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France Tightens the Noose on Money Laundering and Terrorist Financing with New AML Policies and Procedures

In an effort to combat money laundering and terrorist financing, France has transposed the Fifth Money-Laundering Directive into its national law. The new regulations aim to improve transparency in financial transactions and enhance due diligence measures.

French Financial Markets Authority’s Priorities

The French Financial Markets Authority (AMF) has identified the fight against money laundering and terrorist financing as one of its top priorities. To achieve this goal, the AMF has implemented a series of mandatory obligations for financial institutions, including:

  • Risk assessment
  • Identification and verification of client and beneficial owner identities
  • Due diligence measures
  • Reporting suspicious transactions to TRACFIN

The Fifth Directive: Enhancing Transparency and Harmonization

The Fifth Directive, which came into force in July 2018, builds on the Fourth Directive transposed into French law in 2016. The new regulations aim to:

  • Make legal entities and structures more transparent by extending access to beneficial owner registers
  • Harmonize enhanced due diligence measures for high-risk countries
  • Specify measures for remote business relationships

Guidance Notes and Compliance Requirements

The AMF has also published guidance notes on various aspects of AML-CFT compliance, including:

  • The risk-based approach
  • Due diligence measures
  • Reporting suspicious transactions

The authority has emphasized the importance of regular risk assessments to identify threats, vulnerabilities, and the level of risk.

International Standards and National Laws

France’s AML policies and procedures are guided by international standards set by the Financial Action Task Force (FATF) and European Union directives. The country is also subject to national laws, including:

  • Monetary and Financial Code
  • AMF General Regulation

Implications for Financial Institutions

The new regulations have significant implications for financial institutions operating in France, which must implement robust AML-CFT systems to ensure compliance with the law. The AMF will closely monitor compliance and take enforcement action against institutions that fail to meet the requirements.

Conclusion

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France’s move to strengthen its AML policies and procedures is a step towards enhancing transparency in financial transactions and combating money laundering and terrorist financing.