FRANCE: ANTI-MONEY LAUNDERING

 

  • What is the governing legislation?

The French Monetary and Financial Code

The French Criminal Code

The French Customs Code

  • What are the offences?

The French Criminal Code sets out a general offence of money laundering (Art. 324-1) while also providing for specific offences for money laundering in relation to drug trafficking (Art. 222-38), customs offence (Art. 415 of the Customs Code) and terrorist financing (Art. 421-1-6), or tax fraud.

Money laundering consists in enabling by any means the false justification of the source of assets or income of such offence and providing assistance for the investment, concealment or conversion of the fruits of the offences.

Attempted money laundering is sanctioned and subject to the same penalties as money laundering (Art. 121-5 and 324-6 of the Criminal Code).

Recent legislation on money laundering has been passed to tighten the rules following various financial scandals and terror attacks in France. The law of 6 December 2013 introduced a presumption and reversed the burden of proof where the material, judicial or financial conditions of the operation of placement, of dissimulation, or of conversion could not have a justification other than to conceal the origin or the beneficial owner of the assets or income. In such case, it is the defendant who has to prove the legality of the funds or assets in question.

Following the recent terror attacks in France, the law n°2016-731 of 3 June 2016 introduced new rules to fight money laundering and terrorist financing. These include inter alia introducing a presumption of illegality of funds in the event of money laundering in relation to a customs offence, reinforcing customs powers, various measures. The law also provides that other rules will be taken through government ordinances. These relate to the powers of the services of the Ministry and Finance (Traitement du renseignement et action contre les circuits financiers clandestins TRACFIN), the reinforcement of control over e-money and prepaid cards, implementation of the fourth Anti-Money Laundering Directive (EU) No. 2015/849 extending the rules on freezing of assets.

 

  • Obligations

Certain categories of persons such as banks, credit establishments, insurance companies, building agents, accountants, lawyers and notaries who control or counsel operations resulting in movements of capital are subject to constant vigilance obligations. In this respect, they must declare to the services of the Ministry and Finance (TRACFIN) any operations they suspect to be in relation to money laundering.

 

  • Intent

Intent must be established, which requires proving that the accused acted with the requisite intent to commit the offence (Art. 121-3 of the Criminal Code).

 

  • What are the exceptions/defences?

The French Criminal Code does not provide for any statutory defences.

A defence can only be raised based on absence of intent or failure to evidence money laundering e.g. no evidence of knowledge on the part of the defendant that the money was acquired through illegal means.

 

  • Enforcement

The public prosecutor is responsible for investigating criminal offences but an investigating judge (“juge d’instruction”) is usually appointed.

 

  • What are the  sanctions?

Money laundering is punishable by up to five years’ imprisonment and a fine of EUR375,000.

Money laundering in relation to drug trafficking is punishable by up to ten years imprisonment and a fine of up to EUR750,000.

Money laundering in relation to a customs offence is punishable by up to ten years imprisonment, confiscation of the amounts relating to the offence and a fine between one and five times the amount of the offence or attempted offence.

Terrorist financing is punishable by ten years’ imprisonment and a fine of EUR225,000 (Art. 421-5 of the Criminal Code).

Where a legal person is convicted of any of the above-mentioned offences, the maximum applicable fine is five times the fine applicable to natural persons.

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