The world's local bank Annual Report and Accounts CCF - HSBC

CCF
Chairman’s report on corporate governance and internal control procedures (continued)
Persons responsible for control activities and their role
Internal control
a
Risk committees
CCF has a centralised risk control system. Each
type of risk, with its related limits and rules, is monitored
by a specific committee headed by the
Chairman and Chief Executive Officer. Committee
members are those senior executives responsible for
the businesses or functions concerned by each type
of risk. The specific risk committees are:
– Audit, Internal Control and Compliance
Committee, which meets monthly to review all
significant internal audit reports and compliance
matters, particularly issues relating to
money laundering controls. The committee is
regularly advised of any developments in internal
control systems and of any fraud or
attempted fraud. It reviews all potential risks
which are not already the responsibility of
another special committee. These may be operational
risks, information technology risks,
accounting risks, legal risks, security risks or
regulatory change related risks.
– Credit Committee, which meets monthly to
review all credit risk. It is also responsible for
the Group’s overall lending strategy, and particularly
its policy with regard to exposure to
certain types of counterparty or certain types
of financing.
– Legal and Tax Committee, which reviews positions
of principle on legal and fiscal issues
liable to affect the drafting and management
of contracts.
– Asset and Liability Committee, which monitors
structural risks relating to interest rates,
ALM and risk weighted assets.
– Market Risk Committee, which is responsible
for counterparty and proprietary trading risks.
– Structured Transactions Committee, which
reviews all legal, accounting, tax and finance
risks connected with complex structured transactions.
– Non-Performing Assets Committee, which
reviews the need for provisions against nonperforming
assets (loans, securities books) on
a consolidated basis.
b
c
Internal control teams
The group’s main operational divisions and subsidiaries
each have their own internal control team
who assist the management in its mission to maintain
a coherent internal control system.
Their objectives are:
– to ensure consistent, effective internal controls
and their compliance with group rules;
– to oversee implementation of recommendations
made by Group Eurozone Audit;
– to ensure compliance with HSBC Group
standards.
The second line internal control structure within
the CCF retail network has been significantly
strengthened following a recommendation by the
French Banking Commission and as part of the
group’s drive for continuing progress in the prevention
of money laundering, which is one of its
key priorities. A separate unit, forming part of the
second line internal control team, has been established
to control the quality of the retail network’s
money laundering prevention system.
CCF Group Compliance Department
CCF Group Compliance is responsible for efforts
to combat money laundering and terrorism
financing, and for ensuring that the group’s
activities comply with rules, regulations and good
professional practice in these fields. The structure
of CCF Group Compliance is based on that of the
HSBC Group’s compliance function. It has a
compliance officer responsible for each of the
Group’s core businesses (Retail Banking, Private
Banking, Corporate, Investment Banking
& Markets, and Asset Management) and is
supported by a network of Local Compliance
Officers (LCOs) and Money Laundering
Compliance Officers (MLCOs) in each business unit.
In association with the Training Department,
CCF Group Compliance organises refresher courses
on current regulations and workshops on specific
regulatory issues.
It is also responsible for ensuring respect for rules
of conduct throughout the group and for control
over investment services. It draws up and circulates
appropriate compliance rules for the Group’s
different business activities and runs many training
sessions, particularly for the LCOs and retail
network compliance officers. Annual appraisals are
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