Since 2011 when the Chailease Holding was publicly listed on the Taiwan Stock Exchange, it has participated in Company Information Disclosure Evaluation. After three years of continuous efforts, the rank of the Company has improved to the best A ++ rating. In the process, the Company implemented relevant laws and regulations, improved the establishment of policies and guidelines, and voluntarily disclosed Information in order to enhance the transparency of information. The Company also participated in the Corporate Governance Evaluation, which was conducted by the Taiwan Stock Exchange and the Taipei Exchange. Of the 1,617 listed companies that participated, Chailease Holding ranked in the top 5% in 2015, 2017, 2018, 2019, 2020 and 2021.

In addition to publicly disclosing revenue on a monthly basis as stipulated by law, before the 25th day of every month, Chailease Holding voluntarily announces its profit situation in order to give the investing public a more immediate grasp of its revenue and profits. The company website completely discloses all significant information, including complete financial operations, important resolutions from the board of directors and important regulations, all of which provides complete information disclosure services. To ensure a complete public disclosure mechanism, a clear internal implementation process has been established and responsibility has been divided up. The information is classified according to type and attribute and the relevant business units are responsible for it. An internal division of labor, reviews, and a confirmation mechanism all ensure the accuracy of the information. In 2018, the company also amended the Chailease Holdings Information Announcement and Application Procedures. The Regulatory Compliance Unit also publicly provides information relevant to external laws and regulations and accordingly modifies the information for the other business units’ reference.

When Chailease Holding went public in 2011, it voluntarily raised its regulatory compliance standards. Just like financial institutions, it established special business units to develop regulatory compliance management practices. Other major subsidiaries, including Chailease Finance Co., Ltd. and Chailease International Finance Corporation, also developed regulatory compliance management practices. They regularly hold regulatory compliance training and awareness programs to ensure their operations and products comply with internal and external regulations. In addition, they conduct annual internal regulatory compliance inspections and report the results to the board of directors.

In 2018, Chailease created the dedicated position of Corporate Governance Officer. At the same time, the Chailease Holding Legal Department, Secretarial Office, and Administrative Department duties were adjusted. Corporate governance employees in the Secretarial Office and Administrative Department, in matters of corporate governance, are under the jurisdiction of the Legal Department. The Corporate Governance Officer oversees the Legal Department as it implements corporate governance. In addition to statutory corporate governance, the Corporate Governance Officer also coordinates the company’s legal affairs. The results of self-inspection in 2020 are in compliance with the laws and regulations.

In response to revisions to the scope of Taiwan’s Money Laundering Control Act, which added financial leasing activities, the company will undertake to implement all legal requirements and procedures required of financial leasing companies. Chailease will do our utmost to coordinate with competent authorities. While fulfilling our corporate social responsibility, combating money laundering and terrorist financing, and minimizing costs, we will assist the Taipei Leasing Association to work with the competent authorities and consultants to complete the questionnaire and create a template.

Due to the addition of financial leasing activities to the scope of Taiwan’s Money Laundering Control Act, Chailease and our key subsidiaries have established the below policy to prevent money laundering and terrorist financing:

• 1. In the revised portion of the internal regulations, the “Key Points for the Assessment of Anti-Money Laundering and Anti-Terrorism Operations” were added, and the “Anti-Money Laundering and Anti-Terrorism Programs” were integrated, so that front-line colleagues can more effectively check money laundering prevention related matters. In addition, the Company’s subsidiaries Chailease Finance Co., Ltd. and Fina Finance & Trading Co., Ltd. also revised the “Third Party Compensation Method” to simplify the process of verification and write-off of delayed cases by legal units.
• 2. Starting from 2020, the Company has incorporated the results of money laundering prevention into the KPI projects of business and review units to ensure the effective implementation of money laundering prevention operations.
• 3. Establishing an anti-money laundering management system, including an anti-money laundering management and customer basic information maintenance system which was purchase in mid-2019 and launched before the end of 2020.
• 4. In accordance with the “Implementation Measures for the Internal Control and Audit System for Preventing Money Laundering and Combating Capital Terrorism in the Handling of Financial Leasing Business Enterprises” issued by the Financial Supervisory Commission, the Company’s subsidiaries Chailease Finance Co., Ltd. and Fina Finance & Trading Co., Ltd. have completed the provision of “Institutional Risk Assessment Report” to the FSC for future reference.
• 5. According to the “Evaluation Points for Prevention of Money Laundering and Anti-Terrorism Operations” of the Company’s subsidiaries Chailease Finance Co., Ltd. and Fina Finance & Trading Co., Ltd., we do spot checks on business and review cases and promote according to the inspection results.
• 6. As of the end of December 2020, no suspected money laundering and terrorist transactions has been reported by the Company’s subsidiaries Chailease Finance Co., Ltd. and Fina Finance & Trading Co., Ltd.

