Compliance at NRW.BANK

 

NRW.BANK attaches great importance to the trust placed in us by our customers, shareholders, business partners, employees and the public. For us, compliance therefore not only means that all business units act in a proper and law abiding-manner. Compliance is also part of NRW.BANK’s corporate culture and thus forms the very basis of our corporate responsibility.

Our compliance activities focus on the prevention of money laundering, terrorist financing, insider trading, fraud, corruption and other criminal activities in our business environment. To cope with the ever-increasing complexity of national and international laws and regulations, NRW.BANK continuously develops its compliance risk management system and adapts it to current developments and challenges.

The relevant regulations, processes and controls are continuously adapted to the legal and regulatory framework as well as to market requirements.

Complying with market standards and acting in the interest of all stakeholders are obligations that guide NRW.BANK. Violations of the rules are vigorously pursued and punished.

Prevention of money laundering and terrorist financing

NRW.BANK expressly supports national and international efforts to combat money laundering and terrorist financing.

The Federal Republic of Germany is a member of the Financial Action Task Force (FATF) and the European Union (EU) and has enacted laws and regulations designed to implement the anti-money laundering principles of both the FATF and the EU. Section 261 of the Penal Code criminalises money laundering. The Anti Money Laundering Act (GwG) and the German Banking Act (KWG) lay down obligations for credit institutions to prevent money laundering and terrorist financing.

To comply with the provisions, a minimum standard of requirements must be met. NRW.BANK:

  • appoints a Money Laundering Officer;
  • establishes and verifies the identity of its customers;
  • identifies the beneficial owners of its customers;
  • identifies politically exposed persons among its customers;
  • monitors incoming and outgoing payments;
  • reports suspicious circumstances/transactions to the authorities;
  • regularly trains its employees on the prevention of money laundering and terrorist financing.

Our anti-money laundering measures are regularly reviewed and expanded to reflect the latest standards and requirements.

NRW.BANK also complies with the requirements of the Wolfsberg guidelines on anti-money laundering. The Bank offers its business partners the document for download. Please make use of this offer.

Prevention of other criminal acts

NRW.BANK attaches special attention and care to the prevention of other criminal acts. The Bank pursues a business policy that is binding upon all employees and stipulates that active and passive bribery as well as other forms of corruption may neither be used nor accepted. NRW.BANK firmly rejects criminal acts such as corruption, regardless of their form.

In addition to the management’s Code of Conduct, the Bank has introduced behavioural guidelines against corruption for its employees. These guidelines alert employees to dangerous situations in which they could inadvertently become involved in corruption. Attempts at corruption must be averted immediately and reported to the superior and the Compliance Officer.

Securities Compliance

The Securities Compliance unit is responsible for compliance with securities supervisory regulations for the protection of customers, the Bank and its employees.

As part of this activity, risks that may arise from a breach of securities regulatory requirements and thus of the implemented securities compliance processes are analysed and reduced. In this context, extensive processes have been established, e.g. to prevent insider trading.

Avoiding conflicts of interest is another key task. In the interest of its customers and business partners, NRW.BANK continuously monitors potential conflicts of interest and implements measures to address them.

Conflicts of Interest Policy

Information on the Treatment of Conflicts of Interest in Connection with the Business Activities of the Municipal Financing Unit of NRW.BANK (Valid as of November 2007, Last Update in January 2018)

NRW.BANK is a credit institution in the legal form of an institution under public law and has its Head Office in Düsseldorf and Münster. NRW.BANK has been mandated by the government to support the federal state and its municipal corporations in meeting their public tasks, particularly in the fields of structural, economic, social and housing policy and carry out and administer promotional measures in line with the EU State aid rules. It acts in a competition-neutral manner and is governed by the principle of sustainability.

 

NRW.BANK holds a full banking licence and acts as a competition-neutral promotional bank. As a financial institution, NRW.BANK is subject to the banking supervisory regulations of the European Central Bank (ECB).

