BPCE_PILLAR_III_2017

11 NON-COMPLIANCE RISKS, SECURITY AND OPERATIONAL RISKS Financial security

Financial security 11.4

Organization

Financial security includes anti-money laundering and terrorist financing (AML-TF) measures as well as adherence to international sanctions aimed at people, 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 This culture,promotedacross all levels of the company,is builton: 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 with the ● implementationof 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-TF processes, defines the financial security policy for the entire Group, establishes the various standards and guidelines, and ensures consistency across all of the decisions made for each project. This division also performs a regulatory watch, oversees relevant transactions and ensures that the risk of money laundering and terrorist financing is taken into account when new commercial productsand services areapprovedby BPCE. Specialized processes In accordancewith regulationson the organizationof internalcontrolat credit institutionsand investmentcompanies,the institutionshave methods for detecting unusual transactions that are specific to their risk classification.These can be used, if needed, to conduct closer analysisand to submit the requiredreports to Tracfin (FrenchAML-TFagency)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.). Since 2013, electronicprofiling tools have been harmonizedacross the two main networks (Banque Populaire and Caisse d’Epargne).With respect to compliancewith restrictive measures related to internationalsanctions, Group institutions are 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 of operations Internalreports on the preventionof money launderingand terroristfinancingare submittedto companydirectorsand governingbodies, as well as tothe centralinstitution. The DRCCP Financial Security division also closely monitors each institution’s activities in this area throughregular meetings.

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Risk Report Pillar III 2017