The AML/CFT management mechanism and continuous improvement aspects of the subsidiaries under the holding can be roughly divided into the following six aspects, including: institutional risk assessment, policies and procedures, customer due diligence, name checks, education and training, suspicious transactions/terrorist transaction reporting. Concrete actions are explained below:

The process management mechanism of the money laundering prevention manufacturing industry is explained as follows:

In order to timely and effectively inform the management team of the Company’s overall money laundering and capital terrorism risks and to determine and develop the mechanisms that should be established and appropriate mitigation measures that should be taken, the Company refers to the FATF40 recommendations, and in accordance with international norms and trends, by introducing the Group’s consistent institutional risk assessment methodology through consultants to conduct institutional money laundering and capital terrorism risk assessments. The assessment targets include countries and regions, products and services, transaction and payment channels, and customer aspects, assessing inherent risks, control measures and residual risks of the overall organization, understanding its own risks and formulating action plans (items to be improved) based on the report results. The corporate risk assessment report should be submitted to the board of directors and then reported to the competent authority for review. In addition, the action plan (items to be improved) in the corporate risk assessment report should be reported to the board of directors on a regular basis to track its implementation effectiveness. The board of directors also makes suggestions or provides certain support based on specific facts, and establishes a culture of the board of directors focused on money laundering prevention and combating capital terrorism.

In order to comply with external regulations, such as the Money Laundering Prevention Law, the Capital Terrorism Prevention Law, and the Measures for the Prevention of Money Laundering by Financial Institutions, new internal regulations and amendments were established in 2020. The adjustments made to important regulations are listed below:

Measures are taken to identify customers, including collecting, updating, and storing information. These procedures include identifying the actual beneficiaries of business households and those with family members and close relationships with people with important political positions. We have adopted the principles of risk-based approach (RBA), review on a risk-based basis, focus on major money laundering high-risk customers and transactions with risk grading, and implement different intensity review mechanisms (CDD, EDD) to effectively allocate resources, such as identifying high risks customers’ needs to take enhanced due diligence to confirm their funding needs and main sources of repayment, and the establishment of business relationships with high-risk customers requires review and approval by senior management.

When establishing a business relationship, the Company is to perform name checking operations on customers and persons related to them (person in charge, guarantee company/person, substantial beneficiary, and supplier). The name check database (Dow Jones database) is divided into domestic categories list of foreign sanctions (including but not limited to the sanctions lists published by the Office of Overseas Assets Control (OFAC) of the U.S. Department of the Treasury, the United Nations, the European Union, and China), people in important political positions at home and abroad, their family members, and people with close relationships (hereinafter referred to as Domestic and foreign PEPs) and negative news related to money laundering. If the database is updated, all customers will be checked on the incremental list in night batches every day. Whether it is the establishment of a business relationship or the batch name checking, the list information will be reviewed and released by the operator. If it is a sanction list, no business relationship is to be established and should be notified immediately. If it is domestic and foreign PEPs, the customer risk should be raised to a high-risk customer, and regular review operations are to be performed every year. If it is involved in negative money laundering news, it should be confirmed whether it is a very high-threat eight crimes in the National Risk Assessment Report (NRA) If so, it should be strengthened to confirm the use of funds and the source of repayment, and it can only be undertaken after approval by senior management. In addition, the Company has also established a group self-built list sharing mechanism, and when a business relationship is established or a self-built list is added, the list will be checked.

Regarding transaction monitoring, when conducting transactions or establishing business relationships, dedicated personnel will analyze and collect data on potential high-risk customer alerts in a risk-based spirit, referring to customer industries, channel sources, business departments, and transaction activities whether it conforms to past habits, keep a record of the investigation process, and implement strengthened control measures, improve the level of transaction approval and strengthen due diligence. After investigation and analysis, the dedicated staff will submit suspicious activity reports to the Ministry of Justice Investigation Bureau of the clients or transaction activities that may be involved in money laundering or terrorist activities. Since the outsourcing system was launched in December 2020, relevant alarm cases have been collected and the dedicated unit has taken advantage of the subsequent control of related risks in addition to the future plans and measures of money laundering.

