Prevention of Conflicts of Interests
POLICY
Objective
1. The objective of the Policy is to protect the Bank customers’ interests by preventing
possible conflicts of interests and to ensure meeting requirements of the Financial Instruments
Market Law, European Parliament and Council Directive 2009/39/EK, and European
Commission Regulation 1287/2006 while rendering investment services and accompanying
investment services.
2. The Policy determines basic principles for identification of circumstances causing conflicts
of interests that might significantly threaten or damage a customer’s or several customers’
interests and establishes the procedure for the Bank to prevent or minimise conflicts of
interests and adverse effect thereof.
Acronyms and Definitions
Bank - AS Expobank, unified registration number 40003043232
FI – financial instruments within the meaning of the Law on Financial Instruments Market of
the Republic of Latvia (Finanšu instrumentu tirgus likums), agreements that simultaneously
give rise to financial assets of one person and financial liabilities and equity securities of
another person; as well as documents certifying the issuer’s obligations to the holder,
including but not limited to stocks, bonds, debt warrants, bills of exchange, shares in mutual
funds, any other claims on assets; as well as their related or derivative instruments or
contracts, i.e., options, futures contracts and forward deals
Customer – a person to whom the Bank will render the investment services and/or
accompanying investment services stated in the Law under a signed service agreement
Law – the RL Financial Instruments Market Law (all terms, unless specifically described
herein, meet the Law)
RL – the Republic of Latvia
Policy – this Prevention of Conflicts of Interests policy
Prevention of Conflicts of Interests Policy
Approved on 23.07.2015.
Effective as of 30.07.2015
3rd Edition
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Description
1. NATURE OF CONFLICTS OF INTERESTS
1.1. A conflict of interests is a situation when different parties have mutually conflicting
interests. Such conflicts of interests may occur between the Bank, persons related to the Bank,
its employees, structural units, functions, and customers (including those among Bank
managers, officials, and attracted agents, as well as other parties that could be related to such
persons directly or indirectly), as well as among different customers.
1.2. Situations when the Bank might face the risk of occurrence of conflicts of interests are
situations when the Bank, its employees, structural units, or a Bank’s controlled third party:
1.2.1. could receive financial benefits or avoid financial loss at a customer’s expense (note:
the fact that customers agree to pay commission fees or remuneration to the Bank is not
considered receiving financial benefits “at customers’ expense”);
1.2.2. is interested in such an outcome of a service rendered to a customer or transaction
executed on behalf of the customer that does not match said customer’s interests (note: the
Bank’s structural units may have interests that vary from other structural units’ interests, for
example, the Bank’s interests regarding trade in the Bank’s name may be in conflict with its
customers’ interests regarding their investment activities. Such conflicts are solved with
application of actions described below; however, the Bank employees are not allowed to get
involved in making such decisions where they could have their own financial interest);
1.2.3. is involved in the same professional activities as customers (except cases when the
Bank concludes transactions with other financial institutions based on transactions between
two financial market players);
1.2.4. is financially or otherwise interested in facilitating one customer’s or a group of
customers’ interests more than another customer’s or a group of customers’ interests (note:
conflicts of interests inevitably occur in case of transactions among different customer groups,
as well as when investors-customers obtain shares that a corporate customer issued as IPO –
initial public offering);
1.2.5. receives remuneration for a service rendered to a customer from another person in
money, goods, or services, which are not a standard charge for such service (note: for
example, if the Bank, as an investment consultant, received “motivation” from a fund to offer
said fund’s shares to the Bank’s customers);
1.2.6. executes one client’s order against the other client’s order, including when deciding on
one client’s order fulfilment against the other client’s order independently;
1.2.7. provides advice to clients on investments in financial instruments or execution on
behalf of the clients by individually managing clients’ assets in accordance with the clients’
authorization (portfolio management service);
(a) financial instruments issued by the Bank independently, or in respect of which the Bank
has provided investment or other form of recommendation or research;
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(b) financial instruments for distribution and offering of which the Bank has entered into an
agreement with a third party, especially if the Bank receives a commission for this;
(c) financial instruments for which the Bank has carried out the issue or placement, including
non-public, organized or helped to carry out to a third party;
(d) financial instruments for which the Bank is a market maker;
(e) financial instruments that are in the Bank’s disposal and which the Bank is willing to sell.
