France’s arsenal to combat money-laundering and terrorist financing.

The fight against illicit financial flows is a priority for the French authorities. Money laundering is central to criminal activities and is a threat to the economic and political stability of countries and international security.

The rise of terrorism has made it necessary to strengthen the surveillance of financial circuits that could fund it. To address these facts, France has adopted a considerable legal arsenal and actively participates in improving standards in this field, both at international level, through its contribution to the work of the Financial Action Task Force (FATF) and at regional level, as a contributor to the legislative work carried out by the European Commission and to the conventions of the Council of Europe.

Corruption affects all countries, regardless of their level of development. It is a barrier to sustainable economic development and an obstacle to good governance and strengthening the rule of law, especially when it affects sectors such as policing, justice and prison administration. Corruption also provides fertile ground for the development of criminal and/or terrorist activities in certain vulnerable countries.

The poorest people are those most affected by its consequences. According to a World Bank study, the sum of bribes paid each year amounts to $1000 billion, representing 9% of global trade.

 French plan to combat corruption, money-laundering and terrorist financing

France’s arsenal to combat money-laundering and terrorist financing is based first and foremost on the definition of a general offence of money-laundering in the country’s Penal Code (Article 324-1), applicable to the proceeds of offences and crimes, as well as to the financing of terrorism.

The detection of illicit financial flows also relies on the requirement for all person transporting money, securities or stocks worth more than €10,000 to declare it to customs (Regulation (EC) 1889/2005 of 26 October 2005 for movements into or out of the European Union; ArticleL.152-1 of the Monetary and Financial Code; Article464 of the Customs Code for transfers within the EU).

Certain professions and organizations are subject to a due diligence requirement, under which they have to produce declarations of suspicion concerning operations they find suspect. Such professions and organizations include:

  • financial institutions (banks, manual bureaus de change, insurance companies, investment funds and mutual organizations, etc.);
  • chartered accountants, auditors, bailiffs;
  • certain non-financial professions (notaries and estate agents, operators of casinos and gambling clubs, auctioneers and vendors of high-value items). Following the transposition of the third directive on the fight against money-laundering of 26 October 2005 (2008 Act), new sectors of activity have been brought into the system, including legal administrators and trustees, bailiffs and lawyers (for only some of their activities). Lastly, by an Order adopted in January2009, the due diligence requirement was extended to all persons providing public services.The financial intelligence unit (TRACFIN) collects and analyses declarations of suspicion made by those operators. When it confirms a suspicion of money-laundering, it refers the case to the territorially competent public prosecutor.

TRACFIN also represents France within international organizations and networks working to combat money-laundering and terrorist financing: the Camden Assets Recovery Interagency Network (CARIN) is an international network for asset tracing, freezing, seizure and confiscation of assets acquired through transnational crime); and the Egmont Group of Financial Intelligence Units for the fight against money-laundering. It also relies on bilateral agreements with its foreign counterparts. In this context, improvement in operational cooperation between TRACFIN and foreign financial intelligence units is considerable in terms of both quality and quantity. The quality and responsiveness of operational information exchanges is improving. While most requests come from EU countries, Asia and the Middle East are also making increasing numbers of them.

At the same time, administrative authorities have been designated to control the professions and organizations subject to requirements. The latest administrative authorities put in place include the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) which is competent for estate agents and domiciliary companies, the Central Service for Racing and Gaming of the Ministry of the Interior for casinos, and the French online gambling regulatory authority (ARJEL) for online gaming. Failings observed by those authorities are sanctioned by a National Sanctions Commission attached to the Minister responsible for the Economy. Its functioning is described in Decree 2009-1535 of 10December2009.

Since 2010, the Anti Money-Laundering Steering Committee (COLB, Conseil d’orientation de la lutte contre le blanchiment de capitaux et le financement du terrorisme) has been coordinating the efforts of all the government departments concerned and the control authorities for the professions with a due diligence requirement. It can propose improvements to the national arsenal to combat money-laundering and terrorist financing and provides regular updates on the state of the threat.

International initiatives to combat corruption, money-laundering and terrorist financing

At intergovernmental level: the FATF system

The Financial Action Task Force on Money Laundering (FATF) is an intergovernmental body set up following a French initiative during the G7 Summit held in the Grande Arche building near Paris in 1989. As early as 1990, it drew up 40recommendations on the fight against money-laundering and put in place self-assessment and mutual evaluation processes to ensure they are implemented by the member countries.

