AFD - Universal Registration Document 2020

STATEMENT OF NON-FINANCIAL PERFORMANCE 2 Fair practices

2.7.8 Speci fi c risks of non-compliance related to the Covid-19 crisis The constraints imposed by the lockdown made it necessary to adapt the working methods of all AFD Group employees, including Compliance. The severity and depth of the health and economic crisis have led to a reorientation of the Group’s priorities and the implementation of a dedicated response to meet the needs of our counterparties. P As part of the reorganisation of project appraisal procedures, Compliance is fully involved in this effort by jointly developing, with the operational departments, an adapted procedure (known as “Health in Common”) for appraising, as quickly as possible, plans to respond to the health and economic crisis linked to the pandemic while prescribing safeguards and maintaining targeted controls on risky instructions. In this exceptional framework, Compliance has reduced its time-frame for monitoring projects. It focused its analysis on risky instructions, i.e. on new projects and on those involving counterparties that did not already have relations with the Group before the crisis. P Against a backdrop of an upsurge in fraud, a trend specific to each period of crisis, Compliance has endeavoured to prevent the risks of non-compliance linked to the criminal opportunities offered by this pandemic. Thus, Compliance has been attentive to communications from regulatory bodies (ABE, ACPR, AMF) calling for enhanced vigilance in terms of AML/CFT, fraud and corruption or those of financial intelligence units such as Tracfin in France or FinCEN in the United States, which raised awareness in the banking and financial sector about the types of financial crime relating to Covid-19. Unsurprisingly, these structures emphasised that the typologies encountered reflected those traditionally observed following natural disasters and that the scams commonly encountered such as false transfer orders had been able to adapt to the increasing number of orders for medical equipment and increased funding for healthcare projects. These players in the fight against money laundering also highlighted the significant risks of misappropriation of State mechanisms put in place in response to the crisis. In this context, the Compliance Investigation function wished to reinforce the vigilance of the Group’s employees by sending dedicated communication messages describing the most sensitive risk areas and providing tools/advice aimed at protecting the institution but also its partners against the risks of fraud and embezzlement.

The AFD Group’s NCJ Policy is regularly updated, both with regard to the list of countries concerned and the content of the applicable restrictions. It was recently impacted by two texts: P law no. 2018-898 on the fight against fraud has, on the one hand, integrated the European list of non-cooperative jurisdictions for tax purposes (“EU list of fiscal NCJs”) with the French list of Non-Cooperative States and Territories (“NCSTs”) and, on the other hand, enshrined in the law the prohibition on the Group’s participation in the financing of projects in which the controlling shareholder is registered in an NCST, unless this registration is justified by a real economic interest in the country in question, or the project is being carried out in the country. The EU list of fiscal NCJs now impacts both EU-funded projects and the Group’s own- resources projects. It should nevertheless be noted that the integration of the EU list of tax NCJs into the list of NCST is not automatic and must be done by decree pursuant to Article Ǿ 238-0 A of the French General Tax Code. Insofar as the list of NCST has not been updated since 7 Ǿ January 2020 (1) despite subsequent changes to the EU list (2) , the latter in its most recent version is currently only applicable to projects involving the delegation of European funds or a mix of resources; P the Financial Regulation of 2018 (known as “Euratom”) prohibits partners implementing EU funds from financing projects (i) Ǿ whose counterparty is located in a country on the EU list of high-risk third countries in terms of AML/CFT, on the EU list of non-cooperative jurisdictions for tax purposes, or not meeting the OECD Global Forum standard for the exchange of information on request or (ii) Ǿ likely, in addition to fraud and tax evasion, to contribute to tax optimisation. These requirements were clarified and specified during several discussions with the European Commission services in charge of tax and customs issues and will be formally incorporated into the Group’s NCJ policy in 2021. At the same time, Compliance, together with Proparco’s legal department, initiated a project to reform the AFD Group’s NCJ policy to make it more readable for the operational teams and to integrate a more detailed understanding of tax matters in relation to projects.

(1) As of 8 Ǿ 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. (2) The last EU update took place on 7 Ǿ October 2020.

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2020 UNIVERSAL REGISTRATION DOCUMENT