Financial Crime World

Here is the converted article in Markdown format:

French Law Outlines Due Diligence Measures to Combat Money Laundering

The French government has outlined stringent due diligence measures to combat money laundering and terrorist financing in the financial sector. According to a decree issued on September 2, 2009, financial institutions must implement additional measures to verify the identity of customers and assess the risk of money laundering.

Low-Risk Customers

Financial institutions are exempt from enhanced due diligence for customers who:

  • Are listed companies whose securities are admitted to trading on at least one regulated market in France or a state party to the European Economic Area.
  • Are public authorities and public bodies with accessible identities.

Additional Due Diligence Measures

Obligated entities must implement additional measures when dealing with customers who:

  • Are not physically present during identification
  • Are politically exposed persons (PEPs)
  • Engage in anonymous transactions
  • Conduct business with individuals or entities from countries listed by the Financial Action Task Force

These measures include:

  • Obtaining official documents
  • Verifying identities through third-party certifications
  • Requiring initial payments to be made from or to an account opened with a regulated entity

High-Risk Situations

Strengthened due diligence measures are required when dealing with customers who present a high risk of money laundering, including situations where:

  • Transactions appear complex, unusually large, or lack economic justification.
  • Financial institutions must evaluate the anti-money laundering and counter-terrorism financing measures implemented by co-contracting institutions.

Constant Due Diligence

Obligated entities must conduct constant due diligence throughout the business relationship to ensure that customers are accurately monitored. This includes:

  • Verifying the consistency of transactions with customer profiles
  • Updating knowledge about customers to apply appropriate due diligence measures

Prohibition to Enter into a Business Relationship

Financial intermediaries cannot enter into a business relationship if they are unable to identify their customer or obtain information about the purpose, nature, and business relationship. If an existing relationship is deemed high-risk, financial institutions must terminate it and report suspicious transactions to TRACFIN.

Obligation to Report Suspicious Transactions

France has adopted a dual system of due diligence and reporting obligations to combat money laundering. Financial institutions are required to make suspicious transaction reports to TRACFIN if they suspect or have reasonable grounds to suspect money laundering or terrorist financing offenses.

The decree aims to strengthen France’s efforts to prevent and detect money laundering, as well as to ensure the integrity of the financial system.