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31 december 2007

Preventing money laundering – the need for a clear framework


In 2007, French banks called the government's attention to the need to amend French law to prepare for the implementation of the 3rd Anti-Money Laundering Directive. The accumulation of new laws and regulations over the past 20 years has resulted in a confusing body of anti-money-laundering rules, with banks sometimes finding themselves faced with conflicting obligations. This diminishes the effectiveness of the overall framework and results in legal insecurity that is all the more serious considering the risk of criminal liability.

 

This new directive brings some major improvements. It introduces a risk-adjusted approach that will enable banks to focus their attention on the most sensitive situations. However, the FBF believes that the European dimension of money-laundering should have been more adequately addressed. Maintaining the minimum harmonisation approach may cause competitive distortions between the EU member states.


The scope of suspicious transaction reporting, which is fundamental to preventing money laundering, has been considerably extended and will now include all offences punishable by more than one year in prison. In France, unlike most other European countries, this will apply to all business and financial crimes including tax fraud, unless domestic law is amended.


Unless the distinction is made between organised crime and tax fraud, Tracfin may end up being overwhelmed by the large number of suspicious activity reports that are likely to be made. This may also require the creation of files on thousands of people.


The FBF asks that the government find a pragmatic solution to this problem that will enable banks to continue their efforts to effectively prevent money-laundering, in a clearer legal framework.



BANKERS JOIN FORCES TO PROMOTE TRAINING

French bankers have developed a common programme to train their employees in the prevention of money laundering. Training modules were updated in February 2007 to account for regulatory changes. By end-2007 over 370,000 bank employees representing over 90% of the sector's total workforce had received this training.



BANKS OBSERVE NEW FRENCH RULES FOR FREEZING ASSETS

The decree of 11 April 2007 established the French framework for freezing terrorist assets. The list of people whose assets French banks are required to freeze supplements the lists issued under the European regulation of 2002, which has been amended 89 times.

The FBF has worked hard to ensure that screening measures are as effective as possible. It has also emphasised the need for consistency between French and European laws.

 
 
 
 
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