The European Union adopted the first anti-money laundering Directive in 1990 in order to prevent the misuse of the financial system for the purpose of money laundering. It provides that obliged entities shall apply customer due diligence requirements when entering into a business relationship (i.e. identify and verify the identity of clients, monitor transactions and report suspicious transactions).
This legislation has been constantly revised in order to mitigate risks relating to money laundering and terrorist financing. In 2015, the EU adopted a modernised regulatory framework encompassing:
- Directive (EU) 2015/849 on preventing the use of the financial system for money laundering or terrorist financing(4th anti-money laundering Directive);
- Regulation (EU) 2015/847 on information on the payer accompanying transfers of funds– makes fund transfers more transparent, thereby helping law enforcement authorities to track down terrorists and criminals.
The Member States had to transpose the 5th anti-money laundering Directive (Directive (EU) 2018/843), by January 10th, 2020.
These amendments were introduced to:
- enhance transparency by setting up publicly available registers for companies, trusts and other legal arrangements; enhance the powers of EU Financial Intelligence Units, and provide them with access to broad information for the carrying out of their tasks;
- limit the anonymity related to virtual currencies and wallet providers, but also for pre-paid cards;
- broaden the criteria for the assessment of high-risk third countries and improve the safeguards for financial transactions to and from such countries;
- set up central bank account registries or retrieval systems in all Member States;
- improve the cooperation and enhance of information between anti-money laundering supervisors between them and between them and prudential supervisors and the European Central Bank.
Based on Directive (EU) 2015/849, Article 9, the Commission is mandated to identify high-risk third countries having strategic deficiencies in their regime on anti-money laundering and countering the financing of terrorism.
Directive (EU) 2019/1153 enhances the use of financial information by giving law-enforcement authorities direct access to information about the identity of bank-account holders contained in national centralised registries.
The aforementioned laws (directives and regulations) were implemented in France and its overseas territories through various laws, ordinances and regulations, which are gathered and organized in the Monetary and Financial Code (MFC), which is partially applicable in New Caledonia and French Polynesia.
European regulations apply in some French overseas territories such as Guadeloupe, French Guiana, Martinique, Réunion, Saint-Martin and Mayotte.
However, they are not applicable in the overseas countries and territories (OCTs): New Caledonia, French Polynesia and the Wallis and Futuna Islands, Saint-Pierre and Miquelon, and French Polynesia.
In the remaining overseas territories, European money laundering regulations were partially extended.
Articles L. 562-3, L. 745-13, L. 755-13 and L. 765-13 allow to apply asset freezing measures taken by UNSC resolution, decision of the Council of the European Union or European regulation, by order of the minister in charge of the economy, in the OCTs, overseas countries and territories where European regulations are not directly applicable.
New-Caledonia
The following rules are applicable in New -Caledonia to insurance companies:
- Vigilance obligation;
- Obligation to inform / report;
- Anti-money laundering and asset freeze.
Insurance companies included in the list
Article L.561-1 of the CMF includes insurance companies within the list of organizations subject to the anti-money laundering regulations.
Vigilance / Alertness obligation
The first principle that has to be complied with in New Caledonia is the vigilance obligation (also called alertness or watchfulness obligation).
Article L561-5 of the Monetary and Financial Code states the following:
Before entering into a business relationship with their client or assisting them in the preparation or execution of a transaction, the persons mentioned in Article L. 561-2[1]:
1° Identify their customer and, where applicable, the actual beneficiary within the meaning of Article L. 561-2-2[2] ;
2° Verify these identification details on presentation of any written document of a conclusive nature. They shall identify and verify under the same conditions as those set out in I the identity of their occasional customers and, where applicable, their beneficial owners, when they suspect that a transaction could be involved in money laundering or terrorist financing or when the transactions are of a certain nature or exceed a certain amount.
III. – When the customer subscribes to or joins a life insurance or capitalization contract, the persons concerned shall also identify and verify the identity of the beneficiaries of these contracts and, where applicable, the beneficiaries of these beneficiaries.
- – By way of derogation from I., when the risk of money laundering or terrorist financing appears to be low and when necessary, in order not to interrupt the normal exercise of the activity, the obligations mentioned in 2° of said I. may be fulfilled during the establishment of the business relationship.
- – The conditions of application of this article are specified by decree in the Council of State.
These rules are loosened if the beneficiary is reliable (art. L.561-9), or strengthened if he is particularly unreliable (because he is not physically present during registration, or is domiciliated outside the EU, art. L.561.10 and following articles).
Reporting obligation
The reporting obligation is posed by article L. 561-15 of the MFC, as follows:
- – The persons mentioned in Article L. 561-2 [including insurers] shall be required, under the conditions laid down in this chapter, to report to the department mentioned in Article L. 561-23 [special bureau under the ministry of economy] the sums entered in their books or transactions involving sums that they know, suspect or have good reason to suspect originate from an offence punishable by a custodial sentence of more than one year or are linked to terrorist financing.
- – By way of derogation from I, the persons mentioned in Article L. 561-2 [including insurers] shall declare to the service mentioned in Article L. 561-23 [special bureau under the ministry of economy] the sums or transactions that they know, suspect or have good reason to suspect originate from tax fraud when at least one criterion defined by decree is met.
III. – At the end of the enhanced examination prescribed in Article L. 561-10-2, the persons mentioned in Article L. 561-2 shall, where appropriate, make the declaration provided for in I of this Article.
- Any information likely to invalidate, confirm or modify the information contained in the declaration shall be brought to the attention of the department mentioned in Article L. 561-23 without delay.
- Attempted transactions referred to in I and II of this article shall be reported to the department referred to in Article L. 561-23 [special bureau under the ministry of economy].
- The report referred to in this article shall be made in writing. It may, however, be collected verbally, except for the persons mentioned in Article L. 561-17, by the department mentioned in Article L. 561-23 [attorneys licenced to plead before the French supreme courts], under conditions that enable the latter to ensure that it is admissible.
This department shall acknowledge receipt of the declaration, unless the person referred to in Article L. 561-2 [including insurers] has expressly indicated that he or she does not wish to do so.
The following articles (L.561-15-1 to L.561-22) set forth further precisions on the reporting obligation.
Asset freezing
Articles L. 562-1 and following (to L.562-11) set forth an asset freezing mechanism.
French Polynesia
The Monetary and Financial Code sets forth anti-money laundering regulations applicable in French Polynesia in articles L.755-13 and following.
Consequently, the same rules are applicable in French Polynesia for insurance companies:
- Vigilance obligation;
- Obligation to inform / report;
- Anti-money laundering and asset freeze (art. L.562-2 MFC).
Since New-Caledonia and French Polynesia do not share the same political and judicial institutions with France, several adaptations were made with regards to local law references and institution names.
Recents comments