Money laundering contributes to the development of illegal activities such as organized crime, drug trafficking and tax fraud, and sometimes finances terrorism. Since 2009, France has had legislation in place to combat money laundering and the financing of terrorism, the aim of which is to eradicate these activities as far as possible, but also to guarantee fair competition between businesses. This legislative arsenal includes criminal provisions, of course, but also a number of vigilance rules imposed on the professions most exposed to this type of risk. These include the banking sector, real estate agents, online gaming and betting operators, casinos and domiciliation companies. Penalties, including money-laundering fines for financial institutions, are set to rise sharply in 2022.
What are the obligations of financial institutions?
One of the missions of the Commission Nationale des Sanctions (for real estate, gaming and domiciliation professionals), the Commission des Sanctions of the Autorité de Contrôle Prudentiel et de Résolution or the Commission des Sanctions of the Autorité des Marchés Financiers (for the banking and financial sector) is to penalize organizations that fail to report suspicious transactions, or worse, encourage them.
The various Sanctions Commissions were created in response to the public authorities' desire to put in place a system to combat money laundering and the financing of terrorism, in line with their commitments to the European Union.
We need to act, because these fraudulent activities call into question the transparency and smooth running of the economy in general. They have damaging consequences for society as a whole.
The Commissions are imposing a series of measures to combat money laundering:
- Setting up risk assessment and management systems
- Implementation of a complementary internal vigilance protocol
- Permanent control
- Identification and verification of customer identity
- Retention of documents relating to each customer for 5 years
- Staff training and information
- Reporting suspicious transactions as soon as they appear abnormal
- Termination of business relationship in case of doubt
Thanks to their experience in their field and their mastery of their environment, financial institutions are perfectly capable of detecting dubious behavior. They must then report it, on the one hand, to preserve their integrity and reputation, and on the other, to participate in the mandatory fight against money laundering.
Their responsibility is fully engaged. They must fully assume their obligations, or face sanctions.
What do banks risk?
In 2022, around $5 billion was paid in fines worldwide for non-compliance with anti-money laundering measures. Danske Bank alone, for example, paid $1.9 billion in fines.
Unreported suspicious transactions, insufficient action taken against this type of operation, and shortcomings committed by the various financial organizations were sanctioned twice as much in 2022 as in 2021. The obligation to set up risk assessment and management systems accounts for almost all the breaches observed.
Sanctions are systematicallypublished, without necessarily mentioning the name of the sanctioned organization, in order to inform all the professionals concerned.
However, the Commissions have found that after an inspection, most of the professionals comply.
Article L561-40 of the French Monetary and Financial Code specifies the penalties incurred, ranging from a warning to a reprimand or even a temporary ban. In most cases, these sanctions are accompanied or replaced by a financial penalty (45% of cases), the amount of which is set according to the seriousness and number of breaches observed.