2018 Registration document and annual fi nancial report - BNP PARIBAS56

2 CORPORATE GOVERNANCE AND INTERNAL CONTROL

2

Corporate governance report

■ examined the ILAAP report. It examined the tolerance threshold above which it may be deemed that the liquidity situation is compliant with the Bank s risk tolerance;

■ decided whether the Group s compensation policy was compatible with its risk profi le.

The Board:

■ approved changes to the Group s RAS and aggregate risk thresholds and limits;

■ examined, based on the RAS and the Committee Chairman s report, the Risk Dashboard presenting the indicators adopted for the different risk categories, as well as the risk governance, management and monitoring measures on a regular basis;

■ was informed, where applicable, of any risk threshold or limit that had been exceeded, in accordance with the governance policy decided in 2016;

■ was informed of the Committee s review of the ECB s follow-up letter on the Operational Risk Management topical review and the Bank s response letter;

■ based on the Committee Chairman s report, acknowledged the Committee s work on Group risks;

■ was regularly informed of trends in the cost of risk by business line and geographical area;

■ approved the liquidity risk tolerance level and the policies, procedures and internal systems relating to liquidity risk;

■ confirmed that the operational risk, permanent control and business continuity components of the internal control report had been forwarded to the ACPR.

Compliance, internal control, litigation and periodic control The Internal Control, Risk Management and Compliance Committee:

■ continued to monitor the implementation of the remediation plan initiated in 2014 on the US authorities request, reflecting the commitments made by BNP Paribas to control activities carried out in US dollars;

■ continued to monitor the outcome of the General Inspection review of remediation;

■ examined the 2017 internal control report including the Compliance Risk Assessment report, the key compliance points across all business lines and geographical areas, and the periodic control report;

■ reviewed the section of the management report on internal control and submitted it for the approval of the Board;

■ examined the report on the assessment and monitoring of risks in 2017, in accordance with the provisions of the Decree of 3 November 2014 on the internal control of companies operating in the banking, payment services and investment services sector subject to the control of the ACPR. It assessed the effectiveness of the policies and systems in place;

■ analysed the Compliance Function s interim report;

■ discussed the main results of periodic control in 2017 and in the fi rst half of 2018; it reviewed the results of the second wave of audits in entities with clearing operations in dollars;

■ reviewed the General Inspection half-year report;

■ reviewed, at each of its meetings, the list of ongoing legal disputes and proceedings, as well as the developments in each of the cases between meetings. It monitored the most signifi cant legal disputes and group investigations and actions with regard to banks foreign exchange market practices and their resolution;

■ was informed of the modifi cation requests and additional requests made by the regulators concerning the recovery and resolution plans;

■ examined the annual update to the recovery plan and resolution documents, and recommended their approval by the Board; examined changes in French and European resolution regulations; and was informed of the complexities linked to the set-up of the Total Loss Absorbing Capacity (TLAC) and of the Minimum Requirement for own funds and Eligible Liabilities (MREL) mechanisms and the regulatory changes in progress;

■ monitored implementation of the Volcker Rule and the updated programme for the certifi cation process and the French law on the separation and regulation of banking activities;

■ was informed as part of the certification process of the Group s compliance with Swap-Dealer, Foreign Account Tax Compliance (FATCA) and Qualifi ed Intermediaries (QI) regulations;

■ reviewed the MiFID 2 control framework and the controls implemented in 2018;

■ acknowledged the follow-up letter subsequent to the ACPR s audit of the Bank s fulfi lment of its obligations in terms of listing customers on, and deleting them from, the central register of refused cheques, the central bank card register and the national database of incidents of repayments of personal loans.