Chang Hwa Bank|Corporate Social Responsibility-Business Integrity

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Business Integrity

Policy and Commitment

The Bank is committed to formulating policies based on the management philosophy of integrity, transparency, and responsibility, and to implementing them in internal management and external business activities.
The Bank’s “Sustainable Development Best Practice Principles” stipulates that while operating its business, the Bank shall actively practice sustainable development, including the implementation of corporate governance, the development of a sustainable environment, the maintenance of social public welfare and the enhancement of information disclosure on sustainable development. As a sustainable direction and guideline for all colleagues in the development and execution of their business, the Bank has Human Right Policies, which commits and regulates the Bank’s responsibility to respect and protect human rights, and to construct an honest, fair, respectful and open working environment. All employees of the Bank and its subsidiaries are required to incorporate human rights considerations in all aspects of the operating value chain, including human rights in the workplace, health and safety in the workplace, freedom of association, personal privacy, dishonest behavior and the promotion of human rights policies.
The Bank also has ”Ethical Corporate Management Best Practice Principles” , ”Code of Ethical Conduct” , “Employee Code of Conduct” , and ”Internal Complaint Handling Regulations” , which specify that in carrying out their business, Bank personnel shall engage in business activities based on the principles of fairness, honesty, good faith and transparency, and shall comply with the highest ethical standards and legal norms, so that the Directors, Managers and employees of the Bank understand the Bank’s integrity and ethical values (including operating in good faith, preventing conflicts of interest, avoiding profit opportunities and confidentiality principles, etc.) and strengthen compliance with the law to establish good corporate governance, risk management mechanisms and internal control systems, actively prevent and detect dishonest behaviors, and ensure the reliability of reporting pipelines and financial information to deepen the integrity of the corporate culture and create sustainable development of the operating environment.
Chang Hwa Commercial Bank Ethical Corporate Management Best Practice Principles
Chang Hwa Bank Code of Ethical Conduct

Goals and Targets

In the process of engaging in commercial activities, the Bank's personnel shall proceed in a fair, honest, and transparent manner, and shall not directly or indirectly provide, promise, request, or accept any improper benefits, while avoiding engaging transactions with suppliers and customers involved in unethical conduct.
The Bank’s Ethical Corporate Management Best Practice Principles explicitly prohibits bribery, acceptance of bribes, acceptance of improper benefits, provision of illegal political contributions, improper charitable donations or sponsorships, infringement of intellectual property rights or business secrets, unfair competitive practices, insider trading, products and services that infringe on the rights and interests of others, and requires the establishment of relevant prevention rules, reporting procedures and handling disciplinary action.

Responsibilities

The Sustainable Development Committee, which is composed of directors and senior managers of the Bank, acts as the unit responsible for operating with integrity and designates the Compliance Division to be responsible for the handling of matters related to operating with integrity and to assist in supervising the implementation of the Bank’s regulations on the prevention of dishonesty, and to report to the Sustainable Development Committee and the Board of Directors on a regular basis.
The directors and senior executives of the bank have issued the "Statement of Compliance with the Ethical Management Policy" , promising to abide by the Ethical Corporate Management Best Practice Principles, relevant regulations on listing and OTC listing, and other laws and regulations related to integrity management; employees have issued "Commitment Letter of Ethic and Integrity" agreeing to strictly abide by the Ethical Corporate Management Best Practice Principles, Employee Code of Conduct and relevant business regulations.
The Bank's “Employee Code of Conduct” requires all employees to carefully read the provisions of the code and shall sign the “Statement of Complying with the Code of Conduct of Chang Hwa Commercial Bank”, affirming that they shall comply with relevant regulations and uphold high ethical standards and moral codes.( If employees have any doubt and suspicion about “Employee Code of Conduct,” they may consult the direct supervisor of the unit, the Compliance Officer of the unit and Compliance Division according to their position.)

Whistleblowing Mechanism

The Bank has established an internal and external whistleblowing system. The internal audit unit accepts whistleblowing cases and discloses relevant reporting channels on the official website.

Internal and External Whistleblower System Channels and Methods

Internal and External Whistleblower System Channels and Methods：

External whistleblowing Channel:
Whistleblowing mailbox chb0110@chb.com.tw
If the public finds that the Bank’s personnel have committed a crime, fraud or violation of laws and regulations, they may submit a report to the Bank’s whistleblowing mailbox.
Internal whistleblowing Channel:
Employee whistleblowing system / whistleblowing mailbox chb0111@chb.com.tw
If the whistleblower is an employee of the Bank, he/she may submit a report on the employee whistleblowing system on the Bank’s Corporate Intranet. In addition, The Bank has established the independent whistleblowing mailbox, hotline, fax number and address for the employees of the Bank to use.

