AFD - 2019 Universal registration document

RISK MANAGEMENT 4 Risk management

4.3.6.3 Non-compliance risks According to regulations, the Compliance Department (DCO) is responsible for the prevention, detection, monitoring and management of non-compliance risk throughout AFD Group. Non-compliance risk is defined as “the risk of legal, administrative or disciplinary sanction, material financial loss or loss to reputation arising from failure to comply with the provisions governing banking and financial activities,whether they be directly applicable legal, regulatory, national or European provisions, or whether they are professional and ethical standards or the instructions given by executive officers, particularly in light of the guidelines from the supervisory body” (Decree of 3 Ǿ November Ǿ 2014, Article Ǿ 10p). The DCO ensures the Group complies with (i) Ǿ internal and external provisions related to preventing money laundering and terrorist financing (AML/CFT), (ii) Ǿ provisions related to the fight against corruption and associated offences as well as fraud and anti-competitive practices, (iii) Ǿ provisions to do with abiding by national and international trade and financial sanctions, provisions that govern the performance of banking and financing activities or (v) Ǿ provisions that ensure the protection of the personal data and private lives of clients. The department is part of the Executive Risk Department (DXR). The Compliance function reports on its activities to the Internal Control Committee (Cocint) and to the New Products and New Activities committee (Coconap in its Compliance configuration), as well as the Regulatory Risk Committee. The Compliance function covers all sectors, operations, geographic areas and regulatory contexts of AFD Group. In addition to operational projects and activities, it also concerns the Group’s new activities and products, in accordance with regulations. Its ultimate aim is to ensure that non-compliance risks are appropriately evaluated in the interest of preventing and limiting the exposure of AFD Group and its management to legal and/or administrative action and to reputational risks, by supervising them should these risks arise. Non-compliance risk monitoring is ongoing and backed by a risk map. The following changes were made to the non-compliance risk mitigation system during 2019: P further measures to prevent corruption and influence peddling introduced on the back of the so-called “Sapin Ǿ II” Act of 9 Ǿ December Ǿ 2016 with the entry into force on 31 Ǿ January Ǿ 2019 of the whistle-blowing procedure for employees and directors of the AFD Group and external service providers working on its behalf, the overhaul of the set of procedures governing gifts and invitations to clarify the rules in place, particularly in terms of thresholds, and reporting and approval processes and starting work on mapping group suppliers to implement anti-corruption measures in respect of them using a risk- based approach;

4.3.5 Major risk ratio At 31 Ǿ December Ǿ 2019, the AFD Group was in compliance with the major individual risk ratio set out by banking regulations, i.e. a maximum of 25% of risk-based consolidated capital. 4.3.6 Other operational risks 4.3.6.1 Risk related to the settlement process AFD has established a number of measures to tighten up the organisation and control of settlements: P procedures which describe and formalise the processing of settlements; P pre- and post-settlement checks; P training and awareness-raising initiatives, primarily on the risks of fraud, for staff involved in settlement processing and checks. In terms of anti-money laundering measures, AFD uses commercial software that provides an automated system to cross-check settlement records against a list of persons and entities that require extra vigilance. 4.3.6.2 Legal risks The Legal department is responsible for managing the Group’s legal risks. It covers all legal areas (except for Human Resources and Taxes). The Legal department provides legal support: P in financing, guarantee and equity investment operations at all stages of the project cycle, including restructuring projects and disputes; P in cross-disciplinary matters (Group risk prevention, international government agreements, relationships with other sponsors, guarantee funds, partnerships, relationships with subsidiaries and companies in which AFD holds shares, and legal knowledge creation); P in market transactions; P in institutional matters (bylaws, governance, relationships with the government and supervisory bodies, legislative and regulatory development, agreements for various services); P regarding banking and finance regulations; P in criminal matters, on all subjects where AFD Group or its directors may be held liable; P by providing consulting services for all AFD entities. To AFD’s knowledge, there are no governmental, legal or arbitration proceedings, whether suspended or pending, that could have or have had a material effect on the financial situation or the profitability of AFD and/or AFD Group over the last 12 Ǿ months.

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UNIVERSAL REGISTRATION DOCUMENT 2019

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