Financial Crime World

French Criminal Code: Heavy Penalties for Money Laundering and Tax Fraud

In France, money laundering and tax fraud are considered serious crimes, punishable by severe penalties. The French Criminal Code and other relevant laws impose significant fines and imprisonment on individuals and legal entities found guilty of these offenses.

Penalties for Natural Persons

  • Tax fraud: up to five years’ imprisonment and a fine of €500,000 (Article 1741 of the General Tax Code)
  • Aggravated tax fraud: seven years’ imprisonment and a fine of €3 million, with the possibility of increasing the fine to half the value of criminal proceeds
  • Money laundering: penalties vary depending on the circumstances
  • Tax fraud: maximum penalty of five times the fine provided for natural persons, up to €2.5 million
  • Money laundering: maximum penalty of five times the fine provided for natural persons, up to €1.125 million (Article 422-5 of the French Criminal Code)

Administrative Penalties

In addition to criminal penalties, non-compliance with anti-money laundering and terrorism financing obligations can lead to administrative fines:

  • Prudential Supervision and Resolution Authority: fines ranging from €5 million for natural persons to €100 million or 10% of net annual turnover for legal entities (Article L 561-36-1 of the Monetary and Financial Code)
  • Financial Markets Authority: fines up to €15 million or five times the amount of profits made for natural persons, and up to €100 million or ten times the amount of profits made for legal entities (Article L 621-15 of the Monetary and Financial Code)
  • National Sanctions Commission: fines up to €5 million (Article 561-40 of the Monetary and Financial Code)

Plea Agreements

In France, plea agreements are available in certain circumstances. The Code of Criminal Procedure allows for a company to agree to undertake specific obligations, such as paying a fine, implementing compliance measures, or compensating victims, in exchange for dismissing charges (Article 41-1-2 of the Code of Criminal Procedure). This is known as a “Convention Judiciaire de Réparation” (CJR).

For example, HSBC Private Bank agreed to pay a fine of €300 million to settle criminal charges of money laundering or tax evasion proceeds without admitting guilt.

Defences

In France, certain defences are available for parties accused of money laundering, terrorism financing, or fraud:

  • Covered institutions and persons who have fulfilled their obligations to report suspicious activities cannot be prosecuted for violating professional privilege or confidentiality rules (Article L 561-22, I of the Monetary and Financial Code)
  • Covered institutions can benefit from exemption from prosecution if they have implemented a reinforced anti-money laundering procedure and fulfilled their reporting obligations to Tracfin

Record-Keeping and Disclosure Requirements

Under French law, institutions and persons listed in Article L 561-2 of the Monetary and Financial Code (covered institutions and persons) are required to:

  • Maintain records and information about their customers for five years from the closure of the account or termination of their business relationship
  • Report without delay any funds recorded on their books or transactions that they know, suspect, or have good reason to suspect are related to an offence carrying an imprisonment sentence of more than one year or terrorism or tax evasion

By understanding these penalties, plea agreements, defences, and record-keeping requirements, companies and individuals can better navigate the complex legal landscape of money laundering, terrorism financing, and fraud in France.