2. TYPES AND FEATURES OF CONFLICTS OF INTERESTS
2.1. Loans
2.1.1. Bank employees are not allowed to borrow funds from the Bank’s customers (except
financial institutions), goods or service suppliers, or other Bank employees, to become a
guarantor of such persons, or to enter similar relations.
2.1.2. If necessary, Bank employees may borrow funds from the Bank based on the Bank’s
established rules and requirements of regulatory enactments, or from reliable financial
institutions that issue loans. If an employee borrows funds from another financial institution,
including the Bank’s correspondent banks, the loan agreement may not contain exceptional
provisions.
2.1.3. The Bank takes actions to make sure that:
 The Bank’ regulatory documents on crediting clearly determine the decision-making
process regarding loans for employees;
 Loans are granted to employees according to the approved Credit Policy, crediting
instruments, and product descriptions;
 Employees and other persons involved in the decision-making on crediting cannot decide
on loans where such employees, or other persons, or their related persons have substantial
interest;
 When issuing a loan, the Bank may not be subject to the risk of being accused for unfair
action towards shareholders and employees of the Bank;
 Loan provisions for persons who are related to the Bank and are not its employees will
not differ from similar loan provisions granted to persons that are not related to the Bank
and will not conflict with the interests of the Bank, its shareholders and depositors.
2.2. Personal Transactions
2.2.1. Employees may, at their discretion and in their name, buy or sell shares, bonds, or
execute other investments adhering to all active laws and regulations of the Republic of
Latvia, as well as to the Bank’s rules and procedures. Employees are not allowed to
personally advise others or change their or other persons’ portfolios at the time when they
might have at their disposal confidential information about the issuer of such securities or of
the securities, except cases when this is done within their job or professional duties.
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2.2.2. Employees are not allowed to get involved in speculations, borrowings, or gambling, if
such actions:
 do not meet the Bank’s Ethics Standards and other requirements of the Bank’s internal
regulatory documents and decisions of the Board;
 can cause negative publicity and unacceptable risk to the Bank’s reputation;
 could obstruct fulfilment of employees’ direct job duties;
 expose employees to financial loss risk, which is not comparable with the employees’
income or could substantially affect their financial standing.
2.3. Conflicts of Interests between Bank and Persons in Close Relations with Bank
2.3.1. The Bank persons in close relations with the Bank may not face conflicts of interests in
a situation that might result in losses to the Bank or a customer. Such independence is
achieved by dividing the Bank’s operations from said persons’ operations according to active
regulatory enactments and internal documents;
2.3.2. Bank employees are not allowed to exchange information with persons in close
relations with the Bank if such information exchange may conflict with interests of one or
several customers;
2.3.3. The Bank makes sure that there is no direct connection between remuneration of a Bank
employee and remuneration or income of an employee in another company (who is a person
in close relations with the Bank) so that employees could not face conflicts of interests when
fulfilling their job duties;
2.3.4. The Bank makes sure that employees of a person in close relations with the Bank
cannot influence the way Bank employees do their job;
2.3.5. Bank employees may not get involved with another company (that is a person in close
relations with the Bank) without consent of the Board of the Bank so that such involvement
could not cause conflicts of interests.
2.4. Conflicts of Interests between Bank and Its Employees
In order to prevent occurrence of conflicts of interests between the Bank and its employees,
the latter, while performing their job duties, are not allowed:
2.4.1. to participate in decision-making and to act in their own name or in the name of a
person related to an employee if such actions could adversely affect the Bank’s or other
customers’ interests;
2.4.2. to accept tasks outside their scope of authorities (for example, tasks to operate in the
Board of other companies or otherwise act as consultants) without the Bank’s prior consent in
each individual case.
2.5. Giving or Receiving Gifts and Entertainment
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2.5.1. In the understanding of this Policy, a gift is a value for which the recipient thereof
should not pay the market price. Gifts are deemed meals, beverages, goods, services, tickets to
entertainment or sport events, as well as an opportunity to use premises or hotels.
2.5.2. Bank employees, managers, and representatives make sure that the Bank is not exposed
to the risk of being accused of corruption, bribery, or giving or receiving other inappropriate
payments. This means that Bank employees, managers, and representatives are not allowed:
 to request and receive from customers, suppliers, business partners, or other persons
material benefits or advantages for themselves or other persons, which could result in
influence on the Bank’s decisions regarding the object of interests of the provider of said
material benefits or advantages;
 to offer and render to customers, suppliers, business partners, or other persons material
benefits or advantages under circumstances where this could affect the beneficiary’s
decisions regarding the Bank;
 to give or receive any material benefits if it is prohibited by legal acts of the Republic of
Latvia.
