France Fights Financial Crime but Overseas Territories Remain Vulnerable

France Fights Financial Crime but Overseas Territories Remain Vulnerable

Introduction

France has been praised for its efforts to tackle financial crime, with a robust framework in place to combat money laundering and terrorist financing. However, a recent report from the Financial Action Task Force (FATF) highlights critical gaps in the country’s control over profits from illegal trade in its overseas territories.

FATF Evaluation Report

The FATF evaluation report commended France’s “robust and sophisticated framework” for fighting financial crime, noting that efforts have resulted in significant successes, depriving criminals of substantial amounts of money. However, the report also identified vulnerabilities in France’s maritime access to the Mediterranean and Atlantic via both EU and overseas borders, such as French Guiana and the French West Indies.

Vulnerabilities in Overseas Territories

The FATF report highlighted that these territories are particularly vulnerable to drug trafficking, with cocaine being smuggled into mainland France. The proceeds from offences like theft, fraud, and misuse of corporate funds are difficult to evaluate due to the transfer of funds to bank accounts in the sub-region, where international cooperation is often challenging.

Lack of Strategy and Insufficient Supervision

A source involved in the FATF report’s creation told EURACTIV that the real risks likely run higher than what is suggested in the report. The insider added that France lacks a specific strategy for this geographical zone and that the supervision in much of the non-financial sector is insufficient, particularly for real estate agents and notaries involved in the real estate sector.

Recommendations from FATF

The FATF recommended that France increases the number of money laundering technical specialists across all its competent authorities to address these gaps. The report also praised the financial crime intelligence service TRACFIN, which plays a vital role in the AML/CFT system, both nationally and internationally.

Strengthened Efforts Against Financial Crime

France’s efforts to combat financial crime have been strengthened over the past ten years, with the creation of dedicated institutions such as:

Central Office for the Fight Against Corruption and Financial and Tax Offences (OCLCIFF)
French anticorruption agency (AFA)
National Financial Prosecutor’s office (PNF)

Ongoing Vigilance

Didier Banquy, president of COLB, the national advisory board for AML/CFT, said that France had “considerably strengthened [the board’s] operational and legal arsenal to be able to tackle these threats in [the] country.” However, he added that ongoing vigilance is essential to adapt and update risk assessments as criminal practices evolve rapidly.

The FATF evaluation report serves as a reminder of the importance of ongoing efforts to combat financial crime and address vulnerabilities in France’s overseas territories. As Banquy noted, it is essential to maintain ongoing vigilance to ensure that these threats are effectively tackled in the country.