The country of France is challenged with a large range of money laundering risks (ML) both domestically and internationally. It is particularly faced with threats associated with tax fraud, social fraud, and customs fraud. The country also faces drug trafficking, which often involves using other external international ML channels. On a societal scale, France is also exposed to human trafficking and violations of integrity offences which involves mainly corruption by specifically politically exposed persons (PEPs).
Furthermore, France also faces high levels of terrorism and terrorist financing (TF) and has also been targeted by numerous terrorist acts from 2015. Often TF is conducted by extremists who receive financial flows in combat zones through fundraising networks and other funding procedures including prepaid cards and virtual currencies.
France has grown increasingly sensitive and susceptible to ML and TF crimes as a consequence of the global technology improvement, particularly in the financial sector owing to the introduction of new digital goods and virtual assets.
In terms of risk assessment, in 2019, France completed its second national risk assessment (NRA). This risk assessment is primarily based on reports that are produced by TRACFIN (an intelligence services under the authority of the Ministry of Economy, Finance and Recovery), supervisory and prosecutorial authorities, as well as investigative services. It also incorporated analyses by the French organised crime information, intelligence, and strategic analysis unit (SIRASCO).
The NRA was developed between the years 2016-2019 through the establishment of nine working groups that cover both sectors and transversal threats and vulnerabilities. By using quantitative sources (including statistics related to suspicious transaction reports (STF)), and qualitative sources (including ML or TF cases, and/or public and internal reports), a risk rating was able to be developed. This system considers the threat level and approximates the residual vulnerabilities after alleviating measures.
In the preliminary stage of work, numerous areas that require supplementary attention are identified by assessors. This occurs by analysing ML and TF threat assessments that are presented in the NRA by French authorities. From this, information from the legal and institutional environment relevant to ML/TF risks is noted, specifically potential points of vulnerability. Within the last report the following issues were analysed:
TRACFIN has power to ensure international cooperation. While it is said that cooperation is of high quality, it however faces occasional delays. TRACFIN does require the existence of all preceding international agreements.
The European Union Agency for Law Enforcement Cooperation (Europol) is relied upon by the police force, gendarmerie, and customs authorities in the conduction of their own operations. These parties also use relevant bilateral conventions or agreements.
France’s relation with other EU countries is also utilised when needed, more specifically for extradition procedures which accounts for approximately 90% of all requests. This system enables for a fast enforcement process as France and other EU nations follow the rules and regulations that are set by the European arrest warrant. However, procedures conducted with non-Eu nations end up slowing the extradition process significantly.
In terms of France’s AML/CTF system, France has been able to deal with a substantial level of work on identifying the ML/TF risks that the country is vulnerable to. NRA, SRA, TRACFIN and SIRASCO reports have provided authorities a relatively in-depth understanding of ML and TF risks. However, the risk assessment has some limitations for some areas and activities (including real estate, cash and virtual assets), in the evaluations of threats such as corruption, and methodological reservations.
The fight against both terrorism and TF has also gotten more attention in recent years. Even though prosecution authorities have been given more money in recent years, it is not enough for the number of specialised investigators that are needed at both the local level and for larger legal investigations.
In terms of TF, France should maintain and develop a close and secure cooperation between authorities involved in CFT. The country should also maintain the high standard of commitment and skill in CFT that includes the evolution of financing methods through technology.
In terms of preventative measures, it is recommended that regulated entities have a better understanding on the concept of BO, in order identify who is in ultimate control over capital/voting rights. It is also recommended to amend the definition of BO for associations, foundations, and endowment funds as long as they are line with FATF requirements.