2.5.3. The restrictions stated herein do not include gifts that are given or received from family
members and close personal friends under circumstances not related to the recipient’s job at
the Bank. However, employees must report to the Risks Director any cases where such gifts
could be related to a conflict of interests.
2.5.4. The restrictions stated herein do not apply to gifts that the Bank gives to its employees
pursuant to the Bank’s procedure on holidays and celebration events, for example,
anniversaries, Christmas, etc.
2.5.5. Gifts that Bank employees are not allowed receiving or giving regardless of the gift
value:
 money or money equivalents, e.g. securities or discounts to goods or services that are not
available to public or all Bank employees;
 gifts that are given regularly and without a reason.
2.5.6. Accepted gifts that employees may receive:
 discounts to goods or services that are available to public or all Bank employees;
 gifts with the market value appropriate to the employee’s income or position within the
Bank, which are traditionally given on holidays or celebrations, e.g. weddings or
anniversaries, provided that such gifts are not unreasonable;
 advertising or marketing materials, e.g. pens, calendars, etc. with apparent logos of the
firm the market value of which is appropriate to the employee’s income or position
within the Bank regardless of whether they are related to general holidays or events
provided that such gifts are not unreasonable;
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 awards of public, education, or religion organisations given to recognise services
rendered or achievements;
 achievement awards in public competitions, tenders, etc.
2.5.7. Employees must report to the Risks Director:
 any gifts with the market value inappropriate to the employee’s income or position within
the Bank if it is given or received as a Bank representative;
 any gift offer, even if rejected, if the offered gift is too large or expensive or if the same
person offers gifts that are not allowed to accept under this Policy.
2.5.8. The gift or gift offer report should include information on the nature of the gift, its
approximate value, provider’s or recipient’s identity, and the reason why the gift is given or
received. Upon receipt of the report, the Risks Director evaluates the effect of gift or offer
receipt on the recipient’s decisions regarding the giver.
2.5.9. If the Risks Director concludes that the market value of a gift is not appropriate to the
employee’s income or position within the Bank or otherwise unacceptable, respective actions
are taken, for example, gifts are returned to the givers or donated to charity organisations;
such actions should be properly documented.
2.5.10. Employees may receive food, beverages, travels, hotels (for example, offers to use
hotels) or entertainment events that are related to business in the Bank’s interests and that,
unless paid by the other party, would be usually paid by the Bank as justified business trip
expenses, provided that:
 expenses are related to an employee’s accommodation and a higher-rank Bank official’s
(a Member of the Board or a head of a department) permit was received in advance;
 these are regular meals or entertainment that are included in a customer’s or supplier’s
sponsored events visited also by representatives of other firms, provided that a visit to
such an event is related to business in the Bank’s interests and that a higher-rank Bank
official (a Member of the Board or a head of a department) agreed thereto.
2.5.11. In cases when it is not restricted by RL legal acts, employees may give the following
in the Bank’s name:
 gifts with the market value appropriate to the transactions carried out with the gift
recipient and gifts that the Bank gives on holidays and celebration events, provided that
such gifts are not unreasonable;
 meals and entertainment, unless it happens too often or they are unreasonably given to the
same person.
In case of doubts regarding correspondence of a gift market value with transactions with a
customer, the Risks Director’s acceptance should be received.
2.5.12. In exceptional cases, the Board of the Bank may allow receiving a more valuable gift
than described in the Policy if it is known what is given, the giver’s and recipient’s name,
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giving and receiving circumstances, as well as a possible value of such gift determining a
special gift use, if necessary.
2.5.13. Bank employees must understand that the fact of gifts being given or received may
become available to the public and cause an adverse effect on the Bank’s reputation.
2.5.14. The Bank’s hospitality towards state officials may not be expressed in an amount or
manner that might compromise the officials’ or the Bank’s reputation and it may not exceed
general polite behaviour norms.
