Financial Crime World

France Tightens Financial Crimes Prevention Measures with Fifth AML-CFT Directive Transposition

In the ongoing battle against money laundering and terrorist financing (AML-CFT), the Autorité des marchés financiers (AMF) of France has prioritized strengthening its supervisory role. The transposition of the Fifth Money-Laundering Directive into French law marks a significant step forward in enhancing transparency and safeguards against terrorist financing and money laundering.

Foundational Obligations from the Fourth Directive

Since December 2016, France has enshrined the following foundational obligations from the Fourth Directive in its Monetary and Financial Code:

  1. Risk assessment
  2. Client and beneficial owner identification and verification
  3. Due diligence throughout business relationships
  4. Suspicious transaction reporting to TRACFIN
  5. Internal audits and reporting to the AMF
  6. Asset freezing measures

The Fifth AML-CFT Directive: An Overview

Proposed by the European Commission following the 2015 Paris terrorist attacks and the Panama Papers scandal, the Fifth Directive (EU Directive 2018/843 of 30 May 2018) came into force on December 3, 2020. The Directive aims to:

  1. Bolster transparency of legal entities and structures through access to beneficial owner registers
  2. Harmonize heightened due diligence measures for riskier business relationships or transactions
  3. Outline measures for remote business relationship creation
  4. Regulate specific virtual asset service providers under AML-CTF rules

International and European Legislation

Key legislative frameworks combating financial crimes include:

  1. FATF Recommendations
    • The Financial Action Task Force (FATF) sets the global standard to prevent and counter money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.
  2. Risk-based Approach Guidance for the Securities Sector
  3. Risk-based Approach Guidance for Virtual Assets and Virtual Asset Service Providers
  4. EU Directive (EU) 2015/849 - The Fourth Anti-Money Laundering Directive
  5. EU Directive (EU) 2018/843 - The Fifth Anti-Money Laundering Directive
  6. Commission Delegated Regulation (EU) 2016/1675

Impact and Significance

The transposition of the Fifth AML-CFT Directive into French law marks a significant step forward in France’s financial crimes prevention efforts. The measures introduced by the Directive enhance transparency and safeguards against terrorist financing and money laundering, ensuring that France remains at the forefront of global efforts to combat these illicit activities.