Global Sanctions Compliance Policy
1. INTRODUCTION
1.1 This Global Sanctions Compliance Policy (“Policy”) is intended to help ensure that CapitaLand Investment Limited ("CLI” or “Company”), and the Group1’s directors, employees and officers (collectively, “Directors and Employees” and individually, “Director or Employee”), and other third parties acting on behalf of CLI or any entity within the Group, fully complies with all sanctions applicable to the Group’s business activities. It is also intended to help Directors, Employees and third parties identify the areas where breaches of Sanctions Laws might arise and to support them in making the right decisions in line with the corporate position as stated in this Policy and in the process establish a consistent approach for the organisation’s response to sanctions laws and regulations.
1.2 As an organisation, CLI is committed to carrying on business in accordance with the highest ethical standards. This includes complying with the sanctions laws and regulations (“Sanctions Laws”) of Singapore and the United Nations (UN). The global nature of the Group’s business and because sanctions apply across borders means that the transactions the Group engages in may be subject to unilateral sanctions imposed by multiple government authorities.
1.3 Violations of Sanctions Laws may lead to severe civil and/or criminal penalties against companies and individuals, including significant monetary fines, imprisonment, extradition, blacklisting, revocation of licences, and disqualification of directors. In addition, failure to address the risk of sanctions may adversely affect CLI’s reputation, loss in the value of CLI securities, harm CLI’s commercial relationships and result in extensive time and cost having to be spent in conducting internal investigations and/or defending against government investigations and enforcement actions.
2. APPLICABILITY
2.1 This Policy is applicable to the Group's operations globally, including all legal entities worldwide owned or controlled by the Company. It also applies to all Directors and Employees, whether located in or outside Singapore.
2.2 This Policy also applies to all other persons working for the Group such as suppliers, contractors and consultants, wherever located.
3. THE POLICY
3.1 The Board of Directors of CLI sets out the risk appetite in relation to regulatory compliance, which includes sanctions risk. In this regard, the Group is required to comply with all regulations in the jurisdictions it operates and the Board and Senior Management have no tolerance for any regulatory breaches that would significantly affect the Group’s ability to conduct our business operations.
3.2 In general, the prohibitions are as set out below:
(a) we do not participate in transactions or engage in conduct designed or intended to evade or facilitate a breach of applicable sanctions;
(b) we do not conduct business in, or involving any, Prohibited Countries or sanctions targets;
(c) we do not conduct business that would violate any applicable trade controls laws;
(d) we do not engage in any sanctionable activity that could result in the designation of CLI as a sanctions target; and
(e) we will block or reject transactions where we are obligated to do so under the applicable sanctions laws or regulations.
The prohibitions set out in this paragraph 3.2 are to be complied with on a without exception basis, save with the prior written approval from the Board. Importantly, we will seek to resolve any sanction breach issue expeditiously, this includes exercising any contractual rights we have.
3.3 In appropriate cases, we will prohibit or restrict business activities, transactions, customer relationships or facilitating transactions that we believe:
(a) may violate the applicable sanctions laws, whether directly or indirectly;
(b) involve individuals or entities listed on an official sanctions list by Singapore or the UN sanctions list; or
(c) may potentially circumvent applicable sanctions laws or contravene the spirit of such sanctions laws.
3.4 We only allow deviations from the general requirements in paragraph 3.3 in exceptional circumstances with the prior written approval to be sought in accordance with the prevailing process. In addition, business owners who wish to operate in a Restricted Country shall seek the requisite approval in accordance with the prevailing process. Business owners shall perform risk assessment to understand sanctions risk exposure in relation to operating in a Restricted Country and discuss with Group Compliance the appropriate modus operandi in mitigating sanctions risk.
3.5 To manage the organisation’s sanctions risk exposure and ensure compliance, we are required to (a) understand the applicability of sanctions, its complexity and the effects on the business, and (b) implement controls and processes including screening and due diligence on our counterparties involved in transactions into which we enter. We use a risk-based and proportionate approach to determine whether our counterparty/ies is/are a sanctions target, or the proposed transaction otherwise attracts sanctions risk.
3.6 We require employees and third parties to be aware of and to be alert to sanctions risk and to report any sanctions issues identified to Group Compliance. All employees and third parties shall look out for any red flags or suspicions that may indicate the direct or indirect involvement of a restricted territory, restricted party, controlled item, service, end-use or any other sanctions compliance concern and report any suspicions which may raise sanctions concerns.
3.7 Group Compliance is responsible for determining the guidelines for the performance of Sanctions Due Diligence and other requested analyses, as well as establishing guidelines and conducting training necessary for compliance with this Policy. Group Compliance is also responsible for the management of Sanctions violation risks, including establishing necessary measures to prevent and mitigate such violations. Group Legal will provide the requisite legal support.
4. SANCTIONS RISK MANAGEMENT FRAMEWORK
This section sets out the Sanctions Risk Management Framework, which sets out the Group’s approach for managing sanctions risk in an integrated, systematic and consistent manner.