2.6. Leisure and Off-Duty Activities
2.6.1. Employees’ leisure activities may not cause a negative effect on the Bank or cause
direct or indirect conflicts of interests with employee’s job duties at the Bank. Employees
should avoid potential conflicts of interests and should understand that in case of occurrence
of such conflict, they must stop respective activities. Besides, such activities may not affect
the employees’ work at the Bank directly or indirectly (for example, excessive physical or
spiritual load).
2.6.2. Employees must report to the Board of the Bank their participation with another
company. Work outside the Bank is allowed if it causes no direct or indirect conflicts of
interests, does not obstruct such employees’ job duties at the Bank and if it is approved by the
Board of the Bank. Employees may keep remuneration they receive for work at the board or
other positions outside the Bank, which is not given upon a special request of the Bank.
2.6.3. Employees must receive a high-rank Bank official’s (Member of the Board or a head of
a department) permission for off-duty publications, presentations, etc. that fully or partially
are related to the Bank’s operations. Such publications and presentations may not give the
impression of being presented in the Bank’s name and may not include investment research
elements and investment advice (personal recommendations).
2.6.4. The Bank supports employees’ participation in charity organisations. Employees should
not report their participation in charity events or non-profit organisations and they should not
receive prior permit for that; however, they must understand that work at charity events or
non-profit organisations will require time and there a necessity to undertake legal or economic
liabilities might occur, which might result in legal or financial responsibility, which
employees should find out prior to undertaking that and rate the following circumstances
following this Policy:
 whether the purpose of an event/organisation is clearly determined;
 what is the employees’ role and responsibility in respective event/organisation;
 whether the organisation is financially stable with proper financial control and whether
the organisation is known to and supported by the public;
 whether employees are invited to participate in an event/organisation with a prospect of
receiving financial or other support from the Bank.
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2.6.5. Employees working in a structural unit servicing non-profit organisations should
understand that they might face conflicts of interests. Prior to joining a non-profit
organisation, such employees should receive respective written permit from a higher-rank
Bank official (a Member of the Board or a head of a department). If an employee receives a
post in a non-profit organisation, such employee cannot represent the Bank or this
organisation in their mutual transactions.
2.6.6. Involvement of employees in political parties is allowed if the above provisions of the
Policy are met.
2.7. Conflicts of Interests of Board, Council, and Internal Control
Members of the Council and Board of the Bank prevent occurrence of conflicts of interests in
fulfilment of the duties and refrain from decision-making on the Bank’s transactions where
such members face or could face conflicts of interests. Members of the Council and Board of
the Bank report to the Council of the Bank transactions where they face or could face
conflicts of interests directly or indirectly. The same applies to managers of the Bank’s
internal control unit and function (including the Risks Department, Internal Audit Division,
and actions of compliance control structural units).
3. IDENTIFICATION AND MANAGEMENT OF CONFLICTS OF INTERESTS
3.1. Customer Information Confidentiality
Legal acts that apply to the Bank’s operations, for example, the Law on Credit Institutions,
Financial Instruments Market Law provide for customer information confidentiality
determining that information about customers may be used or disclosed to any third party
within or outside the Bank if customers’ consent was received for such use or disclosure. All
Bank employees must comply with the internal confidentiality provisions. When fulfilling
their job duties, Bank employees may only use such limited access customer information that
is required only and solely for fulfilment of the employees’ direct job duties.
3.2. Investment Research and Advice, Portfolio and Fund Management
3.2.1. The Bank does not prepare and does not distribute investment research, financial
analysis, and does not provide general recommendations regarding transactions with financial
instruments, as well as it does not advise on capital structure, business strategy, and their
related issues, does not provide advice and services regarding merger and acquisition of
companies and purchase of companies, termination of operations, joint ventures, attraction of
capital and borrowed funds, as well as merger and purchase of public and private sector
companies.
3.2.2. Bank employees are not allowed to give recommendations on issues mentioned in
Clause 3.2.1. of the Policy and the Bank controls that by monitoring under the Investment
Services Compliance Control Programme.
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3.2.3. The Bank provides individual advisory on investments in financial instruments, as well
as individual investment portfolio management only in accordance with the clients’s
individual authorization on the basis of the written agreement subject to included existing
restrictions, informing the clients about possible conflicts of interest and offering them
alternative solutions so that clients’ interests are respected.
3.3. Securities Trade in Bank’s Name
Securities trade in the Bank’s name is aimed at profit generation and is separated from the
Bank customer service. Therefore, securities trade in the Bank’s name may not conflict with
interests of the customers concluding transactions with the Bank under receiving investment
services.
