AFD - 2019 Universal registration document

STATEMENT OF NON-FINANCIAL PERFORMANCE 2 Fair practices

December Ǿ 2017 (“EU List of tax NCJs”) is not included in the French list of non-cooperative states and territories (“NCST”); P The AFD Group is prohibited from contributing to the financing of a project if the controlling shareholder is registered in an NCST, except if said shareholder proves that their registration is justified by an effective economic interest in the state or territory in question, or when the financed project is carried out in the state or territory in question. When the Law relating to combating fraud came into force, it did not modify the AFD Group’s policies and procedures in this area. The law sanctions the existing policies and procedures (1) . However, it is worth noting that the integration of the EU list of tax NCJs in the French list of NCSTs, with the resulting financing restrictions, now has an impact on the projects that the Group may finance, using its own resources in these countries. Integration of the EU list of tax NCJs into the French list of NCSTs took effect on 8 Ǿ January Ǿ 2020, following publication of the decree issued in application of Article Ǿ 238-0 A of the French Tax Code. All NCSTs including EU NCJs are therefore now subject to the NCJ procedure of the AFD Group (2) . Prior to adoption of the above-mentioned decree, and in order to comply with subsequent changes to the EU list of tax NCJs, which cannot be immediately transferred into internal legislation, the AFD Group had modified its procedures for projects receiving EU delegated funds and a blend of funding, so that countries and territories on the EU list of tax NCJs can be considered as tax NCJs. It should be noted that this list has changed several times since it was adopted at the end of 2017. The most recent version is dated 14 Ǿ November Ǿ 2019 (3) . In parallel, the Compliance department has been in discussions for several monthswith the services of the EuropeanCommission responsible for tax and customs questions, in order to clarify the Commission’s requirements relating to granting and execution of its projects, and to obtain a statement from it that specifies its expectations in this matter. To improve internal visibility and be able to guide operational teams as to which arrangements are acceptable, the Compliance department is working to integrate French and European anti-tax evasion requirements into the procedure dedicated to the AFD Group’s NCJ policy.

offices). These training modules are adapted to the learners’ profile, as they take into consideration the assignments of employees as part of the introductory programme for new employees, and with respect to transferred AFD Group employees (training relative to transfers to local offices or to users of the payment tool coming from local offices, for example). The Compliance Department developed two offers: one intended for operational employees, and the other for support employees. Moreover, at a manager’s request, this department will provide AML/CTF training specific to his/her teams. 2.7.7 Initiatives undertaken to prevent tax evasion In an effort to contribute to French policies to combat fraud and tax evasion, in particular the policies set out by France at the G8 and G20 meetings, AFD and Proparco adopted a rigorous and specific policy in 2009 regarding the transactions they carry out and the projects they finance in a non-cooperative jurisdiction (NCJ), or transactions and projects that involve one or more NCJs in the legal structure of the financed operation and/or offshore centres more generally. Any project involving a counterparty registered in an NCJ (in terms of tax or AML/CTF) is considered high risk according to the risk classification of AFD and Proparco. The risk indicator related to geographic location ranks these countries as having a very high risk. Accordingly, the diligences expected will be more stringent than for projects not registered in these regions. When tax or AML/CTF NCJs are involved, the AFD Group’s policy determines the types of transactions authorised and the types of projects eligible for the Group’s funding. The use of tax NCJs is either limited or prohibited, in accordance with this policy, which has been regularly updated since its adoption. This policy also underwent a careful review following adoption of Act no.2018- 898 concerning combating of fraud, certain provisions of which concern the AFD Group in particular: P The EU common list of third party country jurisdictions for taxation purposes, adopted by the European Commission in

(1) On this point, excerpts from the parliamentary proceedings are particularly edifying: “The system proposed by the Senate enshrines in law that which currently relates to the financing policy that the AFD Group has imposed on itself, and which is justified by the need to prevent financing of development projects from only benefiting people or entities established in NCSTs who divert the financial flows intended to support the population”; “We should point out first of all that the purpose and the intended effect of this system is not to stigmatise AFD or its action, on the contrary. It is our aim is to acknowledge the considerable efforts the AFD Group has undertaken, by enshrining them into law”; “this article is in no way intended to stigmatise AFD or its subsidiaries. It serves to enshrine in law the virtuous policy of this group by putting into legislation elements which currently constitute […] a simple code of conduct. […] Considering the role and importance of AFD and its subsidiary Proparco, and the public origin of the funds, it is not inconsistent to raise this Group commitment to the normative level” (Extract from the Draft law on the fight against fraud, No. Ǿ 385, filed on Wednesday 28 March 2018 - http://www.senat.fr/leg/pjl17-385.html) (2) As of 8 January 2020, the following States and Territories appeared on this list: Anguilla, Bahamas, British Virgin Islands, Panama, Seychelles, Vanuatu, Fiji, Guam, American Virgin Islands, Oman, American Samoa, Samoa, Trinidad and Tobago. (3) To date it comprises 8 jurisdictions, which are: Vanuatu, Fiji, Guam, American Virgin Islands, Oman, American Samoa, Samoa, Trinidad and Tobago, all included in the French list of NCSTs as ratified by the decree of 6 January 2020.

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UNIVERSAL REGISTRATION DOCUMENT 2019

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