In order to strengthen money laundering prevention and anti-capital terrorism education training courses and deepen the awareness of all personnel to prevent money laundering, each year, all colleagues (including new recruits), dedicated personnel, directors and senior management personnel, legal compliance, auditing and first-line business are divided into categories according to the nature of their business to arrange appropriate education and training for the prevention of money laundering and anti-capital terrorism.

In addition, dedicated supervisors have obtained internationally recognized anti-money laundering specialist (CAMS) licenses and regularly receive relevant training in the courses (including online training) held by internationally recognized anti-money laundering specialists. In response to international trends and changes in laws and regulations, understanding the most money laundering prevention and anti-terrorism operations and making adjustments accordingly. Relevant education and training are as follows:

The audit unit conducts effectiveness tests on the three major areas of personnel control (organization), policies, operating standards, and money laundering prevention system every year, issues an audit report to the board of directors, and regularly tracks the improvement of each unit in response to the audit results.

The dedicated unit shall report to the board of directors and supervisors an overview of the implementation of money laundering prevention and anti-terrorism operations every year. The annual report shall at least cover changes in laws and regulations, operation execution overviews and reports on important implementation projects of the current year. If a major violation of money laundering prevention laws and regulations is found, it will be immediately reported to the board of directors and supervisors. Directors and supervisors are to discuss and give suggestions based on the content of the report. After the meeting, if there are matters that need to be improved and tracked, the money laundering prevention unit shall regularly report the improvement progress to the board of directors and supervisors to establish the Company’s complete system and culture of money laundering prevention and combating capital terrorism.

According to Ethical Corporate Management Principles, and with integrity serving as the basis for policies, a prevention program was created and all employees signed an undertaking agreeing to comply with company rules. Moreover, in 2014, Ethical Corporate Management Best-Practice Procedure and Code of Conduct were issued. Acts of bad faith, benefits, and a reward system were specified in order to standardize employee business practices and to assign special units responsible for maintaining and implementing integrity management. All new recruits must attend the course on the Ethical Corporate Management Best-Practice Procedure and Code of Conduct and regular training was also provided for existing employees.

Revised by the Taiwan Stock Exchange in December 2018, the Corporate Governance Best Practice Principles require companies to obtain directors liability insurance with respect to liabilities resulting from exercising their duties during their terms of directorship in order to reduce and disperse the risk of significant damage to the company and shareholders due to director error or negligence.

As stated in Clause 3 of the company's " Ethical Corporate Management Best Practice Principles ": "When engaging in commercial activities, directors, supervisors, managers, employees, and mandataries of the Company and its subsidiaries or persons having substantial control over such companies ("substantial controllers") shall not directly or indirectly offer, promise to offer, request or accept any improper benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty ("unethical conduct") for purposes of acquiring or maintaining benefits.

Moreover, Clause 10 of the aforesaid Principles addresses regulations governing commercial activities: "Prior to any commercial transactions, the Company shall take into consideration the legality of its agents, suppliers, clients or other trading counterparties and whether any of them are involved in unethical conduct, and shall avoid any dealings with persons so involved. " Consequently, all bribes (Clause 11) and improper gains (Clause 14) are explicitly forbidden.

On the other hand, the company's "Procedures for Ethical Management and Guidelines for Conduct" further stipulates how cases of improper gain shall be handled (Clause 7) as well as the method for assessment of integrity before establishing a business relationship with a customer (Article 17) and how to avoid transactions with dishonest parties (Article 19). In March 2019, the company amended the Chailease Corporate Governance Best Practice Principles, Ethical Corporate Management Best Practice Principles, and Procedures for Ethical Management and Guidelines for Conduct.

The company’s policy regarding director insurance goes beyond current legal requirements. Since going public in 2012, the company has purchased liability insurance for our directors. In August 2017, during a special shareholder meeting, the Articles of Association were revised to add retired directors to the scope of compensation, while indemnity agreements shall also be signed by each director. At the same time, the company purchases Directors and Officers Liability Insurance to prevent erroneous actions taken by directors and supervisors and company officers in the process of their executive duties to cause damages to third parties and provide them with a means to pursue a claim. The insurance also helps to mitigate financial risks to the company caused by litigation and ensure healthy company operations.

