Société Générale / Risk Report - Pillar III

12 COMPLIANCE RISK, LITIGATION COMPLIANCE

COMPLIANCE 12.1

Financial security KNOW YOUR CUSTOMER (KYC)

specific training and increased staff awareness; the importance the p Group places on this issue is largely addressed in the Group’s Code of Conduct and its Culture and Conduct programme; adapting as a matter of necessity existing tools to new regulatory p requirements. CLAIMS ANDMEDIATION The processing of a claim is a commercial act that influences customer satisfaction. Accordingly, this point was largely addessed in the Code of Conduct. The Group's Customer Claims Processing procedure was revised in 2019 to incorporate European Banking Authority (EBA) recommendations and new regulatory requirements, in particular DSP2. Each Bank business possesses an ad hoc governance, organisation, human resources and applications, formalised procedures, and quantitative and qualitative monitoring indicators. Mediation services also form part of the internal procedure. Customers are made aware of the availability of mediation services through various means; in particular, a statement to this effect appears permanently on the back of account statements. Every entity involved is obliged to comply with the independent mediator's decision. CONFLICTS OF INTEREST The Group has a clear normative framework in place to prevent and manage conflicts of interest which specifies the principles and mechanisms that have been implemented. The Group’s procedure was updated in 2019 to include new regulatory requirements and changes. It covers two categories of potential conflicts of interest, i.e. those that may arise between the Group and its customers and those occurring between the Group and its employees, particularly in relation to activities involving an employee’s personal interest and/or their professional obligations. It sets out the rules for identifying potential conflicts of interest that should be clearly defined and identified using a mapping tool and also listed in a conflicts of interest register. PRODUCT GOVERNANCE Product governance obligations have been broadened to include compliance with marketing and customer information regulations. As it is obliged to identify the target market from the product design stage and to verify that the criteria match customer profiles, the Societe Generale Group performs both systematic product reviews upstream of the marketing stage and communication between product originators and distributors to track the products during their life cycle. Vulnerable customers Societe Generale has established practices and usages to comply with legislation vis-à-vis vulnerable customers by providing them with a specific offer involving limited account management fees. To contribute to the national effort to boost the purchasing power of French citizens in challenging financial circumstances, the Group has added to its practices by introducing additional measures in February 2019, notably: freezing bank fees in 2019; p capping bank intervention fees at EUR 25 for vulnerable clients; p organising follow-up and support suited to the situation of p customers experiencing difficulties in the wake of recent events.

In 2018, the Group launched a programme to revamp its KYC functions in order to boost their operational efficiency (via the simplification of standards, greater pooling of resources, optimisation of tools and processes) and to improve the customer experience. This four-year programme, placed under the responsibility of the Compliance Division, is closely and regularly monitored at the highest Bank level. ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING (AML/CTF) The Group has implemented new measures linked to the Fourth Directive on anti-money laundering and counter-terrorism financing as well as European Regulation 2015/847 on the quality of payment information. Several internal initiatives were also launched or continued to consistently strengthen its system. In particular, these initiatives cover alert detection tools used in the Bank’s different businesses, with use of new technologies and the optimisation of scenarios used. FINANCIAL EMBARGOES AND SANCTIONS In 2019, the international environment was again impacted by the reinforcement of US sanctions on Russia and Iran, with greater complexity in terms of implementation that may generate substantial operational risks for financial institutions. In this context, Societe Generale Group has confirmed its position to abstain from any trading activity with Iran and to maintain transactions with Russia within a strict framework. The Group continued to strengthen its Embargoes/Sanctions system under the established remedial programme following agreements with the French and US authorities (see p. 246 of the 2020 Universal Registration Document): Progress has been made on the payment platform centralisation projects and Compliance function employees have received further skills development training, notably through certified training courses. Regulatory risk CUSTOMER PROTECTION Customer protection is a major challenge for the Societe Generale Group, which is committed to respecting and protecting the interests of its customers by striving to meet the highest standards of security and quality of service. Customer satisfaction is covered in Chapter 5 of the 2020 Universal Registration Document, on p. 270. The European consumer protection regulation (MiFID II), which entered into force on 3 January 2018, and the Insurance Directive (DDA), which entered into force on 1 October 2018, have reinforced the existing system that Societe Generale revised and completed in 2019. In particular, the Group has made strong efforts to protect financially vulnerable customers, with fee capping systems in place since early 2019. In this context, significant measures have been taken to improve the Group’s system by: strengthening internal rules relating to customer claims, product p governance requirements, prior information, the appropriateness of advisory, compensation structures and the prevention of conflicts of interest;

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| SOCIETE GENERALE GROUP | PILLAR 3 - 2020