AML, CTF and Sanctions Violation Risk Management

D Communications Inc. (hereinafter referred to as "we" or “our”) recognizes that the prevention of money laundering, terrorist financing, proliferation financing risks, sanctions violation risks, and fraudulent use of financial transactions (hereinafter referred to as "Money Laundering, etc.") is an important responsibility of a financial institution with a public mission, and positions it as one of the most important management issues. Based on this policy, we establish an appropriate management system and carry out business operations in compliance with laws, regulations, and international regulations.

1. Organizational Structure
   • Our management recognizes the importance of anti-money laundering measures, appoints a Chief Officer and takes a leading role in anti-money laundering measures, and strives to strengthen the management system by ensuring that all officers and employees are aware of anti-money laundering measures.
   • We establish a unified management system by appointing a person in charge of anti-money laundering measures and a department in charge of the same, and formulate and manage response policies and respond across the organization. In particular, we place emphasis on preventing involvement with sanctioned persons and countries.
   • In order to prevent our customers, correspondents (including business partners and contractors), and officers and employees from being involved in or becoming involved in money laundering, etc., we take appropriate measures such as verification at the time of transactions in accordance with domestic and international laws and regulations, and strive to constantly verify and improve our response.
   • The internal audit department regularly verify the appropriateness of the risk management system and its implementation status and work to improve it.
2. Risk assessment and reduction efforts
   1. Based on the risk-based approach (RBA), we identify and assess the following risks and take measures to mitigate those risks.
      • Money laundering risk: Unclear customers or transaction details or unusual transaction patterns.
      • Terrorist financing risk: Possible transactions with terrorist organizations or their affiliates.
      • Proliferation finance risk: Financial transactions related to the proliferation of nuclear, chemical, and biological weapons and their delivery means (e.g., missiles).
      • Sanctions violation risk: Potential direct or indirect transactions with sanctioned persons or countries.
   2. We identify and assess risks based on the "Survey on the Risk of Transfer of Criminal Proceeds" and " National Risk Assessment of Proliferation Financing in Japan " published by the National Public Safety Commission.
   3. We take appropriate mitigation measures for risks associated with the products and services we handle, and continually review their effectiveness.
3. Trade Policy and Sanctions
   • We implement management measures appropriate to the risks posed by our customers or transactions, and continually manage such information to keep it up to date.
   • When conducting transactions, we screen customers and business partners against sanctions lists (OFAC, Japanese government, United Nations, etc.) and prevent transactions with those who fall under these lists.
   • For transactions related to sanctioned countries, we conduct additional checks (Enhanced Due Diligence: EDD) to prevent inappropriate transactions.
   • We take appropriate measures in accordance with applicable laws and regulations with regard to financial criminals, and the rejection and elimination of business relationships with which it is inappropriate to establish or continue business relationships.
   • We establish a system that enables us to promptly and appropriately implement sanctions-based measures, such as suspending transactions and freezing assets.
4. Reporting suspicious transactions

   Our transaction monitoring system detects abnormal transactions and automatically issues alerts. If any suspicious transactions are identified, we promptly report them to the Financial Services Agency and other relevant authorities.

5. Preventing financial crime

   We recognize that funds from organized crime such as bank transfer fraud, and crimes involving the unauthorized use of the services of other financial institutions, are a threat to the reliability of the financial system, and We establish a system to prevent the occurrence and spread of such financial crimes.

6. Correspondent Management
   • We properly collect and evaluate information about correspondent banks and thoroughly manage them according to the risks.
   • We find that a Correspondent is a shell bank or a sanctioned party, or that it is permitting transactions with a shell bank or has links to a sanctioned party, we immediately review and suspend any agreements we enter into or maintain with that Correspondent Bank.
7. Training and education for executives and employees
   • We regularly provide our officers and employees with necessary and appropriate training and education according to their roles, and strive to maintain and improve their expertise and suitability.
   • Our employees recognize that anti-money laundering, etc. efforts are a responsibility imposed on those who engage in financial transactions, and will constantly strive to improve their knowledge and acquire skills in their jobs, while also acting in a way that contributes to the safety of customers' transactions.
   • We strengthen education on how to use sanctions lists, what criteria to use to identify suspicious transactions, and how to identify proliferation risks.
8. Compliance verification

   We regularly verify compliance with anti-money laundering, etc. measures and strive to continuously improve our system based on the results of such verification. We update our policy as necessary in response to changes in international regulations and domestic laws.