FRANCE Law and Practice Contributed by: Jean-Christophe Devouge and Kaïs Boussadia, Aurès
ment firms, insurers, crypto-asset service providers and certain non-financial professions (lawyers, nota - ries, chartered accountants) – must report to TRACFIN any sum or transaction suspected of deriving from an offence punishable by a custodial sentence of more than one year, or in connection with terrorism financ - ing. They must also conduct KYC procedures and identify beneficial owners, with vigilance thresholds. Obligated entities are required to implement inter - nal control systems and staff training programmes. Supervision is conducted by the ACPR or AMF, depending on the sector, with the newly established Anti-Money Laundering Authority directly overseeing the 40 highest-risk groups from 2025 at this stage. In the event of AML non-compliance, exposure can be significant. The ACPR may impose fines of up to EUR100 million or 10% of total annual turnover on the entity, and individual sanctions on directors, including temporary bans from management functions of up to ten years and personal financial penalties. The Com- mission nationale des sanctions may impose fines of up to EUR5 million on non-financial obliged entities. In the event of a breach, the competent authority may also impose sanctions on the directors’ entity and on other natural persons who are employees, agents or otherwise acting on its behalf, on account of their per - sonal involvement. 6. Audit, Risk and Internal Controls 6.1 External Auditors The appointment of an external auditor by the share - holders’ ordinary general meeting becomes manda - tory if, at the end of the financial year, the company exceeds at least two of the following thresholds (these thresholds have been modified by a decree of 28 Feb - ruary 2024, transposing a delegated Directive of 17 October 2023):
any personal, financial or professional relationships that are incompatible with the functions of an auditor. In addition, any commercial activity or paid employ - ment of the auditor for the benefit of the company whose accounts they audit is prohibited, in order to preserve the auditor’s independence. 6.2 Risk Management and Internal Controls While no provision expressly mandates a governance framework dedicated to geopolitical risk, several legal frameworks converge towards an obligation of vigi - lance at the highest level of the company. Article L. 225-35 of the French Commercial Code entrusts the board of directors with defining the company’s strate - gic orientations and overseeing their implementation, which encompasses the management of major risks. In practice, boards of listed companies with signifi - cant international exposure are increasingly attentive to geopolitical considerations, and may call upon external advisers or specialist experts to inform their deliberations. Risk factors are typically assessed at the level of the audit committee before being esca - lated to the full board, which retains ultimate oversight responsibility. The reach of foreign sanctions regimes – most nota - bly those of the United States – represents a material exposure for French groups operating internationally. In the same vein, French groups operating across mul - tiple jurisdictions remain attentive to the qualification of certain territories as tax havens, which carries its own regulatory and reputational consequences under both French and EU law. Beyond sanctions, the broader geopolitical and envi - ronmental risk landscape may also give rise to stake - holder engagement at governance level. This is illus - trated by the practice of say-on-climate resolutions (please refer to 7.2 ESG Developments ).
7. Environmental, Social and Governance 7.1 ESG Requirements ESG and Strategy
• a balance sheet total of EUR5 million; • net turnover of EUR10 million; and • 50 employees.
Auditors are subject to certain requirements regarding their independence, which prohibit them from having
The board of directors is entrusted with the defini - tion of the strategy of the company. In doing so, the
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