Internal whistleblowing Regulations：

To establish ethical and transparent corporate culture and facilitate sound management, the Bank formulated “Internal Complaint Handling Regulations” in accordance with Article 34-2 of “Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries.” Rules have been clearly formulated for the responsibilities of the unit in charge of investigation and review, recusal due to conflicts of interest, whistleblower protection, and file management to ensure smooth reporting channels and improve the response process for reported cases. We have also set up reporting channels, including address, mailboxes, and hotlines for reporting. In the circumstances of unethical behavior is identified, including commit crime, fraud, violation of laws and regulation, the Bank’s Internal Auditing Division which is the receiving unit shall designate appropriate personnel to deal with the incident. It is clearly provided that, except regulatory compliance or cooperation with government agency’s investigation or information known by the public, the Bank shall maintain the confidentiality of the identity of the whistleblower and the content of whistleblowing report.
If a case reported is confirmed to be true after review or re-examination, related investigative unit shall review its internal control system and operational procedure, and submit improvement measures to prevent from occurrence of identical conduct. In addition, the persons reported and relevant persons involved in the case are required to stop doing related behavior and shall be proper handled by related personnel management regulations. Damage indemnification may be claimed according to the legal procedures or may be transferred to prosecution agency for handling if necessary.
The Internal Auditing Division shall compile the investigation reports, review results, improvement measures submitted by relevant units, and other relevant materials, and report to the Audit Committee and the Board of Directors on a regular basis.

Punishment and Rewards for Business Integrity Violations：

The Bank adopts a zero-tolerance policy for violations of integrity management and regulations. If the Bank’s personnel violate integrity behaviors, they will be punished in accordance with relevant laws and regulations or personnel management regulations in consideration of the seriousness of the circumstances, and will be included in the annual assessment of units and managers to determine if points will be deducted. In addition, if an employee has a reason for violating the relevant regulations, after the relevant unit mentions the specific reason and transfers it to the Personnel Review Committee of the Bank for deliberation; their bonus will be reduced according to the Employee Bonus Payment Regulations of the Bank.

Assessment Mechanisms

Internal Risk Assessment and Management：

Unethical Behavior and Internal Fraud Risk Assessment

All departments of the head office and overseas branches are as units for the bank-wide assessment of the unethical conduct and internal fraud risks, while analyzing and evaluating the unethical conduct risks of each business activity, including dishonesty and internal fraud, regularly each year; 100% of all units are covered in the evaluation.
As per the Bank’s 2022 Unethical Conduct and Internal Fraud Risk Assessment, "Misappropriation of assets" and “The products and services provided directly or indirectly harm the rights and interests of financial consumers or other stakeholders when they are designed, developed, introduced, provided or sold” among the existing risks bears a higher risk of unethical conduct.
Assessment results have been provided for the Bank’s internal audit preparation and implementation of relevant audit plans, and the Bank has required all departments to strengthen relevant preventive measures or implement a check-and-balance mechanism to monitor the above business activities and review the appropriateness and effectiveness of relevant regulations, thereby establishing an effective accounting system and an internal control system for business activities with a higher risk of unethical conduct. Each department shall analyze business activities with a higher risk of unethical conduct within the scope of its responsibilities and formulate plans to prevent unethical conduct, including operating procedures, code of conduct, and education and training.

Performance of Business Integrity
The Compliance Division of the Bank periodically assesses the Bank’s performance of business integrity and reviews improvement measures on an annual basis, and reports to the Sustainable Development Committee and the Board of Directors.

The assessment report for 2022 was submitted to the 11th meeting of the 2nd Sustainable Development Committee and the 35th meeting of the 26th Board of Directors on 7 January 2023 and 18 January 2023, respectively, and has been disclosed on the Bank’s official website.

External Business Establishment：

Before establishing a business relationship with others, the Bank shall first assess the integrity of the agent, supplier, customer, or other transaction counterparties in accordance with the Bank’s relevant rules, and incorporate the ethical management policy and relevant regulations into the contract terms upon the signing of the contract.

Education and Training

The Bank regularly organizes education, training and publicity related to integrity management. In 2022, the “2022 Annual Integrity Management and Code of Conduct Promotion Course” was held. The number of people who completed the training was 6,693, and the training completion rate was 100%.
To implement relevant values and legal norms, the Bank conducted “The bank's legal compliance system and the code of ethical conduct” training course for new recruits in 2022, with a total of 313 participants.

Reporting/Litigation/Punishment

In 2022, the Bank did not receive any case of unethical conduct reported.
In 2022, the Bank has not been punished by the competent authorities for unethical conduct.
In 2022, the Bank was not involved in any legal proceedings due to fraud, insider trading, antitrust, anticompetitive behavior, market manipulation, corruption, or violation of other financial regulations.
In 2022, there have been no instances of illegal political contributions, inappropriate charitable contributions or sponsorships.

The Third-Party Verification of Business Integrity and Code of Conduct

The Bank strictly follows the Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries. The internal control system and the implementation of the personal data protection system are regularly audited by accountants.
In 2022, the Bank passed the certification of “ISO 22301 Business Continuity Management System”, “ISO 27001 Information Security Management System” and “BS 10012 Personal Information Management System”, and annually entrusts an independent third party to conduct information security assessment and overall information security implementation compliance assessment.
In 2022, the Bank has passed the certification of “ISO 14001 Environmental Management System” and "ISO 45001 Occupational Health and Safety Management System”.
For measures to prevent money laundering and combat terrorism, the Bank annually entrusts independent thirdparty auditing and accounting firms to conduct project audits, and issues the "2022 Statement on Internal Control System for AML/CFT" and uploads it on the Bank’s official website in accordance with regulations.