilities for that purpose.	The Group shall appoint the officer in charge of the Corporate Administration
Department of the Chugin Financial Group as the supervisory manager for AML/CFT. A dedicated division shall be newly established within the Corporate
Administration Department of the Chugin Financial Group to provide thecentralized function of ensuring the execution of measures for AML/CFT.
3.	Measures for AML/CFT under Laws and Regulations	The Group shall establish an internal system capable of carrying out timelyand appropriate measures for AML/CFT under laws and regulations,including, but not limited to, verification at the time of transaction, retentionof transaction records, confirmation of sanctions including freezing of assets,
and notification of suspicious transactions.
4.	Administration of Customer Information and Policy for Handling
Customers	The Group shall establish an internal system for making appropriate
investigations about the basic information of customers in the course of thetransactions with them and for carrying out measures that are proportionate
to their attributes.	Furthermore, the Group shall determine and carry out required risk mitigationmeasures by way of making periodic investigations and analyses on thehistory of transactions with customers.
5.	Transaction Monitoring and Screening	The Group shall determine and carry out required risk mitigation measures
by way of investigating and analyzing the status of transactions by the use ofreports submitted by its branches or detection made by its computer systems
for any unusual transactions or transactions subject to sanctions.

CHUGIN FINANCIAL GROUP, INC.

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