Compliance

Basic Policy

Social norms, common sense, and public expectations for financial institutions are constantly changing due to the transformation of our industrial structure resulting from technological advancement and the emergence of new values. Furthermore, in addition to adapting to changes in the external environment, Aozora continues working to develop new products and services in order to achieve sustainable growth in its business. To avoid any damage to our corporate value, we will continue to comply with all laws and regulations applicable to our business operations, conduct sensible corporate activities based on social norms and common sense, and strive to further improve our management framework for compliance and legal risk to better respond to a wide range of changes in the environment.

Management Structure

Aozora has a Compliance Management Division and a Legal Division in place as the supervising divisions for compliance and legal risks, and these divisions develop internal rules regarding compliance. The two divisions also conduct seminars and e-learning periodically to maintain and improve compliance awareness. As a specific action plan to realize our compliance framework, the Compliance Management Division develops annual compliance programs that are disseminated to and implemented by all of Aozora’s officers and employees, including those at Group companies. The progress and achievement status of these programs are reported to the Audit and Compliance Committee and the Board of Directors on a semi-annual basis. Aozora has also established a Code of Ethics and Conduct as a standard of conduct that every officer and employee must remain in compliance with. All officers and employees of Aozora, including Group companies, pledge on an annual basis that they understand and comply with the Code of Ethics and Conduct.

Customer-oriented Business Management

Aozora has formulated and announced its Basic Policy on Customer-Oriented Business Management based on the Principles for Customer-Oriented Business Conduct publicized by the Financial Services Agency. This basic policy is reviewed on a regular basis for better business management. Additionally, under this policy, we disclose the status of specific initiatives and related matters in our retail division every six months.

We have also established a product governance framework with the involvement of senior management in order to deliver products and other services that contribute to the pursuit of customers’ best interests. Specifically, with the involvement of the Customer Protection Committee, we make decisions about whether to introduce products and related services only after validating whether they are suitable for the target potential customers and investigating relevant issues before we begin to handle the products and related services. After we begin handling the products and related services, we undertake post-sale monitoring based on sales performance, and we review and discontinue the sales solicitation policy for the products and other items as necessary. Through these processes, we implement customer-oriented business management.

Elimination of Anti-social Elements

Aozora clearly states in the Basic Policy on the Elimination of Anti-Social Elements that it steadfastly confronts any anti-social elements that pose a threat to public order and safety while ensuring that it categorically blocks any relationship with such elements. Aozora has established and routinely maintains close cooperative relationships with outside specialized agencies, including law enforcement agencies, the Anti-Organized Crime Campaign Center of Tokyo, and attorneys. In addition, we absolutely refuse to perform any action that may serve to provide income/funding for anti-social elements, including but not limited to backdoor transactions, monetary contributions/membership fees, and subscribing to informational magazines.

• Aozora Bank Group Basic Policy on the Elimination of Anti-Social Elements

Anti-money Laundering Initiatives

Aozora is aware that preventing financial crimes, including money laundering, financing of terrorism, and proliferation financing, and responding to economic sanctions under the Foreign Exchange and Foreign Trade Act (Anti-Money Laundering Measures) are important issues facing the global financial system. We have established a framework to comply with domestic and international laws, regulations, and rules, while also making an ongoing effort to further strengthen our Anti-Money Laundering Measures. For example, Aozora has developed internal policies and an organizational structure, which includes the establishment of a Financial Crime Management Office as a department overseeing Anti-Money Laundering Measures, while conducting a review as needed to ensure their effectiveness. We also systematically provide training for officers and employees regarding the prevention of financial crimes and the response to economic sanctions under the Foreign Exchange and Foreign Trade Act. In addition, we ensure that we verify the identity of customers and the purpose of their transaction at the time of account opening, which is followed by the ongoing monitoring of our customer transactions.

Additionally, we have developed an internal structure that allows for immediate reporting to the relevant authorities regarding any suspicious transactions detected by our daily monitoring process.

• Aozora Bank Group Basic Policy on Anti-Money Laundering

Anti-bribery Initiatives

Aozora has established the Basic Policy on Anti-bribery, which prohibits all Aozora’s officers and employees from giving, offering, or promising improper corporate hospitality, gifts, and other benefits to public officials in any country as well as from giving or receiving excessive corporate hospitality, gifts or other benefits beyond socially acceptable limits. In addition, we continue to provide opportunities for all officers and employees to learn more about our anti-bribery policy.

• Aozora Bank Group Basic Policy on Anti-bribery

Whistle-blower Program

Aozora has established a whistle-blower program called the Aozora Hotline Program in order to detect and correct at an early stage any conduct that breaches laws, regulations, and other rules, and to foster a clean, open, and fair corporate culture. As whistle-blowing contacts for officers, employees, and other personnel of Group companies, we have set up an internal contact, and have also arranged for an outside law firm to act as an outside point of contact.

The program allows for anonymous reporting. In addition, all officers and employees are provided with a special postal envelope addressed to the contact point outside Aozora in an effort to create an environment that facilitates access to the internal reporting system.

In order to protect whistle-blowers, the program tightly controls information and protects privacy, and strictly prohibits any unfavorable treatment of whistle-blowers. If any violation of the law, misconduct, or other such activity is confirmed as a result of whistle-blower investigations, Aozora will promptly take corrective and preventive measures.

In FY2023, there were no whistle-blower cases that had a significant impact on the management of Aozora.