 

NRW.BANK aims to avoid conflicts of interest which may arise in the context of its mission. The Bank has taken a number of preventive measures to achieve this aim. The Managing Board of NRW.BANK is responsible for the implementation of the corporate governance regulations (company organisation, company policy, company strategy and compensation policy), which prevent conflicts of interest, and monitors them regularly.

 

Nevertheless it cannot be ruled out that conflicts of interest may arise in isolated cases. In such cases, NRW.BANK handles these conflicts professionally and strictly in line with the interests of its customers. NRW.BANK ensures that the disclosure of conflicts of interest to customers is made only when the organizational and administrative arrangements established to prevent or manage its conflicts of interest are insufficient.. Potential conflicts of interest that cannot be avoided in spite of comprehensive control measures will be disclosed to the affected customers before any contracts are concluded or any consulting services are provided by the Bank.

 

In accordance with the legal and supervisory regulations (German Securities Trading Act (WpHG) and Guideline on Markets for Financial Instruments in Europe (MiFID II), the Bank provides the following detailed information on the extensive measures it has taken to handle such conflicts of interest.

 

Conflicts of interest may arise between NRW.BANK, other companies of NRW.BANK, the management, the employees of NRW.BANK or other related parties of NRW.BANK and the customers of NRW.BANK or between the interests of NRW.BANK’s customers.

 

NRW.BANK ensures that potential conflicts of interest are identified and managed in an appropriate and efficient manner. The aim is to prevent conflicts of interest from arising in the first place.

 

However, conflicts of interest cannot be ruled out entirely and may arise, in particular, in the provision of securities-related services

  • when providing investment advice in the context of municipal financial and interest rate management;
  • when receiving or granting gifts and gratuities from or to third parties;
  • when customers grant gifts and gratuities to employees;
  • from business relationships of NRW.BANK to issuers of financial instruments, for example when lending relationships exist or the Bank participates in issues or cooperations;
  • when obtaining information that is not publicly known;
  • from personal relationships of the employees, the management or parties related to them to other companies or persons;
  • from the work of these persons on supervisory or advisory boards of other companies or
  • when procuring services of other companies of the NRW.BANK Group which pursue their own business policy interests.
 

As a securities service provider, NRW.BANK is obliged to check, as a minimum, the following conflict situations:

  • Financial advantage: “if and to what extent the securities service provider or one of the persons listed may achieve a financial advantage or avoid (reduce) a financial loss at the expense of the customer”;
  • Conflicting interest: “if and to what extent the securities service provider or one of the persons listed could have an interest in the result of a service provided to the customer that is inconsistent with the customer’s interest in this result”;
  • Incentives: “if and to what extent the securities service provider or one of the persons listed could have a financial or other incentive to place the interests of another customer or another group of customers above the interest of the customer”;
  • Competition: “if and to what extent the securities service provider or one of the persons listed could engage in the same business as the customer”;
  • Incentives from third parties: “if and to what extent the securities service provider or one of the persons listed could receive or could in future receive gifts or gratuities as defined in Section 70 (2) WpHG”.
 

NRW.BANK expects its employees to act with integrity and diligence; to demonstrate legally compliant and professional behaviour; to adhere to market standards and, in particular, to act in accordance with the customers’ best interest at all times. The employees of NRW.BANK are required to abide by certain standards and duties of conduct in accordance with the Bank’s mission statement. Moreover, NRW.BANK has committed itself to transparent and responsible management: By adopting its own Public Corporate Governance Code, the Bank has voluntarily committed itself to good corporate governance.

 

The integrity and quality of NRW.BANK is evident, in its professional approach to potential conflicts of interest. As such, NRW.BANK has established an independent compliance function under the direct responsibility of the management. The compliance function is, among other things, responsible for regularly monitoring the avoidance, the identification and the management of conflicts of interest by the business units.

