Financial Crime World

Mutual Evaluation of France’s Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Measures

Introduction

France’s Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) measures have been evaluated to assess their effectiveness in preventing and detecting money laundering and terrorist financing. This evaluation provides an overview of France’s AML/CFT regulations, highlighting areas of strength and improvement.

Reimbursement and Repurchase

  • The report highlights a need for additional due diligence measures on bonds that can circulate between subscription and reimbursement without revealing the identity of their holders.
  • These bonds pose a high risk of money laundering and terrorist financing due to their anonymity.

Customer Identification

  • French authorities require detailed identification of customers for business relationships and occasional transactions.
  • However, there’s an issue with regular customers where suspicions arise, as the obligation to identify them explicitly concerns occasional customers.

Risk-Based Approach

  • A risk-based approach is used, involving updating customer files on a priority basis for those presenting higher risks of money laundering or terrorist financing.

Beneficial Ownership

  • French law defines beneficial owners as natural persons who directly or indirectly control the customer.
  • This definition aligns with Recommendation 5 and Directive 2005/60/EC.

Ongoing Due Diligence

  • Institutions are required to ensure transactions are consistent with their knowledge of customers, meeting the requirements of Recommendation 5.

Enhanced Measures

  • A new legal and regulatory framework was set up in 2009 to meet the requirement for enhanced measures for high-risk customers, products, or transactions.
  • However, a limitation exists in systematically covering increased monitoring of transactions later on in the business relationship.

Low-Risk Customers

  • The customer due diligence regime for low-risk situations is mentioned, although its effectiveness has not been fully assessed.

Conclusion

This analysis provides an overview of France’s AML/CFT regulations and their compliance with international recommendations. While areas of strength exist, improvements are needed in certain aspects to further enhance the country’s AML/CFT measures.