RBC Financial Group 2005 Corporate Responsibility Report and Public Acountability Statement

RBC believes good governance is, in its broadest sense, a competitive advantage. Our ethical vision and corporate leadership are founded on controls, policies and practices directed at strengthening the ability of the Board of Directors to oversee management’s efforts to enhance shareholder value while remaining responsive to employees, clients and communities.

A GLOBAL APPROACH
RBC’s dynamic approach to corporate governance is responsive to the changing regulatory environment and anticipates best practices as they evolve. Our governance system determines the fundamental relationships among the members of the Board of Directors, management, shareholders and other stakeholders. It defines the framework in which ethical values are established and the context in which corporate strategies and objectives are set.

The strength of our governance starts at the top with an independent Chairman and experienced and well-informed directors, who give priority to strategic planning, ensure that standards exist to promote ethical behaviour throughout the organization, and drive continuous improvement in governance practices.

Through its commitment to high standards of corporate governance, the board retains the confidence of shareholders. Our governance policies and practices support the ability of directors to supervise management and enhance long-term shareholder value.

Our approach is founded on a commitment to high standards of governance and integrity in all facets of our business activities, promoting a proactive governance culture within RBC. The following demonstrate our global approach to governance, compliance and ethics:

• Established in 2001, our Subsidiary Governance Office (SGO) provides governance oversight among our many subsidiaries. Our SGO encourages consistency, simplicity and transparency across our enterprise to help position RBC as a best practices organization in corporate governance;

• In 2001, our SGO introduced the Global Corporate Manager (GCM), a technology solution for managing and tracking corporate data on all RBC subsidiaries. GCM offers employees global access to corporate data as appropriate, providing greater flexibility, and the ability to streamline processes and enhance data management; and

• In 2003, our Financial Controls Office launched an enterprisewide process for managing auditor independence. It provides a structure and system for RBC businesses, functional units or subsidiaries that are entering into a relationship with a public accounting firm to confirm or obtain approval prior to the commencement of work.

GOVERNANCE LEADERSHIP

Every year, the Institute of Corporate Directors (ICD) recognizes four directors who have been nominated by their peers and have distinguished themselves by bringing sound governance leadership to Canadian boardrooms. RBC Chairman David O’Brien was honoured as a 2005 ICD Fellow.

ETHICAL BUSINESS PRACTICES
As a global organization, RBC respects and complies with all laws and regulations that govern our businesses in the jurisdictions in which we operate. We also contribute to the effort to eliminate abuses of the global financial system by adhering to Know Your Client rules (including client identification, verification and record keeping) to ensure, to the fullest extent possible, that our clients are reputable and their business
purposes and funds are legitimate.

We have enterprise-wide compliance policies and processes to support the assessment and management of risks, and have formal policies to address issues such as:
• Money laundering;
• Terrorist financing;
• Conflicts of interest, outside activities, and external directorships of employees;
• Insider trading, information barriers and employee trading;
• Client and employee privacy;
• Know your client (client due diligence);
• Environmental risk management;
• Economic sanctions;
• Lending to political parties;
• Financing military materiel;
• Outsourcing risk management;
• Structured transactions and complex credits; and
• Auditor independence.

PRIVACY AND INFORMATION SECURITY
RBC has a longstanding commitment to safeguarding the personal information and confidentiality information of both our clients and our employees. This commitment is a cornerstone of our business and remains one of our highest priorities.

We have had a formal Privacy Code since 1991. In 2005, we formed a Global Privacy Management Team that comprises Privacy Officers from all RBC businesses and functions, led by our Chief Privacy Officer. This team provides oversight and guidance to our businesses in the implementation of privacy management practices and compliance, as well as developing training and awareness initiatives.

In 2005, we revised several privacy policies, including the RBC Enterprise Client Privacy Policy governing all units of our operations globally and serving as the basis for any unit or geographic-specific privacy policies. These policies, in conjunction with our Code of Conduct and Information Security policies, outline expectations and requirements for compliance by employees and RBC with respect to the collection, use, disclosure and safeguarding of information in our possession.

With increasing reports of security breaches and identity theft, privacy and security are top-of-mind for all of our stakeholders. RBC has placed significant focus on building upon programs and strategies to safeguard information. In 2005, we introduced an enhanced authentication solution to better protect online banking clients from falling victim to online fraud.

RBC also provides timely consumer education material about online security threats such as spyware and “phishing,” a type of fraud that is designed to trick individuals into disclosing confidential financial information for the purpose of identity theft. These bulletins also include tips for clients to follow to better protect their personal computing activities.

