The prevention of financial crime, including money laundering, the financing of terrorism and proliferation financing (hereafter referred to as "ML/FT/PF"), is a top priority for The Hyakugo Bank, Ltd. (hereafter the "Bank" or "we"). We have, therefore, established the following governance structure and AML/CFT/CPF policy to fulfill this commitment.

1　Management Policy

The Board of Directors of the Bank recognizes that the prevention of ML/FT/PF is one of the most important management issues. We regularly review and improve our AML/CFT/CPF framework to ensure it is effective in upholding our key responsibilities as a financial institution.

2　Organizational Structure

The executive officer in charge of the Compliance Management Division is appointed as the Chief Anti-Money Laundering/Countering the Financing of Terrorism/Counter-Proliferation Financing Officer. The AML/CFT Unit, under the instruction of the Chief AML/CFT/CPF Officer, establishes and implements the AML/CFT/CPF policies, procedures and programs in coordination with relevant divisions in a cross-sectional manner to ensure an effective AML/CFT/CPF framework.

3　Risk-Based Approach

We adopt a risk-based approach in identifying and assessing ML/FT/PF risks and, in compliance with the “National Risk Assessment” published by the National Public Safety Commission, we implement robust risk mitigation measures commensurate with the identified ML/FT/PF risks. These countermeasures include conducting timely and periodic customer due diligence processes.

4　Customer Acceptance Policy

In order to manage the Bank's and our customers' exposure to ML/FT/PF risks, we have established a Customer Acceptance Policy in which we will not accept any customers or transactions involved in ML/FT/PF.

5　Economic Sanctions and Asset-Freezing Measures

We screen transactions for parties subject to economic sanctions through transaction filtering and engage in asset-freezing and other appropriate countermeasures pursuant to domestic and overseas laws and regulations.

6　Suspicious Activity Reporting

We handle suspicious customers, activities, and transactions appropriately with confidentiality, whether they are detected by branch offices or through transaction monitoring systems, and ensure that suspicious activity reports are promptly submitted to the authorities.

7　Prohibition of Anonymous Accounts and Fictitious Name Accounts

We do not conduct dealings with anonymous accounts or accounts in fictitious names.

8　Management of Correspondent Banks

We collect sufficient information on correspondent banks to fully understand their business and their AML/CFT/CPF framework and we identify and assess the ML/FT/PF risks posed by these relationships and implement robust risk mitigation measures based on a risk-based approach. We prohibit the establishment of relationships with shell banks and reject transactions involving shell banks or banks affiliated with shell banks.

9　Training

We ensure that all managers and employees receive ongoing comprehensive AML/CFT/CPF training to enhance their knowledge and understanding of AML/CFT/CPF compliance, as well as to develop each employee's expertise according to their role.

10　Anti-Bribery and Corruption

We strive to maintain a high level of professional integrity of managers and employees at all times, comply fully with all applicable anti-bribery and corruption laws and regulations, and establish guidelines to prevent bribery gifts, entertainment, and charitable, philanthropic, and political donations that exceed social norms. The managers and employees of the Bank pledge to abide by the rules stated in this policy.

11　Review of Compliance and Audits

Our AML/CFT Unit regularly, and when instructed by the Chief AML/CFT/CPF Officer, evaluates our compliance with AML/CFT/CPF rules and regulations and constantly endeavors to improve our AML/CFT/CPF framework. Furthermore, our internal auditors periodically conduct internal audits on our AML/CFT/CPF policy and procedures and our AML/CFT Unit uses these audit findings to further improve our AML/CFT/CPF program.

12　Cross-Border Transactions

To manage the ML/FT/PF risks associated with cross-border transactions, we incorporate not only Japanese laws and regulations but also all applicable overseas laws and regulations into our AML/CFT/CPF program. Furthermore, we actively collect information on changes in international affairs and risk mitigation measures and actions taken by other financial institutions in response to such external circumstances. By continuously evaluating internal and external risks in a timely and appropriate manner, we ensure that our AML/CFT/CPF program is constantly improving.

13　Group-wide Management

We are committed to group-wide AML/CFT/CPF compliance. To ensure that our AML/CFT/CPF policy and procedures are properly implemented and followed, we identify, collect, and share all information relevant to our AML/CFT/CPF program across the Group and constantly collaborate on how to improve our AML/CFT/CPF framework.