RepoRt on - BNP Paribas

procedures
checking procedures is one of the key
tasks of the permanent control system,
alongside identifying and assessing risks,
running controls, verifying reporting processes
and overseeing the monitoring
system.
written guidelines are distributed
throughout the group and provide the
basic framework for the group’s internal
control, setting out the organisational
structures, procedures and controls to
be applied. the compliance function,
at the headquarters level, and in the
context of the supervision of permanent
operational control, checks that procedural
guidelines are regularly monitored
for completeness via a network
of correspondents. efforts are ongoing
to streamline the set of procedures and
the applicable standards, improve their
distribution and planning, make them
more accessible and design better
tools for storing them, both at the level
of cross-function procedures and procedures
for operational entities (level-3
procedures).
the group’s cross-functional guidelines
(levels 1 and 2) are updated as part
of an ongoing process in which all the
core businesses and functions actively
participate. as regards the organisation
of controls, the surveys on the effectiveness
of processes have been integrated
into the twice-yearly reporting of the
Permanent control function.
among the group’s cross-functional
procedures, applicable in all entities,
the following are especially important
in terms of controlling risk:
— procedures dealing with the validation
of exceptional transactions, new
products and new activities;
— the procedure for the approval
of day-to-day credit and market
transactions.
these processes rely essentially on committees
(exceptional transactions and
new activities committees, credit committees,
etc.) primarily composed of
operating staff and Permanent control
functions (risk and compliance, as
well as finance department, legal
department and other concerned functions)
who carry out a “second tier” control
on transactions. in case of dispute,
it is escalated to a higher level in the organisation.
at the summit of the process
are the committees (credit committee,
capital market risk committee, risk
Policy committee) on which members
of executive management sit. since the
end of 2008, a monthly risk committee
has been held on which all executive
management members sit, as well
as, in particular, the Heads of the risk
function (grm) and finance function
so as to ensure more frequent monitoring
of group risk trends.
highlights of 2009
group compliance
in 2009, the group’s internal control
system was strongly marked by the increase
in compliance issues and by the
integration of fortis.
the compliance function faced a
strong increase in issues concerning:
— new regulations, in particular the
transposition into french law of the
3rd european money laundering
directive and new requirements in the
field of professional certification;
— stricter requirements in the field of internal
control, with 3 amendments
to crbf regulation 97-02 during the
course of 2009:
• decree of 14 january 2009, specifically
requiring that the board
of directors define the criteria and
thresholds of materiality of incidents
revealed by internal control
procedures,
• decree of 29 october 2009 creating
a new chapter on the fight
against money laundering and
the financing of terrorism (transposition
of the 3rd european money
laundering directive),
• decree of 3 november 2009 on
the compensation of employees
whose activities are likely to have
an impact on the risk exposure of
financial institutions, requiring that
risk be taken into consideration in
the compensation policy (capital
adequacy) and the preparation of
an annual report submitted to the
commission bancaire;
— decree of 5 may 2009 creating new
obligations relating to the measurement
and monitoring of liquidity risk;
— reorganisation and enlargement of
the group with the creation of the
retail banking division and the acquisition
of fortis bank.
121 <strong>RepoRt</strong> on CoRpoRate SoCial and enviRonmental ReSponSibility
the integration of fortis was a major
topic for compliance in 2009 and will
continue to be in 2010 and has resulted
in the general mobilisation of the function,
at headquarters and operational
level.
since the end of 2008, close contacts
have been created between the Heads
of compliance of bnP Paribas and their
counterparts at fortis group, so as to determine
the measures to be introduced
without delay as of the date of the
“closing” (which took place on
12 may 2009), in the field of compliance,
in particular so as to protect the
reputation of the enlarged bnP Paribas
group. in particular, the following measures
were introduced:
— measures to better manage conflict
of interest situations related to the
presence of minority shareholders in
bnP Paribas fortis;
— rules in the field of information
exchanges;
— measures geared at coordinating
action in sensitive areas such as politically
exposed persons or transactions
involving “sensitive” employees;
— a consolidation of the group’s “equity”
positions in view of application of the
rules on information to be reported to
markets.
in addition, compliance was involved
in steering the overall merger so as to
contribute to its integrity.
the inclusion of bnP Paribas fortis,
the implementation of numerous new
rules, in particular prudential and the
improvement of the operational compliance
system, are among the group’s
priority objectives for 2010.