France Tightens Rules on Asset Freeze, Funds Prohibition
In an effort to strengthen its anti-money laundering (AML) and counter-terrorist financing (CFT) measures, France has introduced new regulations aimed at preventing the misuse of assets and funds.
Strengthening AML/CFT Measures
The new rules, outlined in an Order dated January 6, 2021, require reporting entities, such as banks and insurance companies, to implement robust systems for detecting transactions linked to individuals subject to asset freezes and prohibitions on making funds or economic resources available or using them.
Outsourcing Contracts
Under the new regulations, reporting entities must specify in their outsourcing contracts with external service providers:
- The tasks they have entrusted to them
- Ensure that these providers comply with French AML/CFT laws
- Include provisions for back-up mechanisms to ensure continuity of service in the event of a serious incident
Internal Procedures
Reporting entities are required to establish internal procedures for detecting transactions carried out for the benefit of individuals subject to asset freezes and prohibitions on making funds or economic resources available or using them. These procedures must include:
- Methods for analyzing alerts
- Implementing measures for freezing assets and prohibiting the provision or use of funds or economic resources
- Lifting these measures when no longer necessary
Independence and Control Functions
The new regulations also emphasize the importance of strict independence between operational activities and control functions within reporting entities. This is to ensure that those responsible for monitoring operations are not compromised by conflicts of interest.
Designation of AML/CFT Responsible Person
Reporting entities must designate a person responsible for permanent control of their AML/CFT systems and asset freeze procedures. They must also conduct periodic monitoring of these arrangements to verify compliance with French laws and regulations.
Impact on the Financial Sector
The new regulations aim to enhance France’s efforts in combating money laundering, terrorist financing, and the misuse of assets, and are expected to have a significant impact on the country’s financial sector.