Governance and Ethics

Principles and Policies

Financial service companies, perhaps more than any other business, depend on confidence and trust. As a global organization, we respect and comply with laws and regulations that govern our businesses in the jurisdictions in which we operate.

We have enterprise-wide policies and processes to support the assessment and management of risks, including policies to address issues such as the environment, privacy, money laundering, terrorism financing, economic sanctions, lending to political parties, and fiduciary risk. We regularly review policies and controls to ensure continued effectiveness and alignment with relevant laws and regulations. To ensure we operate with integrity, we also adhere to a number of other principles, codes and policies including our Code of Conduct, which governs the behaviour of our employees and informs how we conduct all our businesses operations. This section covers key principles, codes and policies, including:

• Code of Conduct
• Anti-Corruption, Anti-Bribery
• Anti-Money Laundering
• Anti-Terrorism and Economic Sanctions
• Tax Havens
• Identification and Management of Conflicts of Interest
• Reporting Suspected Irregularities
• Privacy
• Fiduciary Risk
• Know Your Client (client due diligence)
• The Environment
• Development of Products and Services
• Political Contributions and Lobbying
• Voluntary Codes and Public Commitments
• External Principles, Charters and Initiatives

Code of Conduct

All our employees worldwide and members of our Board are governed by our Code of Conduct, which was established more than 20 years ago. We review the Code regularly and update it as needed to ensure it covers all aspects of our activities and is clear and easy for our employees to understand and follow. RBC requires all employees to successfully complete a web-based learning program and test, or to follow an alternative process approved by our Human Resources Advisory Service, so that they know and understand the Code's principles and compliance elements. Employees must review the Code and acknowledge adherence to it at least once every two years. In addition, the company's most senior officers and select others must complete the acknowledgement annually.

Our Code of Conduct includes the following principles:

• Upholding the law
• Confidentiality
• Fairness
• Corporate responsibility
• Trust
• Objectivity
• Integrity
• Individual responsibility

Anti-Corruption, Anti-Bribery

Our Code of Conduct includes broad principles that address anti-bribery and anti-corruption concerns. To supplement our Code of Conduct and enhance understanding of regulations as well as the specific requirements of the Canadian Corruption of Foreign Officials Act and the U.S. Foreign Corrupt Practices Act, we launched a new enterprise-wide Anti-Corruption and Anti-Bribery Policy in 2009, which prohibits RBC entities and persons acting on behalf of RBC entities from offering, promising, paying or authorizing the payment, directly or indirectly, of anything of value - such as a bribe or kickback - to any government official to influence or reward any act of such official. The Policy is designed to establish consistent standards across RBC to address corruption and bribery of foreign and other government officials and related internal controls. The Policy is supported by a web-based training program that is mandatory for certain employees because of the nature of the business activities they perform for RBC and/or the geographic regions in which they conduct their business.

Anti-Money Laundering

To monitor for possible money laundering, RBC companies are required by various regulators to apply appropriate scrutiny and monitoring measures to clients, especially clients whose business activities are known to be susceptible to criminal activity or who have been designated as high risk for money laundering. Our Global Anti-Money Laundering (AML) Compliance Group is dedicated to the continuous development and maintenance of policies, guidelines, training and risk assessment tools and models to help our employees deal with ever-evolving money laundering and terrorism financing risks.

We actively participate in global industry groups dealing with anti-money laundering and anti-terrorist financing. We consult with national Financial Intelligence Units globally, such as the Financial Transactions and Reports Analysis Centre of Canada, to ensure that we are effective in our reporting of prescribed transactions. To enhance our anti-money laundering capabilities, we have implemented robust software systems to detect, track and analyze transactions for suspicious activities. RBC promotes employee awareness and compliance with anti-money laundering and anti-terrorist financing controls through web-based training, presentations, employee communications vehicles (newsletters, websites, meetings) and conferences. Annual anti-money laundering training is mandatory for all employees including senior executives.

Learn more.

Anti-Terrorism and Economic Sanctions

RBC has in place enterprise-wide policies that require all our businesses and global operations to abide by all applicable economic sanctions and anti-terrorist financing regulations. Our businesses and their directors, officers and employees will not knowingly do business with, knowingly enter into transactions with, provide or assist in providing (directly or indirectly) financial services to or for the benefit of states, entities, organizations and individuals targeted by any economic sanctions or anti-terrorist financing regulations. These policies apply in all jurisdictions where we operate and to all states, entities, organizations and individuals subject to economic sanctions by virtue of their residency and/or citizenship. Similarly, we will not knowingly take any steps that indirectly would assist or result in our doing any business we would not be allowed to do directly because of an applicable economic sanction or anti-terrorist financing regulation.

