Financial Crime World

France Takes Steps to Combat Money Laundering and Terrorist Financing

France has implemented a range of measures aimed at preventing the misuse of its financial system, in line with the Financial Action Task Force (FATF) recommendations and the European Union’s (EU) Fourth Anti-Money Laundering Directive.

Prohibition on Shell Banks

France has prohibited financial institutions from carrying out transactions with shell banks, which are banks that have no physical presence in the countries where they are licensed and no effective supervision. This prohibition applies to credit, payment, and electronic money institutions.

Suspicious Activity Reporting

Financial institutions and designated businesses must report suspicious activity if they:

  • Know
  • Suspect
  • Have good reason to suspect that an operation originates from an offence punishable by a custodial sentence of more than one year or is linked to the financing of terrorism.

The report must be filed with the competent authorities.

Modernization of AML Regime

France is working to modernize its Anti-Money Laundering (AML) regime, which includes:

  • Improving supervision
  • Giving more powers to financial intelligence units
  • Harmonizing content and access to registers of beneficial owners

The country has also proposed the creation of a European Anti-Money Laundering Authority (ALBC) to ensure coordination in the fight against money laundering.

Evaluation by FATF

France’s AML regime was last evaluated by the FATF in May 2022, which concluded that France has a robust and sophisticated framework that is effective in many respects. However, the country needs to improve its supervision of professionals involved in the activities of legal entities and the real estate sector.

Access to Anti-Money Laundering Laws and Regulations

Anti-money laundering laws, regulations, administrative decrees, and guidance can be accessed on the Internet through:

  • The French Financial Markets Authority (AMF)
  • The French Treasury’s website

Although not all materials are available in English, they can easily be translated.

Conclusion

France has taken significant steps to combat money laundering and terrorist financing, including prohibiting shell banks, reporting suspicious activity, and modernizing its AML regime. The country is working to improve its supervision and coordination with other EU member states to ensure an effective fight against money laundering.