The 40Recommendations are revised regularly in order to take into account recent developments in laundering techniques and methods and to incorporate aspects related to combating terrorist financing. In 2012, the FATF thus thoroughly revised its Recommendations in order to include the new threats of financing of the proliferation of weapons of mass destruction, to clarify measures linked to financial transparency, and to toughen those relating to corruption.

Combined with the nine Special Recommendations on Terrorist Financing adopted by the FATF in 2001 and since supplemented, they provide a comprehensive, coherent arsenal to combat money-laundering and terrorist financing, taken up by FATF-Style Regional Bodies (FSRBs) such as CFATF in the Caribbean, GIABA in West Africa, and MENAFATF in the Middle East and North Africa, as well as by the IMF and the World Bank in their assessment programmes. The FATF conducts peer reviews on an ongoing basis. Cooperation with the IMF and World Bank has been established effectively and sustainably, and relations with FATF-Style Regional Bodies have been strengthened.

Moreover, the FATF has, since 2000, published a list of non-cooperative countries and territories (NCCT) as regards the fight against money-laundering, because of a lack of legislation or poor implementation. That exercise supported that of mutual evaluation and produced a ranking of the countries concerned in a black list (non-cooperative jurisdictions) or grey list (jurisdictions with strategic deficiencies but which are undertaking an improvement process in cooperation with the FATF). It has led to marked improvements in the anti-money-laundering arsenal of several countries judged to be deficient.

As of the outcome of the plenary session of June2014, the black list includes six countries: Algeria, Ecuador, Indonesia, Iran, Myanmar and North Korea. Gradual, proportional and flexible countermeasures can be put in place against those countries by FATF members, as is currently the case for Iran and North Korea, with the aim of limiting financial operations towards them.

As of that same date, the grey list counts 22 countries: Afghanistan, Albania, Angola, Argentina, Cambodia, Cuba, Ethiopia, Iraq, Kuwait, Laos, Namibia, Nicaragua, Pakistan, Panama, Papua New Guinea, Sudan, Syria, Tajikistan, Turkey, Uganda, Yemen and Zimbabwe.

Mutual evaluations of France carried out within the FATF praised the high quality and overall effectiveness of the French system, which ranks as one of the most robust in the FATF.

At the United Nations

On 20 December 1988, the United Nations adopted a United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, making it possible for the first time to universally define the notion of money-laundering and provide for its suppression, combating at the same time traffickers themselves and their intermediaries and bankers.

The United Nations Convention against Corruption (Merida Convention) was signed in 2003 and entered into force in 2005. It is the first universal legal instrument to prevent and combat this phenomenon. The States Parties must criminalize and punish bribe-giving to national, international and foreign public officials under criminal law (criminalization of bribe-taking by foreign public officials is optional). The Merida Convention also organizes the return of embezzled or laundered assets and the extradition of persons convicted of corruption.

During the 3rd Conference of the States Parties in 2009, the Parties adopted a review mechanism aimed at examining the implementation of the Convention in the member countries. The 4th Conference of the States Parties in 2011, held in Marrakesh (Morocco), resolved two issues linked to the review mechanism that had not been decided: the participation of observers and funding. The 5th Conference of the States Parties took place in Panama from 25-29 November 2013. In the very first year (2011), France underwent a review carried out by experts from Denmark and Cabo Verde.

The United Nations Convention against Transnational Organized Crime (Palermo Convention) was adopted in December2000 and requires States Parties to incorporate an offence of money-laundering into their national criminal law.

For its part, the United Nations Office on Drugs and Crime (UNODC) has developed a global technical assistance programme for the fight against money-laundering, to which France contributes.

At European level

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the series of European Union Directives on prevention of the use of the financial system for the purposes of money-laundering and terrorist financing have constantly improved the tools to combat laundering by extending the list of operators subject to due diligence requirements.

The Council of Europe has substantially revised the 1990 Convention in accordance with the 2002 recommendations, updating and extending the scope of the Convention to take into account the fact that terrorism is no longer financed solely by money-laundering, but may also be financed through legitimate activities.

This new Convention is the first international instrument covering both preventive action and the fight against money-laundering and terrorist financing. It addresses the fact that quick access to financial intelligence and intelligence linked to assets held by criminal organizations, including terrorist groups, is essential for the success of preventive and enforcement measures and, essentially, is the best way to destabilize the activities of such organizations.

The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions has been adopted by 30 members of the Organisation, followed by eight other countries (Argentina, Brazil, Bulgaria, Chile, Estonia, Israel, Slovenia and South Africa). It entered into force in France on 29 September 2000. Its scope is slightly narrower than that of the United Nations Convention. It has a peer review mechanism to ensure that it is implemented consistently by all States Parties. Under that exercise, France received a very positive review in 2012.

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