In order to meet these requirements effectively, we have implemented automated systems for scanning client names against various terrorist, control and sanctions lists daily, as well as for scanning payments against various government control lists as per the relevant regulations and internal policies.

Tax Havens

We operate in 55 countries and support the laws enacted by Canada and the other jurisdictions where we operate that are designed to deter tax evasion, tax fraud, money laundering and other criminal activities. RBC and our employees are also expected to comply with all laws and regulations that govern our businesses in the various jurisdictions in which we operate. While complying with applicable laws, we arrange our business affairs in a manner that best meets the needs of our stakeholders. We also contribute to the effort to eliminate abuses of the global financial system by practising "Know Your Client" rules, implementing throughout our global network a robust anti-money laundering compliance regime, adhering to the Code of Conduct and working with international organizations to enhance policies and rules that govern the global financial system.

Identification and Management of Conflicts of Interest

The Bank Act (Canada) and other governing legislation and regulation require RBC to maintain appropriate controls and processes to identify and manage conflicts of interest. The risks presented by a conflict of interest that cannot be eliminated must be managed to an acceptable level and must also comply with our Code of Conduct, laws and regulations. Such management must include approval of the activity by a management level appropriate to the risk. If more than one conflict of interest exists for a particular situation, the conflicts must be addressed and managed together.

Reporting Suspected Irregularities

RBC employees around the world have the duty to report suspected breaches of our Code of Conduct, other irregularities and dishonesty. We have long-established processes that enable employees to do so, and our Code of Conduct protects employees from retaliation for any report made in good faith. Specific to financial reporting practices, the RBC Reporting Hotline was established so employees and third parties around the world can report suspected irregularities or wrongdoing relating to accounting, auditing or internal accounting controls directly to the RBC Ombudsman, anonymously, in confidence and without fear of retaliation, on a 24/7 basis.

The Ombudsman for RBC personally monitors messages received by telephone and email, and files a report on all reported issues to the Audit Committee of the Board of Directors. The employee name and any other personal information is removed from the report and kept in strict confidence by the Ombudsman, who is the only person who can contact the employee for further information.

Privacy

We have had a formal privacy policy since 1991 to ensure that the personal and financial information of our clients and employees is protected.

Learn more.

Fiduciary Risk

Our businesses and subsidiaries are expected to identify, assess, manage and mitigate any fiduciary risk inherent in our operations or arising from our specific activities and relationships with clients.

Employees engaged in fiduciary relationships must have the appropriate level of knowledge and training necessary to discharge their fiduciary duties and must meet all regulatory licensing or registration requirements. Client communication campaigns and marketing materials sent to clients in relation to fiduciary duties must be reviewed and approved from a fiduciary risk perspective.

Know Your Client (client due diligence)

We have long recognized the importance of implementing and maintaining adequate controls and procedures to ensure that, on a reasonable and practicable basis, we know with whom we are conducting business. We perform due diligence on new and existing clients and perform enhanced due diligence on highrisk clients. We also with applicable regulatory guidance concerning anti-money laundering, anti-terrorism and economic sanctions, as well as with suitability requirements that protect our clients.

The Environment

We first adopted a formal environmental policy in 1991, and we update it regularly. Our policy applies to all of our operations, including:

• Environmental impacts of products and services
  
  
• Suppliers and service providers (e.g. contractors)
  
  
• Other key business partners (e.g. non-managed operations, joint venture partners)

Our environmental policy incorporates a number of components that are drafted, implemented and updated regularly. For instance, our Code of Conduct addresses the behaviour we expect of our employees with regard to the environment. We ask vendors to supply us with their own environmental policies and practices, which we consider in the supplier selection process. We also have specific environmental risk management policies for various businesses including agricultural businesses, residential mortgages, business and commercial markets and project finance.

In 2007, we launched the RBC Environmental Blueprint™, which covers our policy, priorities and objectives. The blueprint is overseen by a Corporate Environmental Affairs group that works with executives and staff in business and functional units.

Development of Products and Services

RBC has a formal policy that sets out a defined, rigorous process for the initial and subsequent risk assessment and approval of products. We evaluate products for a range of risks and ensure they align with client needs, our Code of Conduct, laws and regulations, and voluntary consumer protection codes that we have signed. Approval levels correspond to the level of risk identified for a particular product or service.