4.1 Culture and People
4.1.1 Culture is an integral part of the Company’s defence against sanctions breaches. An embedded “risk-aware” culture, underpinned by CLI’s organisational culture, values and practices, sets the foundation for effective management of sanctions risks. Such culture, values and practices include:
(a) “Tone at the top” set by the Board and Senior Management, through our Group-wide messages and decision-making process;
(b) CLI’s core values which require employees to uphold the highest standard of integrity and have courage to do the right thing; and
(c) regular Learning and Development activities to enhance employees’ core competencies in the evolving international environment that drives sanctions changes, communicate the Company’s risk appetite, strategy and approach and equip staff to carry out their responsibilities effectively.
4.2 Sanctions Risk Assessment
4.2.1 CLI applies the principles of a Risk-based Approach (“RBA”) in developing effective processes and procedures to identify, mitigate and manage sanctions risk.
4.2.2 At the operational level, business units shall perform risk assessment to understand the sanctions risk exposure in relation to its business taking into account, without limitation, the nature of its products and services, and counterparties as well as the jurisdictions of the operations and the jurisdictions its counterparties are located or incorporated in.
4.2.3 In performing the risk assessment, business units shall consider all relevant risk factors before determining the level of risk exposure and appropriate type and extent of mitigation to be applied.
4.3 Counterparty Due Diligence (“CDD”)
4.3.1 The term “counterparty” refers to any counterparty which a Group entity comes into contact with in the course of its business, including the following:
(a) counterparties to transactions with a CLI Group entity;
(b) private equity capital providers including joint venture partners of private equity funds managed by a CLI Group entity;
(c) owners and master franchisees of Lodging Property;
(d) tenants, licensees, serviced residence guests and occupants of buildings which are owned or managed by a Group entity; and
(e) providers of services or goods to a CLI Group entity.
Due to the expectations of the SGX Regco2 which has jurisdiction over CLI which is SGX-listed, CDD is also required in respect of:
(f) substantial shareholders and substantial unitholders of CLI Group and its Listed Funds; and
(g) CEO, Key Management Personnel and employees of CLI Group.
4.3.2 CDD measures are undertaken to obtain knowledge regarding the counterparty so as to guard against establishing any business relationship or entering into any transaction designed or intended to evade or facilitate a breach of applicable sanctions. CDD requirements should be set such that they are appropriate to the level of risk commonly associated with the type of transactions/parties.
4.3.3 Employees shall exercise due diligence when dealing with any party with which or whom the Company is establishing a business relation. In exercising such due diligence, Employees should be vigilant to red flags and consider what mitigating factors or measures could be put in place.
4.3.4 In addition, on an ongoing basis, Employees must be alert to changes in a counterparty’s circumstances that may require updates to or review of CDD conducted prior to the commencement of the business relationship or the transaction with the counterparty.
4.4 Counterparty Screening
4.4.1 Counterparty screening is a fundamental control in the Sanctions Risk Management framework to ensure that the Company does not breach the sanctions regime. The Company adopts RBA in screening Counterparty against the sanctions lists issued by the UN and all applicable local regulatory sanctions lists in the jurisdictions in which CLI Group operates (“Sanctions List”).
4.4.2 Business units shall perform counterparty screening prior to contract, client onboarding, transactions processing, and as part of its periodic CDD review and ongoing screening.
4.4.3 Screening records must be retained in line with CLI Group’s record retention policies. It is crucial that the rationale for risk-based decisions is documented.
4.4.4 The screening result and its effectiveness will serve as the basis for the residual risk exposure in the Sanction Risk Assessment.
4.5 Escalation Procedures
4.5.1 If, as a result of the CDD and screening measures undertaken for a (proposed) business transaction, potential match alerts or hits are generated, the Employee shall escalate the matter to his or her immediate supervisor or HOD for assessment.
4.5.2 Assessment of potential match alerts is important to identify and manage any potential sanctions risks. All relevant information shall be made available for investigation to make a risk-based judgement as to whether the alert is a true match to a sanction target and therefore requires further action or whether the alert may be discounted or dismissed.
4.5.3 True matches to the targets in the Sanctions List shall be escalated for resolution in accordance with the prevailing internal process.
4.6 Internal Review and Audit
4.6.1 Group Compliance will monitor compliance of this Policy on a periodic basis. Compliance with this Policy is subject to independent review by internal and external audit.
4.7 Contractual Protections
4.7.1 Employees shall consider using contractual provisions to build added protection against sanctions liability when signing contractual instruments with third parties.
5. REPORTING OF NON-COMPLIANCE
Any person who believes that there is non-compliance by any person affected by this Policy may report such non-compliance in accordance with the prevailing process. Any non-compliance may, in addition to potentially attracting criminal and civil liabilities under the laws, subject the person to disciplinary action by the Company including (but not limited to) termination of employment. The Company may institute disciplinary action and terminate the employment if it has a reasonable basis to conclude a failure to comply with this Policy. The Company is not required to wait for the filing or conclusion of any civil or criminal action against an alleged non-compliant before taking any disciplinary action.
1 “Group” refers to the Company and its subsidiary and associated companies or entities (in the case of associated companies or entities, such companies that are controlled by the Company) collectively; any individual member is referred to as “Group Member”.
2 Singapore Exchange Regulatory Company.