Compliance

The Group defines its Reason for Existence ("Purpose") as "Trust for a flourishing future: Creating new value with the power of trusts and let prosperous future for our clients and society bloom." It considers compliance as "observing not only laws, market rules, and internal regulations, but also broader social norms, and meeting the expectations of our stakeholders (clients, society, shareholders, and employees) to establish trust, with an aim of contributing to their well-being.

So that the Group can implement a proper compliance framework, the Codes of Conduct (“Value”) declare our “strict compliance with applicable laws and regulations” and the Compliance Rules stipulate what directors, officers, and employees need to comply with. In addition, the Compliance Manual, a detailed companion guide to the Codes of Conduct, offers (1) explanations of codes of conduct that must be followed regardless of one's duties and (2) clarification on how to respond when one discovers illegal behavior, while the Compliance Handbook and Company Rules provide specifics of the understanding and awareness directors, officers, and employees need to have according to their duties.

“Our Standards of Conduct” represent a guidance document for our employees that aims at transforming our cherished values, represented by Sumitomo Mitsui Trust Group’s “Purpose”, “Mission”, “Vision”, and “Value”, into guidelines for daily conduct. It provides the fundamental standards for appropriate conduct for our Group employees when they are experiencing difficulty in making a decision for their daily business.

The Group formulates the Compliance Program, which consists of specific practice plans for implementing compliance within the Group each fiscal year, with the approval of the Board of Directors, and the board periodically monitors and evaluates the progress of the program. Sumitomo Mitsui Trust Group, Inc. manages the compliance framework for the entire Group in order to create an appropriate framework in line with the characteristics of operations of each Group company. This is done by formulating the companies' Compliance Programs and providing guidance and oversight on the progress and achievement status of these programs. In addition, The Group's compliance is overseen by the Chief Compliance Officer (CCO), who is an executive officer and regularly reports to the Board of Directors.

The Group has created, with the approval of the Board of Directors, a Compliance Manual containing an explanation of laws and regulations that must be followed and actions to be taken in the event of the discovery of compliance infractions. Employees across the Group are thoroughly informed regarding its contents.

The Group is also improving compliance education to promote the fostering of compliance awareness groupwide. Specifically, the Group offers training and other support for training conducted mainly by the compliance departments of each Group company, such as providing materials, dispatching instructors, and holding discussion-based study sessions on themes shared by the entire Group. In addition to training using the materials mentioned above, each Group company implements training and study sessions in accordance with the characteristics of their operations and products and the attributes of their clients, as well as e-learning on specific themes, and through daily guidance, to foster compliance awareness among employees. Furthermore, “Our Standards of Conduct,” which was established as a guideline for the Group’s employees to take concrete actions, requires us to act with integrity. Also, in order to accurately grasp the status of the penetration of compliance awareness, the Group conducts awareness surveys on compliance at major subsidiaries and elsewhere to understand and improve any issues that have been discovered. These surveys are an attempt to understand the situation of the entire Group by, for example, setting common questions in order to grasp Group-wide issues and to implement any effective measures.

In this awareness survey, we are working to grasp the situation of the entire Group by setting uniform questionnaires in order to grasp issues common to the Group and implement effective measures.

To effect an appropriate response when compliance violations by directors, officers, or employees are discovered, the Group clarifies “How to Respond to the Discovery of Illegal Behavior” in the Compliance Manual, a detailed companion guide to the Codes of Conduct, and obliges directors, officers, and employees to report to the Compliance Department through higher-ups. When the Compliance Department receives a report from a department of a compliance violation, the Compliance Department will conduct an investigation with the reporting department, coordinate with clients to reach a solution, submit reports in-house and to the authorities, determine whether public disclosure is necessary, and otherwise provide guidance and advice on executing the required response in order to settle the issue. Along with verifying the appropriateness of measures to prevent recurrence by the violating department and its supervising unit, the Compliance Department will improve the report and control framework to deter/curtail accidents and to raise the quality of work.

In order to promptly and appropriately respond to any serious violation of laws/regulations and internal rules or to acts that likely constitute a violation, the Group has established a compliance hotline system where all officers and employees (including part time employees, dispatched employees, retired employees, and officers and employees of partner business operators, etc.) can directly report to the Compliance Department or external law firms, in addition to the regular reporting channels.

