The current compliance structure

Subsequent to the amendment of regulation No. 97-02 of the French Banking and Financial Regulations Committee (CRBF) by decree in March 2005, the Group's internal control structures were modified in January 2006, with a distinction made between permanent and periodic control structures. Periodic and permanent controls are coordinated by a Co-Chief Executive Officer who is assisted by an Internal Control Coordination Committee which meets every quarter.
Independent compliance structures have also been set up within the Group’s different businesses around the world in order to identify and prevent any risks of non-compliance.
The Corporate Secretary of Société Générale Group is the head of compliance for the Group (RCOG). He supervises all compliance structures and procedures with the help of a Group Compliance Committee (CCG) which he chairs and which meets every month. This pyramid structure is reproduced in each division, business line or major subsidiary under the supervision of named compliance managers (RCOs). The RCOs for the different divisions sit on the CCG, alongside the heads of the operational departments concerned, and report in functional terms to the head of Group compliance.
The RCOs are responsible for the identification and prevention of non-compliance risks, the validation of new products, the analysis and reporting of any anomalies as well as the implementation of corrective action, staff training and the development of a Group wide culture of compliance.

The key role of compliance
Compliance has always been one of the bank's core values. It is not just the responsibility of the Group's dedicated compliance officers, but concerns its entire staff, in all areas of activity. The Compliance Department was first set up in 1997, with the exclusive task of monitoring market activities. However, its scope of intervention has since been extended to cover risks to the company's image and reputation in all banking activities. Accordingly, the Group now has a compliance and best practices charter that meets the highest sector standards. Moreover, they even go beyond the strict application of today's legal and regulatory provisions, particularly as there are those countries in which said provisions fall shy of Société Générale's ethical standards.
Within the banking sector, compliance can be summed up in a few simple principles such as:
- only working with customers or counterparties that are well known;
- the ability to assess the economic legitimacy of a transaction;
- the ability to justify an adopted stance under any circumstances.
Accordingly, the Group:
- undertakes not to enter into relations with individuals or businesses whose activities fall outside of the law or are contrary to the principles of responsible banking;
- refuses to perform any client or counterparty transactions where it is unable to assess their economic reality or where a lack of transparency suggests that said transactions do not comply with applicable compliance and accounting principles, and more importantly, could constitute attempted money laundering or involvement in the financing of terrorism;
- provides information which is accurate and clear and in no way misleading on the products and services it proposes and to ensure that the latter conform to client expectations.
- has established a “right to alert” (whistle blowing) which can be exercised by any employees who believe they have good reason to think that an instruction received, a transaction under review or, in general, a given situation is not in compliance with the rules that govern the conduct of the Group’s activities.
- has defined strict internal rules to prevent the setting up of operations in a country considered by the OECD as “having harmful tax practices” or by FATF as “having an inadequate anti-money laundering system”. However, the Group does not rule out a presence in these countries where there is an efficient banking and financial activity that meets the economic needs of local or international customers and where the Group’s anti-money laundering standards are applied, even when these are stricter than the standards applied under local legislation. The Group has a policy of applying the specific provisions of the French General Tax Code relating to countries with privileged taxation – a much broader concept than that applied by the OECD. It therefore spontaneously submits a tax return in France for  the revenues of entities located in these countries where these entities come under the scope of application defined by the law (article 238A of the French General Tax Code).

Chinese walls
Professional or banking secrecy is a core aspect of our business as a bank and market operator. It is also a legal obligation. It extends to any "confidential" information, i.e. information transmitted by the customer or person concerned that has not been made public. Confidential information may be circulated within the bank and when in the interests of the bank and/or the customer, but is nonetheless subject to Chinese walls and may not be communicated outside of the company.
Chinese walls are both a concept and procedures aimed at controlling the way in which insider information, confidential or commercially sensitive information is circulated around the bank.
In a multi-disciplinary institution such as ours, there is room for the distinction between:
- first level Chinese walls that ensure that relations with companies or issuers are kept separate from proprietary market activities and investor transactions;
- second level Chinese walls that, within relations established with companies or issuers, ensure any advisory services, financing and credit activities are kept separate;
- individual Chinese walls that apply to any person or team working on a sensitive file.
Chinese walls prevent the circulation or misuse of insider information (other than based on “the need to know”) and enable the bank to conduct what are apparently conflicting activities and manage any obvious conflicts of interest.

The notion also has physical overtones in that it implies the spatial separation of the teams concerned as well as restricted access to their offices and IT databases.

Chinese walls may be breached for professional reasons although breaches are subject to strict procedures that require the prior approval of the Compliance Department and that a record be kept of all the names involved.
Strict compliance with Chinese walls is not solely a means of risk prevention (notably penal risk), they are also a mark of professionalism that enhances our reputation.

Compliance IT tools
Various IT tools have been developed with the aim of ensuring compliance with current regulations (e.g. combating terrorism and money laundering) and the detection of abuses wherever possible.  Examples of such applications include:
- tools used to filter customer files and international transactions in order to detect those persons with a suspected involvement in terrorist activities.
- behavioral analysis tools to facilitate the detection of suspicious transactions in the bank’s retail and private banking activities. 
- an alert management and check surveillance tool.
- a tool for managing lists of insiders.
- a tool for helping to detect market abuses (price manipulation and insider trading) which will be deployed and expanded to include operations outside France.