Risks management and compliance, at the heart of AFL


Compliance plays a crucial role within the banking sector – a complex and highly regulated industry, with major implications for the economy. AFL was established by local authorities to create bank aligned with the best compliance standards.

AFL’s Compliance duties are supervised by the Engagements & Risks Department. Training and awareness campaigns are organised regularly for staff and governing body members.

The AFL has set up an alert and whistle-blowing mechanism.

Regulatory compliance covers the following areas in particular:

Compliance with the laws and regulations issued by national and international authorities,

Financial integrity: fight against money laundering and countering terrorism financing, anti-corruption, management of conflicts of interests and inside information,

Protection of clients and stakeholders: transparency on practices and products, ethical conduct with customers, data confidentiality and protection of personal data.

Code of Conduct and Business Ethics.

Ethical conduct and practices govern all our actions

As required by our public shareholders, AFL’s directors and managers share two convictions:

A commitment to responsible finance, an ambition to be pursued by all, every day.

AFL’s success is down to the women and men whose professional skills, efforts, and integrity drive its growth.

An Ethics Charter

AFL has therefore laid out its commitments and values in an Ethics Charter, that serves as a handbook of principles and rules of good conduct, and in a package of internal policies. These guide every decision we make and ensure that our bank is an embodiment of responsible finance, in keeping with our aspirations.

Discover our ethics charter

Market integrity

Preserving market integrity safeguards investors’ confidence, fosters financial stability, and guarantees that capital markets operate efficiently.

To achieve this, information flows within AFL are managed with the greatest care:

  • Confidential information is protected by professional secrecy laws, or covered by market abuse regulation. In compliance with the recommendations issued by authorities, AFL has drawn up procedures governing the identification, control and disclosure of inside information. This notably involves setting up information silos and managing insider lists. The goal is to prevent the disclosure and potential exploitation of insider information, that could lead to market abuses and/or insider dealing.
  • The transparent disclosure of exact, precise and sincere information to AFL’s stakeholders. This includes financial information – including the company’s performance and risk factors, in accordance with applicable regulations.


Client protection  

We – the public authorities – are both the shareholders and the customers of our bank. Client protection is one of the bank’s core principles and is materialised via a set of procedures governing all stages of the relationship: from pre-contractual information to monitoring the loan throughout its life cycle. Each of our team members is bound by the duty to safeguard the interests of the client, to disclose clear, faithful, and exhaustive information, and to prevent any risks of conflicts of interest. In accordance with applicable regulation, all public authorities can lodge a complaint with the Engagements & Risks Department, which will deal with each request diligently.

Fight against money laundering and countering terrorist funding (AML/CFT)

Operating under the banking regulatory regime, AFL has set up a mechanism to fight against money laundering and the financing of terrorism, and comply with international embargoes and sanctions.

At AFL, this issue is covered by a governance process, a policy revised annually by AFL-ST’s Board of Directors and AFL’s Supervisory Board, and detailed procedures designed to:

  • Ensure clients and business partners are known and well identified (KYC),
  • Monitor the business relationship,
  • Detect high-risk transactions,
  • Carry out screening based on national and international lists of asset freeze targets,
  • Report information to regulatory and judiciary authorities,
  • Conduct permanent controls and periodic audits on the AML/CFT mechanisms in place,
  • Provide information and training courses to AFL employees.

Conflict of interests management    

Managing conflicts of interest is imperative within the financial industry to guarantee transparency, the fair treatment and the protection of stakeholders, and to maintain trust. AFL’s conflicts of interest policy applies to both employees and to members of the Group’s governing bodies. This policy requires a declaration of all interests, whether economic, political, public, family-related, personal or moral, both direct or indirect, past and present. AFL will duly assess and deal with conflicts of interest via a dedicated governance body made up of independent members. The interest may be dealt with in a variety of ways: ensuring the public and transparent disclosure of the information to AFL’s stakeholders (mandates), arranging for the removal of the person involved in multiple interests, or abstaining from entering a business relationship…

Focus on gifts and invitations

Through its Code of Ethics and specific procedures, AFL has set up strict rules governing gifts and invitations received or given to/by its employees to prevent any bribery attempts, and to safeguard the independence and impartiality of its teams.

Appetite for risk

AFL intends to conduct its lending activities to French local governments within a prudent mindset aligned with the practices of its sister entities in Northern Europe. Nevertheless, risk taking is inherent to banking. AFL has set limits to its financial strategy and risk appetite that provide safeguards for its activities. The bank’s strategy in terms of loans and credit risk, market activities, appetite for non-financial risks, and solvency and leverage ratios has been clearly established. Considering that future environmental and climate changes will have a bearing on risk-taking, AFL’s appetite for risk is gradually integrating environment-related risk factors.

Appetite for risk is approved and reviewed annually by AFL-ST’s Board of Directors and by AFL’s Supervisory Board, with backing provided by their Audit and Risk Committees.

Integration of climate risk in the credit distribution policy

Why include climate vulnerability in local government credit analysis?

  • Because climate events may have an impact on the budgets of French regional authorities.
  • Because the risks will increase in coming years (according to bodies such as the IPCC, the ACPR and France Assureurs) and need to be more closely considered in the assessment of credit risk by banks.

AFL has developed an indicator for measuring local authorities’ vulnerability to climate risk based on official public data regarding climate events and prevention plans (Géorisques, Ministry for the Ecological Transition).

The research conducted by AFL has taught us the following:

- Most municipalities are not very vulnerable at this stage,
- A minority are already highly exposed,
- High degrees of exposure have generally been observed in and around large cities.

Mapping of climate risks

AFL carried out a Climate Risk Mapping in 2023. Why?

  • To identify the potential impacts of climate change on AFL’s risk profile over the mid and long-term,
  • To be able to adapt our policies and protect the bank if these events materialise


Key takeaways from the climate risk mapping

Climate change will have consequences for the population and infrastructure. These will require substantial investments aimed at adapting our territories to the consequences of climate change, but also at mitigating its impacts. Governments and regional authorities are on the front line, partially funded by banks and capital markets. In this respect, AFL’s stakeholders have growing expectations:

  • We, the public, are mindful that our bank – and other partners within the banking industry – are truly aligned with the CSR pathway we have set for our territories:
  • The appetite shown by investors for issuers who integrate ESG considerations has changed the environment in which AFL operates,
  • The regulatory authorities have growing requirements in terms of climate and environmental risks, traceability, and transparency,
  • Employees and society also have higher expectations; the latter care about corporate commitment to a more sustainable future.

What is at stake for AFL ?

AFL believes the challenges include adequate action planning to ensure compliance with regulation and meet stakeholder expectations, while keeping the costs of the initiatives under control (for AFL and the local authorities) and avoiding greenwashing.

Find out more about AFL’s ESG committments

Find out more

Ethics and responsibility

“Embody responsible finance to empower local
to meet the present
and future needs of their inhabitants."

A responsible bank

AFL is committed to working with us, local authorities, to lead the energy and social transitions that are coming and are necessary.

A responsible company

AFL is directly committed as a company to the planet and to its employees.

Find out more about AFL’s financial situation and funding strategy.

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