Given the nature of the financial operations used for laundering money, companies may inadvertently be used as agents through multiple channels (real estate investments, financial investments, SME buyouts, money laundering) for the investment of funds derived from illicit or criminal activities thus jeopardizing the stability, reliability and credibility of the entities involved.
Until 2013, financial institutions and regulated professions listed in Article L561-2 of the French Monetary and Financial Code (bankers, bailiffs, lawyers, notaries, accountants, etc.) had to declare to TRACFIN the sums entered in their books or the transactions relating to sums which they suspected were destined for terrorist financing. Thereafter, Article 324-1-1 of the French Criminal Code introduced a presumption that goods or income originating from transactions for which there is no apparent justification constitute the proceeds of an offence.
Pursuant to this Article, companies are now required to identify their customers and the customers’ beneficial owners, to assess the risk of money laundering associated with the business relationship and to implement the level of Due Diligence commensurate with the perceived risk. Assessing the risk of money laundering, including the laundering of proceeds from corruption therefore involves a multi-factor analysis.
The Fourth Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, was passed on 26 June 2017. Under this directive, companies are required to proceed to simplified Due Diligence after conducting a risk analysis.
In France, Ordinance no. 2016-1635 (1 December 2016) implements provisions of the EU’s fourth anti-money laundering directive into French domestic law with goals of strengthening French anti-money laundering legislation and addressing the financing of terrorism. Under the French provisions, French and foreign companies and corporate groups must identify and register their ultimate beneficial owners.