BPCE - 2018 Risk report / Pillar III

11 NON-COMPLIANCE, SECURITY AND OPERATIONAL RISKS Financial security

Financial security 11.2

Organization

Financialsecuritycovers anti-moneylaunderingand terroristfinancing(AML-TF)measuresas well as adherenceto internationalsanctionsaimed at individual persons, entities or countries. BPCE’s Involvement in the prevention of money laundering and terrorist financing Groupe BPCE worksto prevent moneylaundering and terrorist financing through: Corporate culture Promotedacross all levels of the company, corporate culture is built on: principles governing relationships with customers that vert risk and documentKYC for each institution; ● a harmonized,biannual training program for Group employees,which has been expanded over the past few years to include specialized ● training for the Financial Security function; regular staffinformation and coordination on the risk of moneylaundering and terrorist financing. ● Organizational structure In accordancewith Groupe BPCE’s charters,each institutionhas its own financialsecurity division or unit. DRCCP has a specializeddivision that coordinates AML-CTF processes, defines the financial security policy for the entire Group, establishes the various standards and guidelines,and ensuresconsistencyacross all of the decisionsmade for each project.The divisionalso performsa regulatorywatch,oversees relevant transactionsand ensures that the risk of money laundering and terrorist financing is taken into account when new commercial products and services are approved by BPCE. Specializedprocesses In accordancewith regulationson the organizationof internalcontrol at credit institutionsand investmentcompanies,banks have methods for detectingunusual transactionsthat are specific to their risk classification.These can be used, if needed, to conduct closer analysis and to submit the requiredreportsto Tracfin (Frenchfinancialintelligenceagency)as promptlyas possible.The Group’srisk classificationsystem takes into account “high-risk”countries (listed by the FATF, the OECD Global Forum on Transparencyand Exchange of Informationfor tax purposes, Transparency International, the Directorate General of the French Treasury responsible for areas controlled by terrorist organizations, etc.). As regards compliancewith restrictivemeasures related to internationalsanctions, Group institutionsare kept informed by BPCE’s Group Financial Security division and equipped with screening tools that generate alerts on customers (asset freezes on certain individuals or entities) and international flows (asset freezes and countries subject to European d/or US embargoes). Supervision ofoperations Internalreports on the preventionof money launderingand terroristfinancingare submittedto companydirectorsand governingbodies, as well as tothe centralinstitution. The DRCCP Financial Security division also meets regularly to closely monitor each institution’s activitiesin this area.

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Risk Report Pillar III 2018