3.4. Transactions between Bank and Customers or in Customers’ Name
When executing transactions with financial instruments between the Bank and customers or in
customers’ name, the Bank obtains information about customers’ transactions. It is restricted
to maliciously use such information:
 regarding interests of other customers of the Bank executing transactions with the same
securities or receiving other related services;
 regarding the Bank’s transactions with financial instruments or Bank employees’
personal transactions.
3.5. Account Banking Operations
3.5.1. When ensuring customer securities and other assets account banking services, the Bank
elaborates and introduces actions to ensure protection of interests of the customers to whom
account banking services are rendered regardless of other customers’ or the Bank’s interests.
Information about customers’ assets and transactions may not be disclosed with the
customers’ prior consent.
3.5.2. When rendering accounting banking services, the Bank ensures:
 divided holding a customer’s FI from the Bank’s FI;
 cautious choice of business partners: the Bank only cooperates with such account banking
service providers who are subject to requirements towards divided holding of customers’
financial instruments in place in their respective country and who are monitored. When
deciding on a third party where to hold a customer’s owned FI, the Bank with due skills
and care evaluates competence and reputation of such person on the financial market, as
well as requirements of the respective state or market practice regarding holding of
customers’ financial instruments, which could cause an adverse effect on customers’
interests, as well as, at least once a year, revaluates competence of the selected person
and provisions of holding customers’ financial instruments;
 an appropriate organisational structure, securities accounting system and internal control
processes to minimise customer risks regarding financial instruments, which could result
from misuse of the assets, fraud, inappropriate accounting, or negligence.
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3.5.3. The Bank does not hold customers’ owned FI with third parties registered abroad if
holding of FI in third parties’ name is not regulated in such country, except cases when at
least one of the following is met:


FI or the nature of the investment service related thereto requires for them to be passed
for holding to a third party in such country;
FI are held in the name of a professional customer and the customer requested in
writing that the investment brokerage company should them to a third party’s holding
in such country.
3.6. Risk Management and Compliance Control Functions
The objective of the Bank’s risks management, compliance control, and administrative
functions is to protect the Bank’s interests in its transactions with customers, investment in
financial instruments, and undertaking risks. Employees fulfilling said functions receive
confidential information about customers, positions of the Bank’s financial instruments, and
operations with such positions as part of their job duties. Such information may not be used
maliciously regarding:
 interests of the other customers of the Bank, including interests of investors-customers or
competitors;
 the Bank’s transactions with financial instruments (particularly regarding trade in the
Bank’s name) or personal transactions of Bank employees.
3.7. Conflicts of Interests Management Procedures
3.7.1. The Bank elaborates and documents procedures and other internal regulatory
documents that ensure timely identification and management of conflicts of interests
situations and determines actions to prevent conflicts of interests situations, including:
 prevention of occurrence of such situations where Bank employees fulfilling their job
duties face or could face conflicts of interests;
 making sure that structural units that take actions that result or might result in mutual
conflicts of interests are independent (for example, certain information barriers, different
organisational subordination);
 making sure that the information the Bank provides to customers or potential customers is
clear, true, and not misleading;
 making sure that provisions of the Bank’s transactions with related persons are not
different from provisions of similar transactions with persons not related to the Bank and
they do not conflict with interests of the Bank and its customers;
 an opportunity for employees to report about deficiencies of the internal control system,
illegal or unethical transactions without following the subordination established in the
Bank’s organisational structure, for example, reporting directly to the Risks Director, the
Board, or Head of the Internal Audit Unit.
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3.7.2. Having received a report on a current or potential conflict of interests, the recipient of
the report submits it to the Board of the Bank for consideration, and the latter decides on
actions to be taken to prevent (in case of a potential conflict of interests) or to tackle (in case
of a current conflict of interests) such conflict of interests.
3.8. Distribution of Actions within Bank
3.8.1. In order not to allow conflicts of interests situations that could negatively affect a
customer, the Bank makes sure that actions related to customers are only based on the
customers’ interest and are independent of interests of any other customers of the Bank, other
actions, employees, etc. The Bank ensures such independence by distributing its operations
into structural units whose duties are divided.
