France: The Importance of Risk Assessment in AML Compliance

Overview

As one of the wealthiest countries in Europe and the world, France has an economy that attracts diverse business interests, including international banks and fintechs. However, this economic prominence also makes France a target for criminals seeking to launder money, finance terrorist activities, and commit financial crimes.

In response to this threat, the French government imposes strict anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations on its financial institutions. To avoid compliance penalties and contribute to the fight against financial crime, firms operating in France must understand how to meet these obligations efficiently.

Financial Regulators in France

France has established several financial supervisory authorities to regulate the country’s financial marketplace and ensure compliance with AML/CFT regulations.

The Autorité des Marchés Financiers (AMF)

Regulates the French financial marketplace, its participants, and investment products distributed via its markets.
Ensures that all financial institutions operating in France comply with AML/CFT regulations.

The Autorité de Contrôle Prudentiel et de Résolution (ACPR)

Regulates France’s banking and insurance businesses under the direct authority of the Banque de France.
Oversees the implementation of AML/CFT measures by banks and other financial institutions in France.

The Traitement du renseignement et action contre les circuits financiers clandestins (TRACFIN)

Operates under the authority of the French Ministry of Finance, analyzing and investigating suspicious activity reports submitted by French financial institutions.
Collaborates with international partners to combat money laundering and terrorism financing.

Key AML/CFT Regulations in France

French AML/CFT compliance involves several key regulations and controls:

The French Monetary and Financial Code

Criminalizes money laundering and terrorism financing in France.
Requires all financial institutions operating in France to implement effective AML/CFT measures.

The AMF General Regulation

Sets out the AML/CFT compliance rules that all French institutions must follow.
Recommends a risk-based approach to AML/CFT, establishing beneficial ownership, screening for PEPs, and reporting suspicious activity to TRACFIN.

Compliance with French AML Regulations

To comply with French AML regulations, firms must conduct risk assessments of individual customers and implement automated software systems capable of managing the data collection requirements of French AML regulations. An effective AML/CFT solution in France involves:

Customer Identification

Conduct suitable customer due diligence (CDD) to identify customers and build accurate risk profiles.
Verify customer information through various means, including documentation and online checks.

Beneficial Ownership

Conduct beneficial ownership checks to ensure that customers are not using corporate structures or shell companies to disguise money laundering.
Update beneficial ownership records regularly to reflect changes in ownership or control.

Transaction Screening

Screen customer transactions against relevant lists and registers, including PEP lists, beneficial ownership registers, and international sanctions lists.
Use technology to automate transaction screening and reduce the risk of human error.

Recent AML/CFT Developments in France

The AMF publishes the latest updates to French AML/CFT regulation on its news page. Key recent developments include:

MiCA

The provisional agreement on the EU’s new crypto regulatory framework, known as Markets in Crypto Assets (MiCA).
Introduces stricter regulations for cryptocurrency exchanges and other digital asset service providers.

ESG Data

The call for a Europe-wide regulatory framework for environmental social and governance (ESG) data.
Encourages financial institutions to consider ESG factors when making investment decisions.

Ukraine Sanctions

Guidance for French firms regarding the enforcement of sanctions against Russia and Russian individuals.
Requires all financial institutions operating in France to comply with these sanctions and freeze any assets belonging to sanctioned individuals or entities.

Enhancing AML Compliance Performance

Our Labyrinth Screening platform enables firms in France and around the world to enhance their AML/CFT compliance performance. Labyrinth Screening incorporates next-generation machine learning technology to match customer names across thousands of global data sources, including PEP lists, sanctions lists, and adverse media sources, in 21 languages.