Compliance: shared values

Interview with Martine Boutinet, Head of Group Compliance

Smart Compliance

The Compliance strategy is moving forward with the ongoing “Smart Compliance” approach in support of the Group Project.

Smart Compliance is first and foremost about affirming the importance of complying with regulations and protecting Crédit Agricole’s image (defensive pillars), while setting targets for operational efficiency and differentiating features for customers. To this end, a particular focus is placed on contributing to efforts to address customer irritants within the Group and developing native compliance, or an integrated approach to compliance from the start for both customer journeys and new products (offensive pillars).

Smart Compliance is also about the ongoing structuring of the technological methods used in Compliance through the deployment of Group tools that allow Crédit Agricole S.A. to play an oversight role via centralised platforms (filtering of payments and screening of third party databases, escalation of SAPIN II alerts, etc.). And it is about innovation, with the Compliance Valley project that allows us to find and share innovative solutions throughout the business line.

International Sanctions and the OFAC plan

As a reminder, Crédit Agricole S.A. and CACIB committed in 2015 to a remediation plan, in full cooperation with the US authorities, following the economic sanctions of the Office of Foreign Assets Control (OFAC).

At end November, 109 of the 118 defined milestones had been completed. The plan projects the completion of all milestones by April 2021.

Among the most impactful of these, the centralisation of screening of customer and beneficial owner names to verify that they are not subject to international sanctions has been finalised: at end June 2020, more than 63 million customers and related parties had been screened on the Group platforms. The Group-wide deployment of the system for filtering payment flows to control financial transactions has also been completed.

The remediation plan is in the final stages of completion. At the same time, we must guarantee and demonstrate to the regulator that the actions implemented are sustainable and that the procedures are operational through to the first lines of defence.

KYC (Know your Customer)

Customer knowledge is a key element allowing us to carry out the Group’s financial security missions (the fight against money laundering and the financing of terrorism, international sanctions). After the remedial measures taken to update customer data under the plan, the Group must implement the periodic review of KYC according to the customer’s risk level, in all entities that have not yet done so. The rollout of this system is a major goal for 2021, with the deployment of a review management tool for the regional banks.

Another goal for 2021 is to step up the process of KYC sharing between Group entities to improve commercial efficiency and reduce shared customer irritants (for example, by avoiding asking for the same documents several times.) After a testing phase in 2020, the project will be rolled out more broadly at the Group level. Moreover, the Group participates in marketplace platforms on KYC sharing, based on the buy-in of corporate customers who submit their documents.

The Group Financial Security teams are working on the implementation of the 5th Directive: this Directive creates new requirements related to identification and the verification of the identity of beneficial owners, but also simplifies certain aspects of remote onboarding with digital identity.

The Innovation/Native Compliance team in the Group Compliance Division is working with the Group retail banks, DCI, the Users - Customer Accounts Package Division and CATS on remote onboarding for individual customers.

Customer Protection and market integrity

Customers’ expectations of the bank as a trusted third party are high in a sensitive socio-political context intensified by the crisis. At the same time, pressure from regulators is growing with the application of new regulations and an increasing number of controls regarding banking fees, pricing transparency, and customer protection in terms of credit risk insurance and the duty to advise (MiFID II).

Compliance is working with the entities to strengthen our systems, notably in order to ensure the high quality of offers and rollout processes, to improve the clarity of information provided to clients and to guarantee loyalty in customer advisory services, to establish what sets us apart within the customer project.

In terms of market integrity, the Group, and in particular the entities that are most exposed to the financial markets, are strengthening their monitoring systems used in the fight against market abuses.

Commitments to vulnerable customers

The Covid-19 crisis has accentuated the importance of better identifying and supporting financially vulnerable customers. This continues to be a major focus of the French authorities, as demonstrated by the number of missions of the French Prudential Authority, ACPR (Autorité de contrôle prudentiel et de résolution) on this subject within the Group.

The Group continues to mobilise to enhance its system based on concrete and uniform responses between the regional banks and LCL. On this front, Compliance is working in partnership with DCI to ensure the reliability of indicators and proposals applied throughout retail banking.

Support for financially vulnerable customers is fully in line with the Group’s raison d’être and its societal project.

The fight against fraud and corruption

The fight against fraud and corruption remains a priority for Compliance. The teams were highly mobilized during the crisis to thwart new fraud schemes that appeared during this period. At the same time, the anti-corruption system, in particular the evaluation of third party suppliers, has been strengthened to reach a deployment rate of 91% and the “whistle-blower” web tool was deployed across all Group entities, in France and abroad.

In addition to the above initiatives concerning remote onboarding and customer protection (in particular the protection of vulnerable customers), which are also offensive-pillar initiatives, there are two other priorities for Smart Compliance.

Native Compliance support for customer journeys

The crisis has highlighted the need to accelerate the availability of our digital customer journey offers. The Native Compliance team is working in close collaboration with the DCI teams to integrate Compliance into these processes and ensure traceability and paper trails. The team is notably working on the Pro-Become a Customer onboarding journey and the New Everyday Banking Offer for individual and professional customers.

Alert management optimisation

The tools used to screen sanctions, filter flows, and detect concerns in the fight against money laundering create alerts that are processed and documented by the Financial Security teams.

The teams are continuing to improve operational efficiency by using “machine learning” techniques and artificial intelligence.

In 2021, the Compliance team will launch a preliminary study of the retail banking tool in the fight against financial delinquency, which will cover issues related to money laundering and the financing of terrorism as well as fraud, and will draw on the analysis of customer data and transactions with artificial intelligence technologies.