NATIXIS_REGISTRATION_DOCUMENT_2017

3 RISKS AND CAPITAL ADEQUACY Non-compliance risk

In 2017, Natixiscontinuedto implementthe AutomaticExchange of Tax Information regulation across all its French and internationaloperations concerned and located in a country that has implemented the Common Reporting Standard (CRS). This regulation requires the identification of non-residentswho own assets, more specifically financial accounts in the books of Natixis. Handling of customer complaints The systemensuresthat: customers receive transparent information on how their a complaintsare being handled; complaintsare handledeffectively;and a corrective action is enforced to remedy any problems a identified. Market integrity Natixis is equipped with a system to detect transactions that could constitute market abuse. Dedicated teams using a specialist surveillance tool process alerts and analyze potential market abuse. Transactions that could constitute market abuse are reportedto the FrenchFinancialMarketsAuthority(AMF) and to local regulators,in accordancewith the regulationsin force. In 2017, the supervision processes and system underwent an in-depth review, and in 2018 the system will be updated to strengthentheir analysisand detectioncapabilities. The role of the Financial Security Department is to manage the system dedicated to anti-moneylaunderingand counter-terrorist financing (AML/CTF), anti-corruption and anti-fraud, and ensure the compliance of Natixis and its subsidiaries with financial sanctionsand embargoes. Anti-money laundering and terrorist financing As part of the fight against money laundering and terrorist financing,and in accordancewith regulations,Natixis has set up a frameworkthat builds in: KYC and due diligence obligations, in line with a risk-based a approach, on customer onboarding, periodic reviews and throughoutthe businessrelationship; a transaction monitoring and control system based on a automated tools or requests that report alerts and suspicions to Natixis’FinancialSecurityDepartment; a procedure for reporting “suspicious” transactions to the a relevantfinancialintelligenceunit in a timelymanner; regular employee training and information to ensure a compliancewith these obligations. As regards counter-terrorist financing, heightened vigilance measures have been implemented in the form of behavioral analysis tools. These measures identify risk factors and enable the applicationof in-depthand adapteddue diligenceprocedures. FINANCIAL SECURITY 3.10.4

an escalation process for mediating unresolved conflicts of a interestas required. Whenever the risk of compromising a customer’s interests becomesunavoidablein spite of the internalproceduresin place, Natixis informs the customer of the nature of the conflict of interest before taking action on the customer’s behalf, allowing the customer to make an informed decision on whether to proceedwith the transaction. Circulation of information Informationbarriers are put in place and reviewedeach time the organizational structure changes in order to prevent the unwarranted circulation of confidential information. These barriers function as partitions between business lines and departments,setting limits to the circulationof informationon a need-to-knowbasis. As such, information is transmitted only in the customer’s interest and only to employees who absolutely require the information to carry out their duties. These barriers may be organizational, physical or electronic and may be permanent or temporary. Natixis has set up a permanent and complete information barrier separating its Asset Management business activities within Natixis Asset Management from its other activities. Pursuant to regulations in force, the entry of sensitive transactionsinto a specific tool that allows Complianceto rapidly identify issuers to be placed on the watch list or on the prohibitionlist, as well as employeesto be placed on the insider list. Defending customers’ interests is a core concern of Natixis’ activities and is reflected in the policies of each entity in France and abroad. In all circumstances, employees are required to serve customers with diligence, loyalty, honesty and professionalism,and to offer financial productsand services that are appropriate to customers’ abilities and needs. Accordingly, and in the interest of maintaining a high level of customer protection, in the fourth quarter of 2017 Natixis began a cross-functionalreviewof its permanentcontrol systemcovering this area for completionin the first half of 2018. Customer information There is a customerinformationprocedureencompassingall the MiFID II obligationson customeronboarding,as well as pre- and post-tradeinformationdue to customersaccordingto their MiFID category. There is also a specific procedure on costs, expenses, and on key informationdocumentsfor packagedproductsto be provided to non-professional customers before trade, thus ensuring Natixis’compliancewith PRIIPSobligations. Know Your Customer (KYC) The procedures for customer onboarding are in line with the various regulatory requirements governing money laundering, terrorist financing, management, financial sanctions and internationalembargoesfor the entitiesin question. CUSTOMER PROTECTION 3.10.3

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Natixis Registration Document 2017