3.8.2. Regarding each structural unit where conflicts of interests covered herein may occur,
the Bank takes actions and regulates them in internal regulatory documents to make sure that
all possible actions have been taken to prevent possible conflicts of interests, including:
 employees are not allowed to get involved in transactions in the Bank’s name where
employees or their related persons could have personal interest contradicting the Bank’s
or its customers’ interests;
 employees are not allowed to carry out any personal transactions without reporting them
pursuant to the Policy;
 employees of one structural unit are not allowed exchange information with employees of
other structural units if such information exchange might harm interests of a customer or
several customers (for example, information affecting the financial instruments price
available to employees of the Customers and Marketing Department may not be disclosed
to employees of the Broker Operations Department and Investment Management
Department; information on expected transactions of customers of the Broker Operations
Department may not be disclosed to employees of the Investment Department);
 employees of the same structural unit may not exchange information among themselves if
these employees represent different customers with opposite interests;
 particular monitoring applies to situations when employees render services or act in the
name of such customers whose interests may conflict with the Bank’s interests;
 there are no connections between remuneration of employees in one area of operations
and remuneration or income of employees in another area if employees might face
conflicts of interests while performing their job duties (for example, benefits of the
employees who service customers may not depend on performance of trade in the Bank’s
name);
 employees of one structural unit cannot negatively affect the way employees of another
structural unit do their jobs (for example, employees in charge of trade in the Bank’s
name may not have an opportunity of affecting services rendered to customers);
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 employees within the same structural unit may not get involved in actions or rendering
such services that could cause conflicts of interests or obstruct solving conflicts of
interests.
3.9. Reporting and Revisions
3.9.1. In cases when employees become aware of circumstances that, in such employees’
opinion, could cause conflicts of interests that might cause a substance adverse effect on
interests of a Bank customer, such employees should promptly report such situation to their
direct manager or the Risks Director.
3.9.2. If employees of structural units become aware of information of actual or potential
conflicts of interests that might affect customers’ interests and if such conflicts are related to
specific operations at the Bank (as opposed to such general possible conflicts of interests that
are related to the Bank’s structure and the nature of its operations as described in previous
sections hereof), they should promptly report such situation to the Risks Director and Board
of the Bank (making sure the report is saved).
3.9.3. At least once a year, heads of all structural units run an internal revision within their
structural unit to understand possible conflicts of interests that might cause a substantial effect
on interests of the customers to whom the Bank renders investment and accompanying
services or actions and to evaluate sufficiency of rules required to fulfil this Policy. The Risks
Director and Board of the Bank should be notified of the results of such revisions.
3.9.4. In case of identification of current or potential conflicts of interests of the Council,
Board, or heads of the internal control functions of the Bank, they are reported to the Council
of the Bank.
3.10. Disclosing Information on Conflicts of Interests
If, despite the organisational and administrative actions to identify and prevent possible
conflicts of interests taken by the Bank in conflicts of interests management pursuant to
requirements of the Policy, a conflicts of interests situation occurs, the Bank does not start
rendering the respective service and if it is impossible – clearly explains to the customer the
essence and source of the conflict of interests before rendering the service as required by legal
acts of the RL and providing the customer with information that would allow them decide on
whether to continue or terminate the transaction in question.
3.11. Motivation and Due Payments
3.11.1. Situations when the Bank makes or receives payments or other benefits (for example,
goods or services) related to services rendered to customers (“motivation”) might cause
conflicts of interests.
3.11.2. A payment or benefit (charges, commission fees or benefits not expressed in money)
is allowed if such payment or benefit is made to a customer directly or is received from a
customer, except payments or benefits that might be deemed criminally liable bribery, etc.
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3.11.3. Payments and benefits that are allowed are “due payments”. A due payment is a
payment that facilitates or is necessary for rendering a service and that, by its nature, cannot
come into conflict with the Bank’s duty to act fairly, justly, and professionally in customers’
best interests. Due payments are asset holding costs, currency exchange charge, legal services
charge, and other similar payments.
3.11.4. Payments to third parties and receipt of payments from them are allowed provided that
they are meant to facilitate the quality of a service rendered to customers. They may not
contradict the Bank’s duty to act in customers’ best interests and the essence of these
payments should be explained to Bank customers in advance.
3.11.5. All agreements at the Bank, including those regarding any types of payments and
benefits to third parties or receipt thereof from them shall be executed in writing and
considered in advance by the Member of the Board of the Bank in charge of the respective
area of activities who evaluates whether payments or benefits stated in an agreement would
not be deemed motivation.
