Eu Member States have identified two weaknesses in the current anti-money laundering and anti-terrorist financing system: divergences in national transpositions of EU legislation and the absence of a central supervisory body.

Despite five revisions to the legal framework, money laundering remains a persistent problem in Europe. The Danske Bank scandal in Copenhagen, followed by the disclosures of the Cyprus papers and FinCen files showed that billions of dollars in suspicious transactions managed to get through the European market. Six countries (France, the Netherlands, Italy, Spain, Latvia and Germany) called, after the Danske Bank case, for a new supervisory authority, separate from the European Banking Authority.

A European regulation of direct application

On 4th November last the Ministers of Economy and Finance of the European Union meeting by videoconference for an Ecofin Council discussed the European Commission's action plan on the prevention of money laundering and terrorist financing, to improve the application, supervision and coordination of the rules in force since 2018. The ministers' conclusions were to provide the European Commission with guidance for the legislative proposals it will present in 2021. Member States have identified two weaknesses of the current system: divergences in national transpositions of EU legislation and the absence of a central supervisory body.

Ministers stressed the need for a single European regulation with direct application throughout the Union. Brussels now outlines a new European authority, "with the power to intervene punctually and assume supervision instead of a national supervisory authority in clearly defined exceptional situations, on the basis of objective and transparent criteria", indicates the report of the videoconference. National authorities may also request the support or intervention of the European Supervisory Authority. The new supervisor will have direct supervisory powers over a limited number of high-risk entities. It will be able to investigate on the ground, conduct investigations and impose sanctions.

The France peer-reviewed in 2021

"Crypto-assets can be used as a source of crime in general," said Olivier Dussopt, French Minister Delegate for Public Accounts. In this respect, the Council of Ministers invited the Commission to extend the list of taxable providers beyond the current EU framework, in line with the recommendations of the Financial Action Task Force (FATF). In its thirties, the FATF brings together representatives of the European Commission, G7 member states and eight other countries and conducts mutual evaluations of AML-CFT policies. However, the turn of the France approaches. Originally scheduled for 2020, the FATF members' visit to France has been postponed due to the global health situation. The presentation of its mutual evaluation report is now scheduled for the October 2021 plenary. The compliance and effectiveness of its anti-money laundering and anti-terrorist financing policy will be closely examined.

They said

The France has an extremely robust preventive legal arsenal

The France has implemented some of the lowest cash payment thresholds in Europe that greatly limit the possibility of paying anonymously and avoiding traceability. It is an important bulwark against the opacity that feeds all forms of crime, in particular the financing of terrorism and money laundering. We can also rely on a large number of professions subject to the AML-CFT and consistent with the risks identified in our country, which makes it possible to provide a double look at potentially suspicious transactions: the strong maturity of the subjection of financial institutions and their practices, and the complementarity of the non-financial sector, including regulated and sworn professions of numbers and law.

Eléonore Peyrat, Head of the French Delegation to the FATF, Head of the Office in charge of the fight against financial crime and international sanctions, Directorate General of the Treasury, Revue Banque n° 844, p. 18.

http://www.revue-banque.fr/risques-reglementations/article/panorama-des-forces-en-presence-en-vue-evaluation

FATF ensures fair treatment for all countries

By assessing national anti-money laundering and countering the financing of terrorism systems, the FATF ensures fair treatment for all countries. Evaluations have shown – as have the large-scale money laundering scandals in news articles – that many countries need to reform and, more importantly, focus on tangible results that reduce crime, even after the laws are in place.

David Lewis, the FATF-FATF Executive Secretary, FATF Mutual Evaluations

Revue Banque n°844, p. 16.

http://www.revue-banque.fr/risques-reglementations/article/efficacite-un-defi-relever-pour-les-pays

Cooperation between Tracfin and the ACPR, a strength of the French system

The ACPR has a liaison officer with Tracfin, which streamlines exchanges in both directions. The ACPR ensures in its controls that the declarations of financial institutions to Tracfin are made without delay, substantiated and complete. Conversely, Tracfin provides valuable information to the ACPR on risk areas, both at national level and for each institution, which allows the ACPR to adapt the intensity of its supervision to the level of risk. Tracfin has in-depth knowledge of the quality of client files and the vigilance of each institution, thanks to the analysis of suspicious reports, but also thanks to the responses to the 17,000 requests sent each year by Tracfin to registrants in application of its right of communication [...].

Stéphane Mahieu, FATF Evaluation Project Manager, Autorité de contrôle prudentiel et de résolution (ACPR), Revue Banque n° 844, p. 26.

http://www.revue-banque.fr/risques-reglementations/article/acpr-une-approche-controle-fondee-sur-les-risques

AMF teams monitor the marketing practices of atypical products

In line with the conclusions of the ANR [AMF Sector Risk Analysis], tax fraud and scams are the main threats identified at national level. The AMF observes them in the exercise of its missions to protect savers and works to reduce them. As such, the AMF teams monitor the marketing practices of atypical products when they are carried out by financial investment advisors: the controls carried out have made it possible to establish a more precise mapping of these products and the arrangements to which they give rise.

Dominique Lepagnot, Head of Anti-Money Laundering, Autorité des marchés financiers (AMF), Revue Banque n° 844, p. 29.

http://www.revue-banque.fr/risques-reglementations/article/amf-refondu-sa-doctrine-en-matiere-lcb-ft-pour-rep pp.29-31

What the ECB can do to prevent money laundering

The task of the authorities responsible for preventing money laundering and combating the financing of terrorism is to ensure that credit institutions and other obliged entities comply with the requirements on preventing money laundering and combating the financing of terrorism laid down in law applicable. We must therefore recognise that these authorities and supervisors have very different roles and that there are few synergies.

Yves Mersch, Member of the Executive Board, Vice-Chairman of the Supervisory Board, ECB, Banque & Droit HS-2020-1, February 2020, p. 6.

http://www.revue-banque.fr/risques-reglementations/article/prevention-blanchiment-capitaux-lutte-contre-finan

The new Know-your-Customer (KYC) system, after the transposition of the 4th AML-CFT Directive

As the entry into a long-distance relationship is no longer considered a high-risk situation, the practice of KYC (Know Your Customer) should be concentrated – except in exceptional cases allowing simplified due diligence measures or, on the contrary, requiring additional measures – on the standard or common verification of the identity of the customer, natural or legal person. However, some notable changes have been made by the ordinance of 12 June 2020 and its implementing decrees of the same day, both of which have been applicable since 14 February 2020.

Pierre Storrer, Avocat au Barreau de Paris, Kramer Levin Naftalis & Frankel LLP, Revue Banque n° 843, p. 84.

http://www.revue-banque.fr/risques-reglementations/chronique/kyc-apres-transposition-4e-directive-lcb-ft-bis