 

The non-exhaustive list below contains the key measures and methods implemented by NRW.BANK to avoid and resolve actual and potential conflicts of interest:

  • Implementation of organisational processes and instructions to safeguard customer interest in the provision of investment advice in the context of municipal financial and interest rate management;
  • existence of a procedure for the assessment of all relevant risks as well as definition of the target market for the approval of financial instruments and all major adjustments of existing financial instruments before the latter a marketed or sold to customers; regular review of the offered or distributed financial instruments, in particular with respect to their suitability for the defined target market;
  • existence of clearly defined principles for the provision of investment advice in the context of municipal financial and interest rate management which ensure that services are provided at market terms and all customers are treated equally;
  • provision of clear, comprehensive and transparent information by NRW.BANK in order to ensure proper and professional customer service;
  • promotion of good corporate governance at the Bank by the Supervisory Board and the management of NRW.BANK;
  • regulations governing the acceptance and granting of gifts and gratuities and their disclosure;
  • establishment of information barriers to protect confidential information by way of a separation of responsibilities and/or by way of physical separation of individual business units;
  • maintenance of an insider list and a watch list; these measures serve to monitor the flow of sensitive information (insider information) and to avoid the potential misuse of such information;
  • regulations governing personal transactions of employees of NRW.BANK (employee transactions) and disclosure to the compliance function of transactions of employees who may be faced with conflicts of interest in the context of their business activity;
  • regular comprehensive training of the employees of NRW.BANK.
 

NRW.BANK will disclose unavoidable conflicts of interest to the respective customer prior to providing advice or closing a transaction. In case of any such disclosure, sufficient details will be communicated to private customers, professional customers and eligible counterparties.

 

More detailed information about the treatment of conflicts of interest at NRW.BANK is available on request.

Code of Conduct and Benefits

a) Basic principles

NRW.BANK attaches great importance to public trust in its integrity. Especially the acceptance of benefits of any kind is capable of permanently impairing the objectivity and the freedom from conflicts of interest of decisions and causing considerable damage to the reputation of the Bank.

A distinctive feature of NRW.BANK is that it acts as a public law institution sponsored by the State of North Rhine-Westphalia and has a statutory promotional mission. Employees and customers of the Bank must be able to classify their behaviour correctly at all times and therefore need transparent and comprehensible rules.

 

b) Rules for the acceptance and granting of benefits

(1) It is not permitted to accept or grant benefits that could impair business judgement or lead to a conflict of interest. Furthermore, all actions must be refrained from which could merely give the impression of undue influence on a business partner.

(2) It is not permitted to accept or grant cash in the course of professional activities for NRW.BANK. This also applies to cash-like benefits such as vouchers or other financial and non-financial benefits.

 

c) Transactions by NRW.BANK employees in the financial markets

(1) Private financial transactions by NRW.BANK employees must be beyond reproach. Information obtained in an official capacity may not be used for personal gain. Employees report insider information they have received about listed companies to NRW.BANK’s Compliance Officer and do not trade in securities of the companies concerned as long as they have insider information or as trading restrictions are in place by the Compliance Officer.

(2) The members of the management bodies shall make every effort to ensure that transactions by related persons, such as spouses or partners, as well as persons living with them in the same household, as well as transactions by their minor children, comply with paragraph 1.

Complaints management

Should we fail to meet your expectations to your complete satisfaction, we would ask you to enter into dialogue with us. We take all feedback seriously and always see complaints as an opportunity to improve our services and performance in order to meet your needs even better.

Whistleblower system

NRW.BANK has introduced a confidential whistleblower system. The whistleblower system enables the confidential disclosure and receipt of suspicions of compliance violations, i.e. criminal acts as well as violations of the German Banking Act (KWG) or similar irregularities.

Employees may confidentially report any suspicions they have to the Compliance Officer. The latter will pass on the confidential reports (anonymously, if required). This enables NRW.BANK to follow up on the reports received. The whistleblower’s identity will be disclosed only if requested and expressly approved by him/her.

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