40.46 Principle 20: [Reference documents: BCBS, Corporate governance principles for banks, July 2015; BCBS, Principles for the management of credit risk, September 2000.] To prevent abuses arising in transactions with related parties [Related parties should include: (a) the bank’s subsidiaries and affiliates (including their subsidiaries, affiliates and special purpose entities) and any other party that the bank exerts control over or that exerts control over the bank; (b) the bank’s major shareholders, including beneficial owners; (c) the bank’s board members, senior management and key staff, corresponding persons in affiliated companies, and parties that can exert significant influence on board members or senior management; and (d) for the natural persons identified in (a) to (c), their direct and related interests and their close family members.] and to address the risk of conflicts of interest, the supervisor requires banks to enter into any transactions with related parties on an arm's length basis; [Related party transactions include on-balance sheet and off-balance sheet credit exposures; dealings such as service contracts, asset purchases and sales, construction contracts and lease agreements; derivative transactions; borrowings; and write-offs. The term "transaction" should be interpreted broadly to incorporate not only transactions that are entered into with related parties but also situations in which an unrelated party (with whom a bank has an existing exposure) subsequently becomes a related party.] monitor these transactions; take appropriate steps to control or mitigate the risks; and write off exposures to related parties in accordance with standard policies and processes.