Stricter Due Diligence Measures Required for French Financial Institutions
To combat money laundering and terrorist financing, French financial institutions are now required to implement stricter due diligence measures when conducting business relationships with customers. This new ordinance came into effect on January 1st and aims to strengthen the fight against these illicit activities.
Thorough Background Checks Required
Under the new rules, financial institutions must conduct thorough background checks on their clients. They must also report any suspicious transactions to the French anti-money laundering agency, TRACFIN.
Customer Classification and Enhanced Due Diligence
Financial institutions are required to classify each customer as either low-risk, medium-risk, or high-risk based on their business activities, location, and other factors. Those classified as high-risk will be subject to enhanced due diligence measures, including:
- More frequent monitoring of transactions
- Increased scrutiny of their business dealings
Record Keeping and Ongoing Due Diligence
Financial institutions must also maintain accurate records of all customer information and transaction data for at least five years after the termination of the business relationship. Additionally, they must conduct ongoing due diligence on customers throughout the duration of the business relationship to ensure that they are not engaged in any illegal activities.
Compliance with International Standards
The new ordinance is part of France’s efforts to comply with international standards on anti-money laundering and counter-terrorism financing regulations. The country has committed to implementing the Financial Action Task Force (FATF) recommendations, which require countries to have effective systems in place to prevent and detect money laundering and terrorist financing.
Consequences for Non-Compliance
Financial institutions that fail to comply with the new ordinance risk facing penalties and fines for non-compliance. The French government has warned that it will take a tough stance on any institution found to be violating the rules.
Call to Action
“We urge all French financial institutions to take the necessary steps to comply with the new ordinance,” said a spokesperson for the French government. “We will be monitoring compliance closely and taking action against any institution found to be non-compliant.”
In conclusion, the new ordinance is a major step forward in France’s efforts to combat money laundering and terrorist financing. Financial institutions are being urged to ensure that they have robust systems in place to meet the new requirements.