This hotline system enforces rigorous control of information and protection of whistleblower privacy to ensure their protection, and prohibits adverse treatment of whistleblowers who utilize the system appropriately and those who cooperate with the investigation. Also, to make the system easier to use, simple, commonly-known methods of reporting, such as by calling an external law firm or through a web system that allows anonymous reporting 24 hours a day, have been set up. In addition, in order to ensure unified management of the Group, the Group has its subsidiaries establish systems equivalent to this system as necessary. The reported information is consolidated at the Group, so that the Company can utilize this information to enhance its compliance system going forward. Furthermore, in order to promote the appropriate use of the system, SuMi Trust Bank, one of the major subsidiaries, has taken the lead in establishing and providing Q&As and training tools for employees and others. Compliance awareness surveys are also implemented at major subsidiaries, etc. in order to gauge their level of awareness. Responding to amendments to the whistleblower protection act, which strengthens protection for whistleblowers, the Group has provided its subsidiaries with templates for internal regulations and held training sessions taught by lawyers. The number of reports through this system has increased as a result of efforts made to encourage greater use of it.

In addition to the above, the Group has established an accounting hotline system since fiscal 2017 to report inappropriate accounting, etc., and has disclosed contact points on its website while also raising awareness of the system among subsidiaries and others. In addition, SuMi Trust Bank has a personnel consultation desk (LGBTQ Consultation Desk) and other services to provide various consultations regarding unfairness and injustice in personnel management as well as on workplace harassment and human rights issues.

The Group has released its "Anti-Money Laundering Compliance Policy" with the approval of the Board of Directors, and made clear its resoluteness in standing up to money laundering^*1.

For instance, Sumitomo Mitsui TRUST Bank carries out additional confirmation based on details such as a client’s occupation, business, etc., whether they are a PEP^*2, the types of transactions they conduct and the products involved, and the countries and regions they are related to, and then considers the risk of money laundering, in addition to obtaining confirmation based on laws and regulations such as when opening an account (including non-face-to-face transactions) and accepting remittances (Act on Prevention of Transfer of Criminal Proceeds, Foreign Exchange and Foreign Trade Act, etc.). It verifies, using a risk-response system, whether any illicit transfers between accounts have taken place, and has a system in place for employees, when coming across transactions suspected to be related to illegally obtained money or used to finance terrorism or proliferation financing, to immediately report to the person in charge, and in addition to establishing a system for filing reports with the authorities, we support internal training programs and employees' acquisition of specialized certifications on anti-money laundering.

In addition, from the perspective of safely managing our customers' assets, together with establishing necessary internal control systems to provide financial services and taking sufficient security measures for ATMs and Internet banking, we provide information on the modus operandi and methods of financial crimes to prevent our customers from becoming victims of financial crimes.

We formulate a plan for these initiatives every fiscal year, conduct risk-based monitoring and testing (including internal audits), and receive evaluations from external experts as necessary to maintain and improve the effectiveness of these initiatives.

In order to prevent the exchange of entertainment and gifts in violation of laws, regulations, social practices, and customs, the Group has published its Anti-Bribery and Corruption Compliance Policy^*1 with the approval of the Board of Directors, and is implementing a program against bribery and corruption under the supervision of the management team. The program is reviewed and improved through regular risk assessments on bribery and corruption, and at overseas offices where bribery and corruption risks are particularly high, the Group is working to improve its system for preventing bribery and corruption, such as by building close coordination with local law offices to allow for swift and proper responses.

The Group complies with all laws and regulations regarding political activities and funds, such as limiting donations related to political activities to political parties and political fund-managing organizations. In addition, the necessary prior approvals are required for the expenditure of donations related to political activities to be appropriately dealt with.

In addition, to make sure we abide by anti-bribery initiatives, the Group periodically conducts monitoring to confirm the state of implementation, and every fiscal year conducts training for directors, officers, and employees. These training sessions are aimed at raising awareness of the Group’s stance on bribery and corruption, the necessary pre-approval procedures such as the absence of conflicts of interest with counterparties (e.g., licensing, subsidies, contracts), and acceptable guidelines (e.g., when dealing with public officials who are not stakeholders of the Company). Additionally, departments that are more likely to face bribery risks, such as business management, wholesale, and investment and loan-related departments, are required to undergo additional specialized training and submit a pledge of compliance. In order to provide more effective training at our overseas bases, the Group provides training that takes into account the regulations of the country in which the base is located, as well as lecture-style training with local lawyers as lecturers.