3.11.6. In case of arrangements with third parties on any type of payments or benefits to third
parties or receipt thereof from them, the Bank shall disclose information on such
arrangements to customers prior to rendering the service. Such disclosure includes
information on presence, nature, and amount of a payment, commission, or benefits. If the
amount cannot be determined precisely, its calculation method should be explained and
sufficient information should be provided that would allow customers to decide on use of the
service under the terms specified.
3.11.7. To prevent restricted payments, the Bank, when starting cooperation with third parties
and prior to receiving payments from them, as well as in future, conducts annual identification
and classification of payments under the Investment Services Compliance Control
Programme.
3.12. Personal Transaction Limitations
3.12.1. Bank employee and persons related to the Bank are not allowed:
3.12.1.1. to carry our personal transactions based on insider information available to the
person through its job duties at the Bank;
3.12.1.2. to carry out personal transactions using or inappropriately disclosing information
containing a transaction secret;
3.12.1.3. to carry out personal transactions contradicting active legal acts of the RL and the
Bank’s internal legal acts;
3.12.1.4. to advise a third party to execute such transactions with FI that could be deemed as
personal transactions for the person who gave the advice (except the case when such advice is
given while fulfilling job duties) and
1) execution of such transaction is restricted according to clauses 3.12.1.1-3.12.1.3
hereof;
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2) information available to the person on a customer’s pending orders was maliciously
used;
3.12.1.5. to disclose to third parties information or to express an opinion if the person
disclosing information knows or should know that disclosure of this information could result
in a third person executing or advising another person to execute such a transaction with FI
that such transaction could be deemed a personal transaction to the disclosing person who is
subject to restrictions of clause 3.12.1.4 1)-2) hereof, except the case when such information
is disclosed or opinion is given while performing job duties.
3.12.2. Employees and persons related to the Bank must inform the Bank of their executed
personal transactions.
3.12.3. Clauses 3.12.1-3.12.2 hereof do not apply when:
 a personal transaction is conducted as part of individual management of financial
instruments and there has been no prior communication between the portfolio manager
and the person related to the Bank or other person in whose name the respective
transaction is executed prior to such transaction;
 a personal transaction is executed with investment certificates of a public investment fund
and the person related to the Bank or another person, in whose name the transaction is
executed, is not involved in the fund management.
3.12.4. The Bank monitors adherence to requirements of the Policy and Law by employees of
the Bank and persons related to the Bank.
3.12.5. The Bank creates and maintains a register for storing information on personal
transactions of persons related to the Bank and established a procedure for reporting such
transactions.
3.13. Conflicts of Interests Prevention Control
3.13.1. To prevent conflicts of interests, the Bank applies the following controls:
 regular revisions under the Investment Services Compliance Control Programme
elaborated by assessing the degree of threats to customers’ interests and taking into
account the ratio between risks, benefits, and control costs within the legal framework;
 creation and maintenance of a register of personal transactions;
 regular reviews and updates of this Policy;
 availability of the Policy to Bank customers;
 the Investment Services Compliance Control Programme.
3.13.2. The Bank establishes such an organisational structure and distributes duties in such a
way so that possibilities of occurrence of conflicts of interests diminished while rendering
investment services and accompanying services to customers, including making sure that
Prevention of Conflicts of Interests Policy
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structural units rendering investment services and/or accompanying services that might face
mutual conflicts of interests were organisationally divided.
3.13.3. The Bank ensures internal monitoring and audit of the structural units rendering
investment services and accompanying services.
3.13.4. The Bank ensures fulfilment of requirements hereof by developing and constantly
improving the internal regulatory documents required for fulfilment hereof.
3.13.5. The Bank constantly controls and updates information on its rendered investment
services and accompanying investment services, as well as on situations that could cause or
have caused conflicts of interests substantially threatening interests of one or several
customers.
3.13.6. The Policy is revised and updated as needed, but at least once a year, considering
amendments to the Bank’s strategy, operations, internal structure and external circumstances
affecting its operations, amendments to compliance laws, regulations, and standards.
3.13.7. The Risks Director is in charge of monitoring of elaboration, updates, and fulfilment
hereof. The Bank’s Ethics Standards provide basic principles of professional actions and
ethics that Bank employees adhere to in their everyday work. All Bank employees and
officials are responsible for compliance with the Policy and Ethics Standards.
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