Political Contributions and Lobbying

Our policy on political donations is outlined in our Code of Conduct as follows:

[RBC] will make only those contributions permitted by law to a political party, candidate, or campaign and only as an expression of responsible citizenship - not to "purchase" favours or to gain improper advantage. Contributions to political parties, riding associations, and candidates are not included in the corporate philanthropy program.…Employees are encouraged to take their citizenship seriously and to participate in general political processes such as school board, municipal, provincial and/or federal elections, etc.

Canada

We do not make corporate donations to federal political parties through any part of our company in Canada, and political donations to municipal politicians are not permitted. We make political donations to provincial parties to the extent permitted by law and internal policy. Our participation in provincial political donations is limited and restricted depending on the respective province and territory. Of the provinces that accept political donations, all are on the public record as follows:

We have a credit policy relative to lending to political parties or candidates to ensure that all requests are treated in a fair, consistent and equitable manner, while freeing us from perceived political bias and resultant reputation risk. Certain employees who lobby on behalf of RBC must register with the Office of the Commissioner of Lobbying of Canada, under the Lobbying Act. A list of all registered lobbyists in Canada is publicly available, including RBC lobbyists. In addition, our employees who have conversations with senior federal public office holders with respect to legislative proposals, bills, resolutions, regulations, policies, programs or grants, contributions or other financial benefits must report these conversations to the Lobbyists Registry on a monthly basis.

United States

In the United States, we do not provide political donations to any party at any level of government or to political action committees (PACs). However, our U.S. employees are personally permitted to raise money through federal and state PACs for individual candidates. Funds donated by employees are reported to the Federal Election Commission and to appropriate state regulators such as the North Carolina Board of Elections.

Voluntary Codes and Public Commitments

We have signed and adhere to a number of voluntary codes of conduct in the area of consumer protection. Voluntary codes of conduct are non-legislated commitments made by companies, associations and other organizations used as a form of consumer protection in place of government legislation. The Canadian banking industry has developed several voluntary commitments and codes designed to protect consumers and serve them better. These include:

• Canadian Code of Practice for Consumer Debit Card Services: Industry and consumer practices and responsibilities related to debit cards;
  
  
• CBA Code of Conduct for Authorized Insurance Activities: Minimum standards that apply to bank representatives who promote authorized insurance products in Canada;
  
  
• Pledge to Small Business: A commitment governing openness, accountability, the credit process and complaint handling;
  
  
• Principles of Consumer Protection for Electronic Commerce - A Canadian Framework: A guide to protecting clients in online transactions;
  
  
• Undertaking on Unsolicited Services: Assurances related to the marketing and provision of new unsolicited services and the provision of modified or replacement services;
  
  
• Guidelines for Transfers of Registered Plans: A guide on what to expect and where to get help when transferring a registered savings plan (RSP) between financial institutions;
  
  
• Memorandum of Understanding - Low Fee Accounts: A commitment to offer a standard low-cost account to clients;
  
  
• Index-Linked Deposits Undertaking: A description of rights of rescission for index-linked deposit products purchased by telephone;
  
  
• Visa† Zero Liability Policy: The elimination of client liability for certain fraudulent Visa transactions;
  
  
• Visa E-Promise: Protection for Visa cardholders who shop online, by mail or by phone;
  
  
• Online Payments: Consumer and industry responsibilities related to the use of online payments systems in Canada;
  
  
• Plain Language Mortgage Documents: A CBA commitment to improve the readability of residential mortgage documents;
  
  
• What You Need to Know About Coercive Tied Selling: A legally required, explanatory guide on coercive tied selling that also contains contact information for questions, complaints and concerns;
  
  
• Cheque Holds: A commitment to reduce cheque hold periods.

External Principles, Charters and Initiatives

RBC subscribes to or participates in a number of externally developed economic, environmental and social principles, charters and initiatives. They include:

• The Equator Principles
  
  
• The United Nations Environment Programme Finance Initiative
  
  
• The Universal Declaration of Human Rights
  
  
• The International Chamber of Commerce Business Charter for Sustainable Development
  
  
• OECD Guidelines for Multinational Enterprises
  
  
• The Canadian Human Rights Act
  
  
• The Global Reporting Initiative
  
  
• Imagine, a Canadian initiative to encourage corporate philanthropy and volunteerism (RBC is a founding member)
  
  
• The Canadian Standards Association's Strategic Steering Committee on Business Management and Sustainability