Financial Crime World

Money Laundering Threats Loom Large in France Despite Robust Framework

Despite significant strides in combating money laundering and terrorist financing, France still faces a range of threats that require further action.

According to a recent report by the Financial Action Task Force (FATF), while France’s legal framework is robust and effective in many areas, there are still gaps that need to be addressed. The country faces substantial threats from tax fraud, drug trafficking, and terrorism, with the threat of terrorist financing remaining high since the 2015 attacks.

Thematic National Policies

France has adapted its legal framework to mitigate these risks through thematic national policies. The financial sector and supervisors have a good understanding of money laundering and terrorist financing risks, but supervision of the virtual asset sector is still under development.

Supervision and Compliance

Risk-based supervision of designated non-financial businesses and professions is insufficient in some areas, particularly real estate agents and notaries involved in the real estate sector. While compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) obligations has improved among financial institutions, there are still limitations for real estate agents and business service providers.

Awareness of Obligations

Some sectors remain unaware of their obligations, especially when it comes to beneficial ownership, politically exposed persons, and suspicious transactions reporting.

Investigations and Prosecutions

France has made significant progress in using financial intelligence, conducting money laundering investigations and prosecutions, with competent authorities prioritizing the prosecution of high-end money laundering cases. However, a lack of specialized investigative resources impacts the duration of investigations, particularly in complex cases.

Asset Confiscation

The country has also been successful in confiscating criminal assets, with criminals being deprived of proceeds, property, or other assets valued at EUR 4.7 billion annually.

International Cooperation and Sanctions

French authorities have a well-established practice of international cooperation with foreign counterparts, providing good quality and effective mutual legal assistance in criminal matters and making extensive use of informal cooperation. The country plays an active role in proposing individuals or entities designations to the European Union, United Nations, and national sanctions lists.

Combating Terrorism Financing

The fight against terrorism and its financing is a top priority for France, which has obtained very good results. Prosecution, investigative, and intelligence authorities collaborate effectively to exchange information and systematically include terrorist financing components in investigations. The country’s legal and operational framework enables French authorities to combat terrorism and its financing effectively, resulting in a 93% conviction rate for terrorist financing prosecutions.

Recommendations

The report highlights that France needs to improve monitoring of the non-profit sector to prevent its potential misuse for terrorist financing, including through a more in-depth terrorist financing risk assessment. Despite these challenges, France remains committed to combating money laundering and terrorist financing threats.

Key Takeaways

  • France’s legal framework is robust, but gaps remain that need to be addressed
  • Supervision of the virtual asset sector and real estate agents needs improvement
  • Compliance with AML/CFT obligations varies across sectors
  • Investigations and prosecutions require more specialized resources
  • International cooperation and sanctions are effective tools in combating money laundering and terrorist financing
  • France needs to improve monitoring of the non-profit sector to prevent misuse for terrorist financing