Strengthening of Governance Compliance

The Kyushu Financial Group believes that the trust of our stakeholders including local communities is the foundation of our existence, and considers compliance as one of the most crucial management issues. We are committed to compliance with laws and regulations and are taking initiatives to establish and thoroughly implement a compliance system as follows.

Compliance Basic Policy

We recognize our social responsibilities and public mission, and we earn the trust of society through the sound and appropriate operation of our business.
We adhere to laws and regulations, rules and internal regulations, and we carry out sincere and fair corporate activities based on social norms and management philosophy.
In order to ensure the soundness and appropriateness of our business operations, we break off any relations with anti-social forces, etc. that threaten the order and safety of society.

Compliance Management System

The Group is engaged in thorough compliance by establishing the "Compliance Basic Policy," which sets out its basic stance and approach toward compliance.
The Group has established a Compliance and Risk Management Division as a division to oversee compliance matters of the Group. The officer in charge of the CR Supervision Division oversees matters related to compliance of the Group, and the Compliance and Customer Protection Committee is convened chaired by the President and vice-chaired by the officer in charge of the CR Supervision Division. In the Committee, we report and hold discussions on the status of compliance management and the status of management against anti-social forces, in our efforts to maintain and enhance our compliance system.
The officer in charge of the CR Supervision Division regularly reports to the Board of Directors on the status of the Group's compliance with laws and regulations and any violations.
Additionally, we have formulated a compliance program as a specific practical plan to achieve thorough compliance and by doing so we are engaged in the strengthening of our compliance system.

Compliance Management System

Compliance Initiatives

1. Response to Anti-Social Forces

The Kyushu Financial Group has formulated the Basic Response Policy to Anti-Social Forces in order to ensure that it stands united to firmly reject any connections with anti-social forces. Specifically, all new contracts undergo a preliminary review to prevent transactions with anti-social forces in advance. Contracts as well as general terms and conditions also incorporate an anti-social force exclusion clause, and if it is found after transactions commence that the other party is an anti-social force, we will collaborate with external specialized organizations to handle the matter as appropriate.

(Excerpt) Basic Response Policy to Anti-Social Forces

Article 3 The Group, in accordance with the Compliance Basic Policy, stands resolutely against anti-social forces who pose a threat to the order and safety of civil society, and sets forth the basic policy as follows to eliminate relations with anti-social forces:

We will respond as one to unreasonable demands from anti-social forces and take both civil and criminal legal action in response.
To prepare against anti-social forces, we will establish close collaborative relationships with external specialized organizations such as the police and lawyers.
We will break off all relations with anti-social forces including transactions with them.
We will never provide funds or offer profit to anti-social forces.
We will improve our management system to eradicate anti-social forces and prevent their transactions.

2. Prevention of Money Laundering and Terrorism Financing

The Group is implementing strict preventive measures against money laundering and terrorism financing in line with the stipulations of the Basic Policy for Preventing Money Laundering and Terrorism Financing.

The Basic Policy for Preventing Money Laundering and Terrorism Financing.

3. Entertainment, Gift-Giving, and Prohibition of Bribery

The Group's rules of employment prohibit our officers and employees from giving favors to customers through personal lending or borrowing of money or transactions, in violation of laws, regulations or other relevant rules. Behavior of the Group's officers and employees with regard to entertaining and gift-giving involving customers calls for a high level of business ethics from social and public perspectives, and various laws, regulations and rules of each of the Group companies are appropriately adhered to, particularly with regard to relations with public officials.

(Excerpt) Rules of employment, section 2 - prohibited acts (prohibited matters)

Article 29 Employees must not commit any of the following acts:

Borrow money/goods or accept bribery from business partners
Engage in entertaining or giving gifts or favors to business partners in violation of laws, regulations and relevant rules
Coerce business partners to give favors
Take advantage of one's position as employee to gain benefit for oneself or a third party by lending and borrowing money, acting as an intermediary for lending and borrowing money, or guaranteeing debt

4. Prohibition of Insider Trading

To ensure thoroughness in the prohibition and prevention of unfair business practices such as insider trading, the Group has formulated the Prohibition of Insider Trading Regulations, and such acts are also prohibited under the rules of employment.

(Excerpt) Rules of employment, section 2 - prohibited acts (prohibited matters)

Article 29 Employees must not commit any of the following acts:

Buy and sell stocks of the company or business partners on one's own account during the term of employment or after losing one's position as employee upon retirement or dismissal, before undisclosed important facts pertaining to the company or business partners that were made known over the course of business are made public

5. Whistleblowing System

Employees may make use of the Group's whistleblowing system as a means of reporting any discovery of bribery, corruption and the like. The management department takes due consideration in ensuring confidentiality for those making reports when investigating and dealing with matters, and also responds as appropriate to anonymous reports.

Whistleblowing System

6. Employee Training

The Group conducts suitable training for all officers and employees and is aiming to raise compliance awareness.

< Description of Main Training >

Entertainment, gift-giving, and prohibition of bribery
Response to anti-social forces, financial crimes
Other illegal acts

7. Compliance Inspections

The Group conducts compliance inspections using the following methods, which are compiled, managed, and supervised by the Compliance and Risk Management Division.

Compliance monitoring
Confirmation by compliance checklist
Confirmation through in-house and in-store inspections
Confirmation of understanding through e-learning

8. Response to Illegal Acts

In the event of a violation or potential violation of laws, regulations, or internal rules by any officer or employee of the Group, the following investigations and reports are conducted and strict action, including disciplinary action, is taken in accordance with the "Manual for Handling Misconduct Cases and Violations" established within the company.

(Excerpt) Manual for Handling Misconduct Cases and Violations

Reporting the occurrence
Upon discovering the occurrence or potential occurrence of a misconduct case or any other violations, each department head shall promptly report the occurrence or potential occurrence to the supervisor of Compliance and Risk (CR) Management Division.
Initial response
When the CR Supervisor becomes aware of the occurrence or potential occurrence of a misconduct case or any other violations based on a report as described in the preceding paragraph, the CR Supervisor shall give instructions for initial response, including information management related to the case, preservation of evidence, and reporting of facts to the authorities (immediate report), as necessary.
Investigation of misconduct cases and violations
Investigation of misconduct cases and violations shall be conducted as follows in principle.
1. CR Supervisor shall take measures for investigation and clarification of misconduct cases and violations, and shall notify the heads of relevant departments as necessary.
2. CR Supervisor shall investigate and clarify misconduct cases and violations.
3. CR Supervisor may request the relevant departments to dispatch personnel when deemed necessary for investigation and clarification.
4. Upon CR Supervisor’s request to dispatch personnel, the heads of the relevant departments shall cooperate with this request.
5. The results of the investigation and clarification shall be reported to the CR Supervisor.
6. Various materials collected for investigation and clarification shall be kept in the CR Management Division.
Reporting
CR Supervisor shall immediately report the results of the investigation to the director in charge and the heads of relevant departments. In addition, issues that may have a significant impact on management shall be promptly reported to the Representative Director and Board of Directors.
Measures to prevent recurrence
CR Supervisor shall instruct the department where the misconduct case occurred and the department in charge of the operations in which it occurred to promptly take measures to prevent recurrence.

9. Risk Assessment/Reporting and Control

The Group conducts regular monitoring and internal audits regarding the status of compliance. Any scandal or other such occurrence within the Group is reported to the Board of Directors in accordance with internal regulations, and the Group strives to prevent recurrences and reinforce preventive measures under the appropriate involvement and instruction by management.

< Principal matters reported to the Board of Directors >