For more information, visit rbc.com/privacy and rbc.com/security

	RBC REPORTING HOTLINE			FRAUD PREVENTION
	In 2004, we established a whistleblowing policy and the RBC Reporting Hotline, a requirement under the Sarbanes-Oxley Act. Employees anywhere in the world may use the Hotline for confidential reporting of questionable internal accounting or auditing matters within RBC directly to RBC’s Ombudsman.			RBC places a high priority on protecting clients against potential losses from financial fraud. We work closely with other financial institutions, industry associations and law enforcement authorities globally to combat financial crime. We have also produced an entire website of information on fraud and debit card safety for clients, and a publication called Straight Talk about financial fraud, available both through our branch network and online.

CODE OF CONDUCT
Like any citizen, RBC and our employees must comply with the laws, regulations and ethical codes of conduct in all markets in which we do business. All employees worldwide are governed by our internal Code of Conduct, which has been in place for more than 20 years and is updated periodically to reflect the changing environment. In 2003, we introduced a Code of Conduct e-Learning Program to ensure all our employees (from the CEO down) know and understand the principles and compliance elements in the code, including issues such as privacy and confidentiality. This e-Learning Program includes both an online course and a test. All employees must complete the program and test within three months of joining RBC and at least once every two years thereafter. Some groups may test more frequently.

Voluntary codes of conduct
The Canadian banking industry has developed a number of voluntary commitments and codes to protect consumers, to which RBC has committed. These include:
• Canadian Code of Practice for Consumer Debit Card Services;
• Canadian Bankers Association (CBA) Code of Conduct for Authorized Insurance Activities;
• Model Code of Conduct for Bank Relations with Small- and Medium-Sized Businesses;
• Principles of Consumer Protection for Electronic Commerce: A Canadian Framework;
• Undertaking on Unsolicited Services;
• Guidelines for Transfers of Registered Plans;
• Memorandum of Understanding – Low Fee Accounts;
• Index-Linked Deposits Undertaking;
• Visa Zero Liability Policy;
• Visa E-Promise;
• Online Payments; and
• Plain Language Mortgage Documents – CBA Commitment.

COMPLIANCE
All the best policies in the world are just words on a page unless employees understand and have the proper tools to monitor and prevent improper activities.

We ensure that every policy contains a clear plan for communication, training, implementation and monitoring for effectiveness. For example, RBC provides training for employees about money laundering and terrorism financing through web-based training, presentations, conferences and internal communications vehicles such as newsletters and websites.

Our Global Anti-Money Laundering 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.

Furthermore, to enhance our anti-money laundering capabilities, we implemented an enhanced software system to detect, track and analyze transactions for suspicious activities.

CLIENT CONCERNS AND RESOLUTION
We make every effort to resolve client concerns at the first point of contact. If that is not possible, the issue is referred to RBC’s Customer Relations Centre (CRC). In advance, we commit to a definitive time frame for resolving the problem. If an issue cannot be resolved through the CRC, the final point of appeal within RBC is the Office of the Ombudsman, which provides a neutral process for open discussion and voluntary resolution of outstanding conflicts. Our dispute resolution specialists are trained in listening, fact-finding and mediation.

RBC has produced annual Ombudsman reports since 2000, outlining case statistics and analysis. For more information, see rbc.com/ombudsman.

MUTUAL FUND GOVERNANCE
As a member of the Investment Funds Institute of Canada and the Canadian Coalition for Good Governance, RBC Asset Management Inc. helps develop and strives to follow best practices in the mutual fund industry.

Building on a tradition of independent fund governance, RBC Asset Management Inc. and the Board of Governors of the RBC Funds and RBC Private Pools have been active participants in the Canadian Securities Administrators’ development of a proposed rule that all mutual funds and investment funds have an independent review committee (IRC). The intent of the rule is to establish better fund governance practices and to require IRCs to review conflicts of interest that may arise as fund managers manage funds on behalf of investors. This is not new for RBC Asset Management. In 1994, it was one of the first firms to voluntarily establish an advisory Board of Governors to review conflicts of interest and provide advice.

RBC Asset Management’s publication, Mutual Funds and Governance: Taking Care of Your Investments, developed for clients and other stakeholders, highlights our commitment to fund governance and protecting the interests of investors.

CRISIS MANAGEMENT

RBC’s Crisis Management teams are responsible for the overall identification, isolation and management of major crises, and are activated when crises emerge that are both within and outside RBC’s control. We also have formal business continuity management processes in place right across the organization, and undergo periodic crisis simulations to help prepare for possible crises, while testing the practicality of contingent strategies and tactics and the capabilities of crisis teams.

In 2004, the Crisis Management team set up an emergency information telephone line, available to employees and families in the event of an RBC-wide crisis, in case of incidents such as power blackouts, severe weather conditions, or other situations affecting our ability to access RBC offices or serve our clients. In addition, employees can access information regarding situations in their local areas.