Insurance for "Employee Integrity Risk", with the company listed as the insured, prevents and protects against dishonest actions by employees which might cause grave damage to the company (such as legal or financial accounting personnel), and cause the loss of company assets or assets the company is charged to steward. This will offset operational risk onto an insurance liability, reducing losses to the company and thereby protecting shareholder interests.

The Company and its subsidiaries have established the Whistleblowing Policy and Procedures. The Regulations for Protection of Whistleblowers, the Regulations of Prevention, Correction, Complaint and Punishment of Sexual Harassment, and the Regulations of Prevention, Correction, Complaint and Punishment of Unlawful Violations in Workplace have also been established as well. Personnel within and outside of the company can report improper actions, corruption, or actions in violation of the Code of Conduct through the channels of the established public hotlines, the e-mail mailboxes on the official website and internal websites, and the traditional mailbox. The Whistleblowing Policy specifies the dedicated receiving units, the independent investigation units, and the acceptance and investigation schedule for misconduct and malpractice. If the unlawful infringement (includes: discrimination, sexual and non-sexual harassement) has been verified, Chailease may transfer, demote, cut pay, punish employees or impose other punishments on the employees based on relevant regulations such as working rules, depending on the severity. If the investigation result shows that an criminal case, Chailease will help complainants to take legal actions, and transfer the case to judicial authorities.

After being verified without false allegation or incomplete information, the report or the complaint raised will be investigated by the independent investigation unit depending on the nature of the report or the complaint. When the allegations of the report or the complaint is substantiated, the appropriate disciplinary action in accordance with the Company’s Personnel Reward and Punishment Regulations will be taken. Internal publicity to comply with the Company’s discipline and regulations will be enhanced.

The Regulations for Protection of Whistleblowers require that the whistleblower should be kept strictly confidential. All information disclosed during the course of investigation should remain confidential.

Reporting Channels and Procedures of the Company and Its Subsidiaries:

Among the concerns or complaints raised to the Company and its subsidiaries in the year of 2020, 23 reported cases have been investigated and substantiated. The employees who violated the Company’s discipline or regulations have been punished in accordance with the Company’s Personnel Reward and Punishment Regulations and internal publicity has been carried out.(Note: 30 employees involved in the above 23 cases represent approximately 0.42% of the total population of the Company’s 7,079 employees by the end of 2020.)

The fundamental business strategy of Chailease Holding is to achieve the ultimate in differentiation, to find niche markets through differentiation, to maximize in every small niche market, and to bring together many niche markets to create economic benefits. SME financing, cars, trucks, airplanes, ships, consumer financing, fishery financing, and solar power plants, each product has evolved from existing services. We have worked hard in and refined the markets, further expanding the them.

Established in 2000, Chailease Consumer Finance Co., Ltd. focuses on shopping installment payments and works hard on the cardless installment market through physical channels. In 2018, it launched the “0card” brand, providing a cardless electronic transaction model with more than 400 thousand online members. In 2020, the number of online transactions with 0card in Chailease grew 3 times and transaction amounts grew 1.5 times. Looking to the future, we expect to reach one million online members and collaborate with 100 thousand stores in 2023.

At the end of 2020, there were a total of 2,231 solar power plants with a total power generation capacity of 663.78MW (million watts). Geographical areas covered by solar power plants has gradually expanded from central and southern Taiwan to northern and eastern Taiwan as well as outlying islands. Construction has expanded from roof type to ground and water surface types. In 2021, “fishing and electricity symbiosis” will be promoted to find new spaces for the construction of solar power plants, and to cooperate with fishermen, farmers, aquaculture enterprises, and academic units to establish professional teams and gradually refine the aquaculture industry.

Using existing sales organization and business personnel, together with the developed customer market and sales channels, to provide insurance brokerage products and services, giving play to a comprehensive and diversified application to promote commercial manufacturing equipment, vehicle insurance, personal credit insurance, and life insurance. Hundreds of thousands of small and medium-sized enterprises and practitioners are all actively exploring the potential list to achieve product extension and customer extension. Looking to the future, the income of the insurance business will increase by about 20% and is set to become one of the important sources of profit for Chailease Holding.