France

Last updated: 03/04/2014


CENTRAL AUTHORITY FOR REPORTING

Traitement du Renseignement et Action Contre les Circuits Financiers Clandestins (‘TRACFIN’) is an authority to whom suspicious transaction reports should be sent.

The Order of 30 January 2009, which implemented the 3rd European Anti-Money Laundering Directive into national law, extended the scope of TRACFIN's investigations by requiring that a suspicious transaction report be submitted whenever the reporting party knows, suspects, or has good reason to suspect, that a transaction or  attempted transaction:

-  Is based on an offence that is punishable by more than one year’s imprisonment; or

-  Is connected to terrorist financing.

(Article L. 561-15 of the French Monetary and Financial Code).

Tax fraud now falls into the scope of underlying offences covered by the Order. Nevertheless, the law provides that in cases of tax fraud, the suspicious transaction report must contain at least one objective element from the list established by Decree No. 2009-874 of 16 July 2009.

TRACFIN gathers, analyses, supplements and makes use of any and all intelligence from these reports, or from TRACFIN’s foreign counterparts, in order to establish the criminal origin or destination of a transaction (Article L. 561-23-II paragraph 2 of the French Monetary and Financial Code).

When the investigation reveals facts that may constitute an offence punishable by more than one year’s imprisonment, TRACFIN must refer the case to the Public Prosecutor’s Office (Article L. 561-23-II paragraph 3 of the French Monetary and Financial Code).

The State Prosecutor informs TRACFIN of all final court orders relating to suspicious transactions that have been reported (Article L. 561-24 paragraph 2 of the French Monetary and Financial Code).

The scope of TRACFIN’s investigations has also been extended by Article L. 561-15-1 of the French Monetary and Financial Code (Article 12 of the Law No. 2013-672 of 26 July 2013 on the separation and regulation of banking activities). Pursuant to this article, providers of banking services, payment institutions and electronic money institutions must submit to TRACFIN information relating to transfers of funds which take place by cash-transfer or using electronic money. 


ANTI-MONEY LAUNDERING REGULATOR(S)

Supervisory authorities for professionals in the financial sector:

  • The Banking Commission for banks and credit institutions.
  • The Autorité de Contrôle des Assurances et des Mutuelles (‘ACAM’) for insurance companies, mutual insurers and benefit institutions. Note: the Order of 21 January 2010 introduced the Prudential Control Authority, which is now called the Prudential Control and Resolution Authority (Law No. 2013-672 of 26 July 2013 on the Separation and Regulation of Banking activities), an independent administrative authority resulting from the merger of the banking commission, ACAM and the Comité des établissements de crédit et des entreprises d’investissement (‘CECEI’) for credit institutions and investment firms.
  • The Autorité des Marchés Financiers (‘AMF’) for investment firms, investment management firms, securities settlement system managers, financial advisors and traders.

Supervisory authorities for professionals in the non-financial sector :

  • Chambers of Notaries for notaries within their jurisdiction
  • The Haut Conseil du Commissariat aux Comptes for auditors
  • The Order of Certified Accountants for certified accountants
  • The Department Chambers of Bailiffs for the bailiffs within their jurisdiction
  • The Conseil National des Administrateurs Judiciaires et Mandataires Judiciaires for insolvency practitioners and creditor representatives
  • The Conseil des Ventes Volontaires de Meubles aux Enchères Publiques for sales of movable property by public auction
  • The General Directorate for Competition Policy, Consumer Affairs and Fraud Control (‘DGCCRF’) for real estate agents and commercial registered office providers
  • Officers of the national police force mandated with policing gaming in casinos
  • The Conseil de l’Ordre du Barreau with the assistance of the Conseil National des Barreaux for lawyers
  • The Conseil de l’Ordre des Avocats au Conseil d’État et à la Cour de Cassation for lawyers at the Conseil d’État and the Cour de Cassation

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED?  IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The Order of 30 January 2009 implemented the 3rd European Anti-Money Laundering Directive into national law.

The implementing Decree No. 2009-1087 dated 2 September 2009 was published on 4 September 2009.

Professionals were required to comply with their new obligations before 4 September 2010.


LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Articles L. 561-1 to L. 561-45 and Articles R. 561-1 to R. 561-38 of the French Monetary and Financial Code (applicable to lawyers).

