and terrorism financing
II.4.1 – Organization of the system and employee training
The group’s central compliance function fulfills several roles with respect to the anti-money laundering and terrorism financing (amL/ Tf) system within the group, including coordination, management, training, administration and control. The group’s head of compliance (Stéphane cador, [email protected]) reports directly to a member of the group’s Executive management; he is supported by a national manager of the anti-money laundering and terrorism financing system of procedures (raoul d’Estaintot, [email protected]).
To execute its assigned missions, the central compliance function has correspondents within the permanent control and compliance departments of the various regional divisions, business line entities and foreign-based entities. These correspondents, in particular the Tracfin correspondents and declarers, report on a functional basis to the central compliance function.
in 2012, efforts focused on the continued group-wide deployment of the amL/Tf system, including in particular: – the implementation of the acp’s recommendations following its 2011 audit of caisse fédérale de crédit mutuel,
– the recognition of an approach based on the client’s listing markets instead of the markets to which the branches belong for the implementation of amL alerts,
– the establishment of an intra-group information sharing procedure,
– the updating of the business lines’ risk approach, notably through updates to the country rankings in order to take into account faTf statements and embargo surveys.
The integration of crédit mutuel anjou led to the appointment of two new Tracfin correspondents/declarers on behalf of this fede- ration, which fully implements the group’s amL/Tf system.
a surveillance plan that takes into account the recommendations of the prudential Supervisory authority (acp) was established so that it could be rolled out at the entities. at the conclusion of its audit, the acp validated the amL/Tf system but noted that its application was inconsistent between institutions.
amL/Tf training initiatives are included in the group’s training plan.
along with the self-training manual and 16 training modules designed for the caisses/branch managers, a new training module – deve- loped in response to an acp recommendation – was developed for the acms and Employee Savings and Large accounts departments (roll-out in 2012). This training module will be delivered to Tracfin correspondents for the training sessions they provide in the network.
in 2012, 64% of all staff members potentially affected by the risk of money-laundering completed either the new self-training course rolled out as of october 2011 (it should be noted that this course is updated every two years) or classroom training. The training plan stipulates that employees required to complete the training have until the end of 2013 to validate their self-training course.
II.4.2 – Risk classification, description of procedures
II.4.2.1 – Classification and duty of vigilance
at end-december 2012, the implementation of strengthened vigilance measures was required for 0.27% of all clients.
II.4.2.2 – Changes in procedures
The procedures are drafted by business line (retail banking, insurance, asset management, leasing, international, employee savings, real estate, large accounts, capital markets, etc.).
all procedures were updated during the course of the year.
The new system of enhanced due diligence led to an annual update of client knowledge for customers classified as high risk. as for the means of circulating information within the group, a procedure aimed at Tracfin correspondents/declarers and their employees was disseminated. it applies to the entities established in france and abroad.
With respect to the methods for defining material discrepancy criteria and thresholds in the amL/Tf area, a new ranking involves taking transactions into account in a more detailed and appropriate manner than the segmentation of individuals and allows for the possibility of fine-tuning thresholds for triggering alerts.
The conditions for the use of a third party are identical to those of the previous year. in 2011, an application was established for managing customer relations and agreements (prESc) with “financial institution” third parties (those qualifying as “intermediaries for banking and payment Services Transactions - iobSp) for the purpose of issuing mortgage loans and business loans.
II.4.3 – Permanent controls
amL/Tf activity increased significantly last year relative to 2011. for the cm11-cic 1 group:
– 114,042 alerts were generated by the applications and 91% of them were processed; – 30,921 transactions were subjected to strengthened review;
The 2012 control plan for Tracfin correspondents includes the following changes for the retail banking network relative to 2011: – adjustments to the control plan with respect to second-level control applications: going forward, the Tracfin correspondent will give priority to a risk approach based on his geographic scope and the type of client;
– the definition of two control areas for de facto companies (sociétés de fait) and the functioning of client accounts that record transac- tions through the intermediary of international payment service providers.
The first-level control plan is included in the dedicated control application (cinT), branch by branch or caisse by caisse at crédit mutuel. it is supervised by the permanent control teams which are split into regions.
cm11-cic had a 96% average completion rate for control tasks in cinT.
meanwhile, cm11-cic’s average completion rate for second-level control tasks (cinTmT) was 93%. The second-level controls highlight slight improvements in the use of portals, which still needs further improvement, as well as the quality of the comments sup- porting the verifications.
With respect to the centralized control of payments, as required under Ec regulation 1781/2006, the number of discrepancies fell slightly (from 8,484 in 2011 to 8,408 last year) despite the 4% increase in the number of transactions to 2,609,000; they represented between 0.48% and 0.24% of monthly payment flows, and on average fell from 0.34% in 2011 to 0.32% in 2012. it should be noted that a detailed analysis shows that the information is for the most part present. under the terms of the annual review, no bank requires the submission of a report to the acp’s general Secretariat, given either the low volume of transactions showing discrepancies or the answers provided to questions.
a monthly “Webcheques validation” control is designed to verify the proper application by the network of the control procedure for checks issued. The controls and statistics show the proper use of this procedure by the networks. The number of branches with discrepancies is low, and they are contacted systematically.
an overall assessment of controls shows the proper control of amL/Tf risks and proper use of dedicated Tracfin vigilance applica- tions, better coverage of payments supervision through second-level control applications and greater awareness of the importance of supporting evidence for customer identification. To address discrepancies revealed, the anti-money laundering departments continue to raise awareness and provide training programs and daily support to employees participating in prevention measures.
II.4.4 – Main deficiencies uncovered by national and foreign control
authorities and resulting corrective measures
The follow-up letter with respect to the acp audit of the cm11 amL/Tf system in 2011 was received in august 2012.
The acp sought commitments on staffing and the updating of information on customers and identification of politically exposed persons (pEps).
The following points need improvement: structure and improve the consistency of information from regional governing bodies; ensure the use and application of procedures and staff training, which are considered inconsistent across the regional entities; improve the configuration of applications to make them more efficient; ensure the implementation of applications, whose use sometimes appears inconsistent or lax at the regional level, apply the corrective measures identified by the internal control bodies as soon as possible.
1. including the cic regional banks, the acm and cofidis groups as well as bfcm, bEcm, credit mutuel-cic Home Loan SfH, cm-cic factor, cm-cic Epargne Salariale, cm-cic Securities and cm-cic bail.