Short overview of the French legal requirement for internal controls relating to the AML-CFT
Bastille Day Newsletter 2021 - Legislative, Regulatory & Policy Updates
On 16 January 2021, a new Order clarifying the requirements for internal controls relating to anti-money laundering and combating terrorist financing and assets freezing was published in the French Official Journal[i]. It came into force on 1 March 2021[ii] and describes the content of the AML-CFT system that entities subjected to AML-CFT obligations[iii] must put in place.
This text completes the Ordinance no.2020-115 of 12 February 2020[iv] transposing the fifth directive of the European Union on AML-CFT[v] and ensures France’s compliance with the last recommendations of the Financial Action Task Force (“FATF”, the intergovernmental AML-CFT body)[vi].
The entities subjected to AML-CFT obligations must identify, assess, and classify money laundering and terrorist financing risks, for existing products as well as when launching a new product, service or business practice[vii]. The level of risk must be assessed and updated according to the FATF, the European Commission and the OECD risk country lists[viii].
The internal control system must be formalized in writing with the necessary precision and has to be updated regularly to allow its implementation[ix].
Parent companies must establish and update a classification of risks identified and assessed at group level[x]. Procedures should be put in place to ensure the effectiveness of AML-CFT systems to reduce these risks[xi] and a group compliance officer must be appointed to this end[xii].
The Order also elaborates on the role of the AML-CFT Compliance Officer who is in charge of defining and monitoring the implementation of the AML-CFT system. In this capacity, that person must validate the risk classification, validate the AML-CFT internal procedures ensuring that information exchange and escalation procedures enable the effective and rapid transmission of the information required for the performance of their duties to the persons involved in the implementation of AML-CFT obligations. The Compliance Officer must also ensure that the subsidiaries and branches established abroad have mechanisms in place to monitor the compliance of their operations with local rules on the fight against money laundering and terrorist financing and the freezing of assets[xiii].
After informing the Autorité de Contrôle Prudentiel et de Resolution (“ACPR”)[xiv], the reporting entity may choose to entrust AML-CFT prevention to an external service provider[xv]. The Order describes the compulsory terms and conditions of outsourcing contracts, such as the description of the service provider’s tasks or its obligation to inform the reporting entity of any event affecting its mission[xvi]. Entities subjected to the Order must ensure that outsourcing contracts signed before March 2021 comply with the Order before 16 January 2022[xvii].
The Order reiterates the obligation to detect any transaction carried out for the benefit of persons subject to a freezing order, or any use of funds or resources held by persons subject to such an order[xviii]. Internal procedures must be put in place, particularly for the analysis of alerts relating to freezing orders and for the implementation of freezing measures and their lifting[xix].
Furthermore, the Order reaffirms the requirement to implement an internal control system for operations. The reporting entity must designate persons responsible for a specific permanent[xx] and periodic [xxi] Such persons must be independent from operational staff [xxii] and their identity must be communicated to the ACPR[xxiii].
Finally, the Order insists on the responsibility of the top management in the implementation of AML-CFT measures. To do so, they must have the necessary information[xxiv] to periodically monitor their effectiveness and take the necessary measures to remedy their inadequacy[xxv]. An annual report on the organisation of the internal control mechanisms must be drafted by the board or any other managing or governing body of the entity[xxvi].
Through the Order, the French legislator clearly intends to intensify its fight against threats related to money laundering, terrorist financing and the freezing of assets.
Related content
Event
24 June 2025
Moving from a compliance program to a true culture and ethics of anti-corruption in decision-making
On 25 and 26 June 2025, the International Bar Association's annual anti-corruption conference will be held in Paris, providing an...
Press review
20 June 2025
Press review – Week of 16 June 2025
This week's press review covers the recommendations of the Cercle des Juristes, which has put forward seven proposals aimed at...
Press review
13 June 2025
Press review – Week of 9 June 2025
This week's press review covers the indictment of Pascaline Bongo in a corruption and money laundering case, the designation of...
Analysis
11 June 2025
The evolution of US law enforcement policy regarding corruption and organized crime
By executive order dated 10 February 2025, the Trump administration temporarily suspended FCPA enforcement actions as part of a strategic...
Press review
6 June 2025
Press review – Week of 2 June 2025
This week’s press review covers the coordination at the French national level of the economic sanctions decided by the European...
Event
26 May 2025
[Webinar] Enhanced Anti-Corruption Cooperation: A UK–Switzerland–France Perspective
Co-chairs of the American Bar Association International Law Section's International Anti-Corruption Committee suggested a discussion of anti-corruption efforts outside the...
Analysis
20 May 2025
CJIP Paprec: criminal penalties applicable to violations of the rules governing public procurement
On 10 February 2025, Paprec signed a “Convention judiciaire d'intérêt public” – CJIP (equivalent to a Deferred Prosecution Agreement) to...
Press review
9 May 2025
Press review – Week of 5 May 2025
This week’s press review covers the resignation of François Commeinhes from his position as mayor of Sète, following his final...
Press review
2 May 2025
Press review – Week of 28 April 2025
This week’s press review covers the requisitions made against François Fillon in the fictitious employment case following a cassation ruling,...
Press review
25 April 2025
Press review – Week of 21 April 2025
This week’s press review covers the release of Prince Paul of Romania by French authorities, despite a European arrest warrant...
Press review
18 April 2025
Press review – Week of 14 April 2025
This week’s press review covers the extension of the investigation into Eric Garandeau for illegal taking of interest in the...
Press review
11 April 2025
Press review – Week of 7 April 2025
This week’s press review covers the European Parliament's vote to postpone the application of the CSRD to certain companies, as...
We use cookies to optimize our website and our services.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Préférences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.