Cathay FHC is committed to development of our compliance culture centering on our core values of "Integrity, Accountability, and Innovation”. Cathay FHC established the Compliance Department in 2015 to ensure that each of business consistently adhere to laws and regulations. Our Guidelines for Implementing Compliance Policies have been established to ensure that all employees comply with the laws and regulations applicable to their businesses. The Chief Compliance Officer of Cathay FHC is in charge of the management and implementation of group-level compliance policies, the planning and supervision of matters regarding Cathay FHC's compliance, as well as semiannual reports on compliance implementation to the Board of Directors and the Audit Committee. We also convene group-level Compliance Committee; 3 meetings have been convened in 2018. We semiannually implement compliance self-evaluations and self-inspections to ensure that all business units comply with and effectively implement relevant laws and regulations.
Group-level Whistleblowing Program
Cathay FHC implements a corporate culture of integrity and transparency by establishing the group-level whistleblowing program in 2018, which is supervised and directed by our independent directors, and planned and implemented by Compliance Dept., which reports respective implementation to the Board of Directors and Audit Committee every six months. The system clearly specifies the handling and investigation units, processing procedures, and reporting channels (including internal and external channels as well as hotlines). It also specifies the protection measures for whistleblowers, including ensuring the confidentiality of their identities and protecting them from unfair treatment provoked by their whistleblowing actions. From its initiation in October 2018 to the end of December of the same year, Cathay has received 0 reports from internal and external whistleblowers, and officially launched investigation for 0 cases. No illegal activities have been found.
Enhancing AML/CFT Mechanism
In response to the global AML/CFT trends and supervisory requirements in Taiwan and abroad, Cathay established its Guidelines Governing Anti-Money Laundering and Combating the Financing of Terrorism, according to which the Chief Compliance Officer of Cathay FHC acts as the AML/CFT Compliance officer and convenes committees for Cathay's AML/CFT matters. In 2018, 5 meetings have taken place. Cathay FHC and all of its subsidiaries continue to develop AML/CFT systems by adopting the risk-based approach; we have also included relevant SOPs in the items of self-inspection and internal audit, and enhanced customer due diligence and continuous monitoring measures in terms of high risks.
We established Cathay FHC Guidelines for Information Sharing on Anti-Money Laundering and Combating the Financing of Terrorism to effectively implement risk management and enhance the monitoring of risk control across Cathay’s companies. The Cathay FHC Guidelines for Money Laundering and Terrorist Financing Risk Appetite Management specifies details about the zero-tolerance policy concerning our employees’ money laundering and terrorist financing activities, as well as the matrix-based risk appetites on FHC and subsidiary levels, key risk indicators and handling procedures, and the enhancement of management mechanisms for early warning. In accordance with Taiwan's first National Risk Assessment Report, we also adjusted risk methodologies, and our subsidiaries’ annual institutional risk assessment reports have been incorporated. We have formed several group-level task forces in charge of reviewing the effectiveness of risk control and modifying methodologies and risk standards to perfect Cathay's AML/CFT governance.