The Order of 2 September 2009 adopted in application of Article R. 561-12 of the French Monetary and Financial Code, and defining information elements, in connection with knowledge of the client and the business relationship, in order to evaluate the risks of money laundering and terrorist financing (Official Journal dated 4 September 2009 and modified in Official Journal dated 12 September 2009) (applicable to lawyers).

Decree No. 2009-1108 of 10 September 2009 concerning the moneychanging profession and the Order of 10 September 2009 concerning the moneychanging profession.

The Order of 29 October 2009 concerning internal supervision of credit institutions and investment firms modifying the Regulation No. 97-02 of 21 February 1997.

The Order of 29 October 2009 concerning prudential regulation of payment firms.

The Order of 10 November 2009 defining the means for carrying out simplified anti-money laundering and terrorist financing vigilance obligations and modifying the Insurance Code, the Mutual Associations Code (Code de la Mutualité) and the Social Security Code (applicable to lawyers).

The Order of 12 November 2009 concerning ratification of changes to the general regulations of the Autorité des Marchés Financiers.

The Order of 24 December 2009 concerning ratification of changes to the general regulations of the Autorité des Marchés Financiers.

Decree No. 2010-52 of 15 January 2010 concerning obligations of chartered accountants in preventing the use of the financial system for the purposes of money laundering and terrorist financing.

Decree No. 2010-69 of 18 January 2010 setting up an anti-money laundering and terrorist financing steering committee.

The Order No. 2010-76 of 21 January 2010 which merges the authorisation and supervision authorities in the banking and insurance sectors.

The Order of 27 July 2011 concerning the list of non EEA states which has similar disclosure requirements to European Community legislation (applicable to lawyers).

Decree No. 2012-1125 of 3 October 2012 concerning suspicious transaction reporting and due diligence requirements in preventing the use of the financial system for the purposes of money laundering and terrorist financing.

Law No. 2013-100 of 28 January 2013 introducing various provisions adapting the French legislation to the European Union banking and financial legislation.

Decree No. 2013-384 of 7 May 2013 defining the conditions and details of the nomination of a permanent representative mentioned in Article L. 561-3 VI of the French Monetary and Financial Code.

Decree No. 2013-385 of 7 May 2013 setting up the conditions and procedures for the provision of information on substantive operations mentioned in Article L. 561-15-1 of the French Monetary and Financial Code.

Decree No. 2013-480 of 6 June 2013 setting up admissibility requirements to the suspicion report (modifying the Article R. 561-1 of the French Monetary and Financial Code).

The Order of 6 June 2013 setting up the procedure for transmission of the report and the information of the informant in the event of inadmissibility.

Law No. 2013-672 of 26 July 2013 on the separation and regulation of banking activities


ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

All lawyers admitted to one of the French Bars are subject to the local laws (Article. L. 561-2 Monetary and Financial Code). 


LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.)

The French Bar Association (Conseil National des Barreaux) has adopted professional guidelines on the obligations of lawyers under the anti-money laundering regime imposed by the Third European Directive, as implemented into French law by the Order of 30 January 2009. The guidelines were published in January 2012.


IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

Yes. Unless they act as fiduciaries, lawyers do not currently report directly to TRACFIN, rather they must declare any suspicions of money laundering to the President of the relevant Bar (Article R. 561-26 of the French Monetary and Financial Code).

The President then passes on such declarations to TRACFIN, unless he or she considers the suspicions to be unfounded (Article L. 561-17 of the French Monetary and Financial Code).

The same rule applies when TRACFIN sends an information request to a lawyer. The request must be sent to the President of the relevant Bar who will pass it on to the lawyer.

An information request sent directly to the lawyer would be deemed not receivable. 


DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Client due diligence requirements apply both to new clients and existing ones.

Client due diligence measures means:

-       identifying the client's identity on the basis of documents, data or information obtained from a reliable and independent source (Article L. 561-5 of the French Monetary and Financial Code);

-       identifying, where there is a beneficial owner who is not the client, the beneficial owner's identity; and  

-       obtaining information on the purpose and intended nature of the business relationship (including the client's main activity and source of wealth and the source of funds to be used to the transaction) (Article L. 561-6 of the French Monetary and Financial Code). 

The verification of the identity of the client, and of the beneficial owner where applicable, must be performed prior to the establishment of the business relationship (Article L. 561-5-I paragraph 1 of the French Monetary and Financial Code).

In some circumstances, such verification can be performed during the establishment of the business relationship, provided that the risk of money laundering or terrorist financing appears to be low (Article L. 561-5 of the French Monetary and Financial Code).

