FRANCE Law and Practice Contributed by: Damien Luqué, Martin Jarrige de la Sizeranne and Sacha Tartarin, Lacourte Raquin Tatar
According to this framework, credit institutions must comply with the following main require - ments (inter alia): Customer Due Diligence Customer due diligence obligations are manda - tory before any entry into business relationship between a credit institution and its client (Know Your Customer – KYC). In addition, such require - ments on customer due diligence must also be implemented on an ongoing basis during all the business relationship (ongoing customer due diligence). In order to comply with its due diligence require - ments, credit institutions must: • identify the customer and, where applicable, the customer’s ultimate beneficial owner(s) (UBO); • verify the customer’s identity based on reli - able and independent sources and, where applicable, verify the UBO’s identity; and • assess the purpose and intended nature of the business relationship. These due diligence obligations must be pro - portionate and linked to a risk-based approach. Thus, where the AML/CFT risk associated with a business relationship is likely to be low, credit institutions can apply simplified customer due diligence measures and where the AML/CFT risk is likely to be higher, enhanced customer due diligence measures must be applied. Risk level can be assessed based on the follow - ing risk factors (among others): • the customer’s (and where applicable the UBO’s) type of business or professional activ - ity;
• the customer (and where applicable its UBO) is a politically exposed person (or a member of a politically exposed person’s family or a person known to be closely associated with a politically exposed person); • the customer’s (and where applicable the UBO’s) transaction might favour anonymity; • the customer’s (and where applicable the UBO’s) residence is located in a geographical area of higher risk; • the customer’s (and where applicable the UBO’s) reputation; and • the customer’s (and where applicable the UBO’s) nature and behaviour. In addition, credit institutions must put in place policies and procedures that enable them to identify persons targeted by financial or eco - nomic sanctions taken by French authorities, EU institutions, United Nations or other relevant international authorities. Where applicable, assets belonging to targeted individuals or legal persons must be frozen in order to prevent any move, transfer, alteration, use of or dealing with Credit institutions must report any suspicious transaction or any customer’s ownership and control structure that raises suspicion to the French financial intelligence unit: TRACFIN. Credit institutions must appoint a reporting officer and a correspondent officer, who will be responsible for submitting suspicious transac - tion reports and be the TRACFIN’s contact point within the credit institution. Internal Control Requirements To comply with AML/CFT requirements, credit institutions must implement sound internal policies, procedures and controls to ensure the potentially criminal funds. Reporting Requirements
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