Following the publication of two TRACFIN newsletters in October 2015, reiterating the due diligence required of professionals subject to the measures for anti-money laundering and combating the financing of terrorism (AML/CFT), it is necessary to give an overview of these obligations.
Directive EU 2015/849 of 20 May 2015 strengthens professionals’ due diligence with regard to AML/CFT. Provision is therefore made for strengthening the risk-based approach. Exercising due diligence by professionals
The professionals referred to in article L. 561-2 of the Monetary and Financial Code are subject to the obligation to implement due diligence allowing their clients (regular or occasional) and the origin and destination of the funds to be known.
Before establishing a business relationship and when assisting the client during preparation or performance of a transaction, the professional must identify the client and the actual beneficiary of the operation, check their identity on the basis of any substantiating written document, and gather all information about the object and nature of the proposed operation.
Throughout the monitoring of the business relationship, the professional must update their knowledge about the client in order to assess the consistency or legitimacy of the operations performed.
The professional, who is subject to the obligation to due diligence, may assess a suspicion according to a criterion or a body of evidence underlining the unusual or illicit nature of the suspect operation.
Indicative criteria are decided upon to call for particular vigilance:
For legal entities
- Recently-created companies,
- Difficulties in identifying the actual beneficiary of a financial operation,
- Frequent changes of management,
- High turnover as soon as the company is created,
- High-risk sectors: Construction and civil engineering, security companies, professional training, hotel industry, fast food industry, prepaid cards, etc.
For natural persons
- Numerous cash payments/withdrawals,
- Entry into the insurance scheme for confidentiality reasons,
- Politically exposed persons,
If, based on these criteria in particular, the professional has suspicions about origin of funds, they must make inquiries of their client to obtain more information or justifications. If this is not sufficient to dispel their suspicions, TRACFIN should be sent a report of suspicion, describing the origin of the suspicion and the natural person or legal entity involved.