The above-mentioned client due diligence requirements are, however, not applicable to lawyers when:

1)     they provide assistance to clients in relation to a transaction which does not concern any of the following activities:

  • buying and selling of real estate and business entities;
  • managing of client money, securities or other assets;
  • opening of bank, savings or securities accounts;
  • organisation of contributions necessary for the creation of companies;
  • creation, operation or management of companies;
  • creation, operation or management of trust companies or any other similar structure; or
  • creation, operation or management of endowment capital.

2)     they ascertain the legal position for a client; or

3)     when they perform the tasks of defending and / or representing that client in judicial proceedings, including providing legal advice on instituting or avoiding proceedings.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes.


ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Yes.

1) When a lawyer provides assistance to a client in relation to a transaction which is   particularly complex, the amount of the transaction is particularly high, and the transaction does not seem to have any economic justification or legitimate purpose (Articles L. 561-10-2-II and R. 561-22 of the French Monetary and Financial Code).

2) Specific additional measures will have to be implemented where:

-  The client or its legal representative is not physically present for identification purposes; or

-  The transaction is a transaction for the client’s own account or for the account of third parties and is carried out with persons established in a state or territory where the local legislation or practice does not support anti-money laundering or anti-terrorist financing.

The specific additional measures include:

a)     measures ensuring that the client's identity is established by additional documents;

b)    measures to verify or certify the documents supplied, by an independent third party

c)     measures ensuring that the first payment of the transactions is made from or to an account opened in the client's name with a regulated financial institution established within the EEA; and

d)    measures to obtain confirmation of the identity of the client by a regulated financial institution established within the EEA or in a third country which imposes equivalent obligations relating to the fight against money laundering and terrorist financing.

3) In respect of transactions or business relationships with "politically exposed persons" residing in another Member State of the European Union or in a third country, all of the following specific supplementary measures will have to be implemented:

a)     a money laundering or terrorist financing risk-based approach must be defined and implemented in order to determine whether the client is a politically exposed person;

b)    the decision to enter into a business relationship with such a person must be taken by a member of the executive body or any person authorised for this purpose by the executive body; and

c)     the source of wealth and funds that are involved in the business relationship or transaction must be investigated.


ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Yes.

The client due diligence measures are not applicable, to the extent that there is no suspicion of money laundering or terrorist financing, for clients or transactions which represent a low risk of money laundering or terrorist financing such as:

a)     regulated financial institutions established in a Member State of the European Union or party to the agreement on the EEA, or in a third country which imposes equivalent obligations relating to the fight against money laundering and terrorist financing;

b)    listed companies whose securities are admitted to trading on a regulated market within the EEA, or in a third country implementing disclosure requirements consistent with the European Community legislation (a list of which should be set up by the French Minister of the economy);

c)     public authorities or public bodies designated as such pursuant to the Treaty on European Union, the Treaties on the Communities, Community secondary legislation, public law of a Member State of the European Union or any other international commitment of France, which fulfil all the following criteria:

(i)             the client's identity is publicly available, transparent and certain;

(ii)            the activities of the client, as well as its accounting practices, are transparent; and

(iii)           the client is either accountable to a Community institution or to the authorities of a Member State, or subject to appropriate procedures to control its activity.

Regardless of the identity of the client some transactions are not subject to the implementation of due diligence measures. These transactions include in particular transactions on e-money, transactions related to insurance policies, savings plans, asset financing and consumer lending, which represent a low risk of money laundering or terrorist financing (Article R. 561-16 Monetary and Financial Code).

Credit and payment institutions providing online payment services are not always subject to the obligations regarding the verification of the client’s identity,  if there is no suspicion of money laundering or terrorist financing (Article R. 561-16-1 of the French Monetary and Financial Code).

Simplified due diligence can be applied when the client or the transaction represent a low risk of money laundering or terrorist financing (the list of those clients and transactions is established by decree), or when the client is a regulated financial institution established in a member state of the European Union or party to the agreement on the EEA, or in a another country which imposes equivalent obligations relating to the fight against money laundering and terrorist financing (Article L. 561-9 Monetary and Financial Code).

In the cases mentioned above, the persons who are subject to the obligations relating to the fight against money laundering and terrorist financing will have to gather sufficient information to establish if the client or the transaction qualifies for one of these exemptions (Article L. 561-9-I of the French Monetary and Financial Code). 


ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

No. Only financial institutions are allowed to rely on third parties to meet their obligations regarding client identification procedures (Articles L. 561-7-I of the French Monetary and Financial Code).


WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Lawyers and lawyers acting as fiduciaries are under an obligation to declare any suspicions where any transaction is related to any offence punishable by a minimum of one year in prison or terrorist financing, when they carry out in the name of and for the account of their client any financial or property transaction, or when they participate in assisting their client in the preparation or carrying out of transactions concerning the following activities:

  • buying and selling of real estate and business entities;
  • managing of client money, securities or other assets;
  • opening of bank, savings or securities accounts;
  • organisation of contributions necessary for the creation of companies;
  • creation, operation or management of companies;
  • creation, operation or management of trust companies or any other similar structure; or
  • creation, operation or management of endowment capital.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

Because of their duty of professional confidentiality, lawyers may not transmit information about the above-mentioned suspicious transactions if this information was received from one of their clients or obtained from one of their clients in the course of ascertaining the legal position  (consultation juridique) of their client, or performing their task of defending or representing that client in or in connection with judicial proceedings, including providing legal advice on instituting or avoiding proceedings, whether such information is received or obtained before, during or after such proceedings (Article L. 561-3-II of the French Monetary and Financial Code).


DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

In theory, reporting provides the reporting party with immunity from civil and criminal liability and disciplinary sanctions (Article L. 561-22-III of the French Monetary and Financial Code and Article 226-10 and Article 226-13 of the French Criminal Code). 


ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

Yes. Provided that TRACFIN is advised of a transaction which has not yet been completed, it may block completion of the transaction for up to 5 days, during which time a court order to prevent its execution permanently may be sought (Article L. 561-25 paragraph 2 of the French Monetary and Financial Code).


IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Yes, tipping-off is not permitted and is considered a criminal offence (Articles L. 561-19-paragraph 1 and L. 574-1 of the French Monetary and Financial Code).

Lawyers may not disclose to the client or to third parties the fact that information has been transmitted to the Financial Information Processing Unit, or that a money laundering or terrorism financing investigation is being or may be carried out.

Dissuading a client from engaging in an illegal activity is however not considered as tipping-off.

The prohibition of disclosure also does not include disclosure to the President of the Bar Association or disclosure for law enforcement purposes.


DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

The verification of the identity of the client and the beneficial owner where applicable, must be carried out prior to the establishment of the business relationship (Article L. 561-5-I paragraph 1 of the French Monetary and Financial Code).

In some circumstances, such verification can be performed during the establishment of the business relationship, provided that the risk of money laundering or terrorist financing appears low (Article L. 561-5 of the French Monetary and Financial Code).

Where a lawyer is unable to apply client due diligence measures, he/she must not establish a business relationship or carry out an occasional transaction with the client or he/she must terminate any existing business relationship with the client (Article L. 561-8 of the French Monetary and Financial Code).

The lawyer may also decide whether there are grounds to inform TRACFIN through the President of their Bar Association. 


ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

Yes. Ongoing monitoring must be applied during the whole course of the business (Article L. 561-6 paragraph 2 of the French Monetary and Financial Code).

If there is any doubt whether information previously received about an existing client’s identity is correct or adequate, renewed verification of the client’s identity should take place.  


DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

N/A.


HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

Yes. Mrs. France Moulin took on the defence of a person arrested for the alleged laundering of money from drug trafficking. In 2007, she was charged with:

(i)             aiding and concealing the money laundering; and

(ii)            telling her client's friend information about the ongoing investigation.

The French court held that the lawyer was not liable for assisting her client to money launder but sentenced her for telling the client's friend about the ongoing investigation (decision of the Criminal Court (Tribunal correctionnel) of Orléans of November 2007). 


HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Yes. Between 18 January 2010 and 2 February 2010, the FATF conducted an assessment of the implementation of anti-money laundering and counter-terrorist financing (AML/CFT) standards in France. This was the FATF's third mutual evaluation of France.

The Order No. 2009-104 of 30 January 2009 and its implementing decrees revised and supplemented customer due diligence obligations. It appears that these new obligations, which apply to both financial institutions and non-financial professions, together with record-keeping and suspicious transaction reporting obligations, are very comprehensive, and largely compliant with FATF requirements. The level of compliance of non-financial professions with their AML/CFT obligations, however, is not completely satisfactory. The authorities will therefore need to make a considerable effort in this area.



Information supplied by:

Jacques Buhart
Avocat au Barreau de Paris
McDermott Will & Emery
jbuhart@mwe.com



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