CFM INDOSUEZ Wealth Management - 2019 annual report

35 2019 Activity Report At CFM Indosuez Wealth Management, the internal control system is applied in accordance with the Order of 3 November 2014 on the internal control of companies active in banking, payment services and investment services and subject to ACPR supervision. The system includes a process for controlling transactions and internal procedures, a structure for accounting and processing information, systems for measuring risks and results, risk monitoring and management systems, an information and documentation system and a process for monitoring flows of cash and securities. For CFM Indosuez Wealth Management and its subsidiaries, CFM Indosuez Gestion and CFM Conseil en Investissement, the risk management function is organised locally within the Risk and Permanent Control department, which is responsible for the oversight, coordination and supervision of the risk and permanent control system (credit risk, market risk and operational risk). To round out this system, internal control is also performed through periodic controls carried out under the responsibility of the General Inspection department and compliance controls covering in particular onboarding and KYC reviews, financial security, transaction monitoring and approval, compliance and fraud risk monitoring. The CA CIB Chief Risk Officer (who reports to the ACPR) and the Indosuez Wealth Management Risk & Permanent Control (RPC) department delegate their authority to the Head of the Risk and Permanent Control department to oversee the risk control and supervision system, based on: • A central system including level 2.1 and 2.2 controls, which are applied by all Group entities, implemented by Indosuez Wealth Management via its main control functions (Legal, Compliance, Finance, Security, Permanent Control, etc.). • A local system of controls implemented by all operating departments (level 1 and 2.1 controls) and level 2.1 and 2.2 controls performed by the control functions, to complete the scope of the Wealth Management Business Line Common Control Plan. Most of the results of the controls are centralised and monitored via the IT solution Copilot, which is used by all Group entities. Results classified red or orange, meaning that improvements are needed, are subject to a detailed permanent control analysis and are reported to the Internal Control Committee and the Audit and Risk Committee. An action plan is implemented if necessary. The results achieved in all quarters of 2019 were satisfactory and showed no signs of a major increase in risk. Information provided to Executive Directors, the Internal Control Committee and the Board of Directors and decisions made in 2019: Information provided to senior management includes details of outsourced activities, the approval and monitoring of credit risk limits, the results of controls across the entire internal control scope, significant incidents, anomalies detected by the anti-money laundering and counter terrorist financing monitoring and analysis system, and any other significant events relating to permanent risk control, compliance and periodic control, covering both internal and external activities. The governing body is also provided with details of changes in outstanding loans, ratings and non-performing loans. As well as the reports made by the Risk and Permanent Control department, the Compliance and Ethics function also submits reports to the executive bodies. The Internal Control Committee met on 5 February, 12 June and 15 October 2019. Reports on internal control, risk measurement and monitoring and the monitoring of cheques for 2019 were submitted to CFM Indosuez Wealth Management’s Board of Directors on 12 March 2020. The half-yearly Internal Control Report was presented to the CFM Indosuez Wealth Management Board of Directors on 3 October 2019 and the 2019 Annual Report and its notes were presented by management at the Internal Control Committee on 12 February 2020 and the Board of Directors’ meeting on 12 March 2020. After CFM Indosuez Wealth Management’s total assets exceeded the threshold of € 5 billion, the first Audit and Risk Committee meeting was held on 21 March 2018, chaired by François Veverka. In 2019, three committee meetings were held, attended by directors, the Statutory Auditors, the CFM Indosuez General Secretary, the Head of the General Inspection department, and representatives of the Credit Risk, Permanent Control, Finance, Compliance and Fraud functions in turn (on 18 March, 2 October and 11 December). On 16 May 2019, the Board of Directors approved the new risk appetite chart and limits. Credit risk: LCredit risk and counterparty risk is monitored by CFM Indosuez Wealth Management’s Risk and Permanent Control department, which reports functionally to the Chief Executive Officer and directly to the Indosuez Wealth Management RPC function. Counterparty risk is concentrated on the client lending business and is part of the Wealth Management Business Line’s risk management strategy approved by the decision-making bodies of CA CIB and Crédit Agricole SA, as set out in Indosuez Wealth Management’s Framework Directive on Wealth Management Credit Risk Management (RPC DB 003). CFM Indosuez Wealth Management is exposed to counterparty risk with respect to natural persons, wealth structures whose beneficial owners are natural persons or