The Group has declared its resolute stance against antisocial forces in its Codes of Conduct (“Value”), taking initiatives to prevent transactions with antisocial forces. Specifically, in addition to incorporating a clause to exclude the involvement of organized crime group in various products and services as a check against antisocial forces and as a contractual justification to cancel any transactions if they are determined to be antisocial forces after the start of any transaction, a framework has been established to prevent transactions with antisocial forces by checking with a database operated by the National Police Agency, via the Deposit Insurance Corporation of Japan, mainly for new loans for individual clients. In addition, we have a framework in place to check whether the counterparty to a transaction is an antisocial force after the commencement of the transaction. In cases where the counterparty is found to be an antisocial force, we have established a framework that allows us to take measures in close coordination with external specialist organizations, such as the police, for the eventual cancellation of the transaction.

Additionally, training for the prevention of transactions with antisocial forces is provided to directors, executive officers, and employees once every fiscal year to improve awareness of preventing such transactions.

In order to prevent insider trading, the Group strictly manages and stipulates the reporting obligations, delivery and management practices for insider information that may be obtained during the execution of working duties in its Rules on Insider Information Management. For example, our core subsidiary SuMi TRUST Bank conducts regular training for all employees, while all directors, officers, and employees regularly submit a vow that includes a pledge to comply with internal company rules on preventing insider trading.

In addition, the asset management function of SuMi TRUST Bank was integrated into Sumitomo Mitsui Trust Asset Management Co., Ltd. (SMTAM) to strengthen the asset management business, which is positioned as the Group's growth business, thereby establishing a strict information blocking system with other Group companies. As well as having particularly strict controls and information blocking to prevent insider information from being leaked to departments that handle investments (asset management), SMTAM has established its “Guidelines on Contact, etc. with Securities Companies, etc.” prohibiting improper contact between our employees in charge of investing and sales persons at securities companies.

The Group recognizes that properly fulfilling tax obligations is an important social responsibility.

The Group has established the basic policy on tax compliance by resolution of the Executive Committee in order to raise the tax awareness of the Group’s officers and employees, appropriately manage taxation, and conduct corporate activities while balancing the interests of all stakeholders, including clients, investors, national governments, and local communities.

Based on this policy, we comply with the tax laws, notices and guidelines of each country, tax treaties, OECD transfer pricing guidelines, BEPS^*1 action plan, etc., and strive to pay appropriate taxes and prevent tax avoidance activities in violation of these laws^*2.

The Group does not engage in transactions solely for the purpose of aiding tax avoidance or transfer of income. Under the direction of the Chief Financial Officer, who is responsible for taxation, the Group’s tax team and the management of the Group’s domestic and overseas offices work together to carry out tax-related work in line with this basic policy. In addition, we strive to improve tax literacy by utilizing specialists in order to comply with the tax laws of each country and contribute to proper tax payment.

In addition, highly important matters are reported to and resolved by the Board of Directors.

To comply with the Antimonopoly Act, the Group has instituted the Company Code of Conduct for the Antimonopoly Act in the compliance manual. This code of conduct spreads awareness among directors, officers, and employees by providing them with comprehensible and relatable content, which includes specific examples using problems that could occur in the course of business at the Group.

Furthermore, at group companies we have created rules for checking up on prohibited concerted action, abuse of one’s dominant position, false or exaggerated advertising and the like as a means of strict management to remain compliant with the Antimonopoly Act.

The Group’s compliance manual contains a policy on respecting intellectual property rights. Directors, officers, and employees are strictly prohibited from engaging in the unauthorized duplication or use of other people’s copyrighted materials or the like. To further properly defend intellectual property rights, the Group writes internal rules for the proper use of such rights belonging to group companies.

The Group classifies conduct risk as any action that could have a negative impact on the Group, the working environment, our clients, the market, the financial infrastructure, or society due to an officer or employee of a Group company engaging in behavior that violates professional ethics or otherwise fails to meet expectations among stakeholders or damages their trust in us. Each Group company is working to create a PDCA cycle to regulate this possibility by defining and evaluating conduct risk, implementing risk control measures, and strives not only to prevent problematic behavior (misconduct), but also to promote desirable behavior (good conduct).

In addition, we formulated "Our Standards of Conduct" as a guidelines for executives and employees and each Group compay to put the Group's cherished values ("Purpose", "Mission", "Vision", and "Value") into concrete actions. "Our Standards of Conduct" consists of 25 items based on the four pillars: our standards for our people, our standards for our society, and our standards for our shareholders. They are positioned as guidelines that officers and employees of Group companies are expected to refer to when they are in doubt making a decision. In particular, group employees are expected to act with integrity. Through various types of training and discussions, we are working to disseminate them throughout the entire Group, and we are also starting to check officer and employee familiarity with them.

Link to "Our Standards of Conduct"