AMF CERTIFICATION – Sheet 3 Part 1

FINANCIAL SECURITY: FIGHT AGAINST MONEY

LAUNDERING, TERRORISM AND CORRUPTION

Definitions
The penal code defines money laundering as facilitating false justification regarding the origin
of goods or income by the perpetrator of a crime or offence.

Assisting in the investment, concealment or conversion of a transaction on the direct or indirect

product of a crime or offence, also constitutes money laundering.

● Placement consists of introducing funds of a criminal origin into the financial system, via
the opening of an account by a figurehead, for example;

● Concealment encompasses several techniques like layering which aims to cover the
tracks between capital and its fraudulent origin with the multiplication of transactions
between various companies, persons or countries;

● Conversion relies mainly on the integration technique which aims to invest funds in the
real economy by purchasing goods or commercial projects

Regulatory framework
The regulatory framework is as follows:

● On an international level, the FATF (Financial Action Task Force), which encompasses
thirty or more countries, establishes international standards regarding the fight against
money laundering.

● On the European level, a series of directives transposed into French law which define the
vigilance and detection requirements that establishments must comply with.

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 ● On an international level, the French intelligence unit TRACFIN, identifies and analyses
reports of suspicion and transfers a part of the files to the courts or the competent
authorities like the tax authority, for example. On their part, the ACPR and AMF monitor
compliance with regulations by financial institutions within their jurisdiction.

The organization set up by institutions

Upon entering into a relationship, financial institutions are required to verify the client’s identity
based on substantiating documents and identify the beneficial owner of the business
relationship. Furthermore, they must acquire information regarding the nature of the business
relationship. If the institution isn’t able to identify its client or acquire the necessary information,
they must not establish a business relationship with the client.

Throughout the business relationship, banks must compare client transactions with their profile,
in order to spot unusual transactions with regards to complexity or the amount, compared to
the client’s profile.

The institutions must report their suspicions to TRACFIN regarding amounts or transactions:

● That may originate from offences punishable by a prison sentence exceeding one year;

● Or that may contribute to financing terrorism;

● Or that could even originate from tax fraud, relying on elaborate fraud mechanisms.

Regarding organization, the risk-based approach consists of setting up due diligence tailored to
the risk of money laundering presented by the client or the transaction.

Thus, approval procedures for opening accounts and supervising them will be reinforced, in
particular for politically-exposed persons (in French PPE - personnes politiquement exposées),
for example Ministers, Ambassadors or Executives of a public corporation and their close
relatives, but also for other clients who aren’t directly affected by the regulation but who could
present risks of money laundering. Thus, TRACFIN considers that transferring high-level athletes
from one club to another could entail money laundering.

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Sanctions
Institutions that don’t abide by the regulations may be subjected to administrative sanctions by
their supervisory authority, ranging from a reprimand to the withdrawal of approval,
accompanied by financial penalties.

In the worst cases, penal sanctions can be given, in the form of prison sentences and fines.