Body
The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.
Legal affairs
National regulatory framework regarding AML and effective date of the regulations
The last AML regulation to come into effect was the fifth European directive (Directive (EU) 2018/843) related to the prevention of the use of the financial system for the purposes of money laundering or terrorist financing that was published on the 30th of May 2018 and came into force on the 10th of July of the same year.
This directive was transposed into French law by ordinance n° 2020-115 published on February 12th, 2020, aimed at strengthening the prevention against money laundering and terrorist financing.
The main objectives of this ordinance were to expand the AML corpus to new individuals such as lawyers, strengthen customer due diligence required for regulated entities, open the possibility to implement remote business relationship and strengthen the role of the supervisors.
National regulator or relevant authority for AML controls
The ACPR is the main authority in regard to AML supervision for entities under the ACPR control and those licensed by the AMF.
Customer Due Diligence
Conduct of a typical KYC identification process
Any KYC identification process requires for the regulated entity to first identify its client or the beneficial owner (defined as the natural person having more than 25% of the legal person’s share capital) in accordance with article L.561-5 of the CMF. This article also requires a verification of the said customers with proof-worthy documents (or their beneficial owners).
However, depending on the situation of the customer and if there’s a small risk for money laundering or terrorist financing, a simplified identification without verification may be applied (article R.561-14-2 of the CMF).
However, for those who showcase a standard risk, both identification and verification are required.
Article R.561-5 of the CMF lists the needed information for the identification of the customer such as the name, surname, date and place of birth for individuals or the legal status, the corporate name, the registration number and the headquarters of corporations.
As for the verification of the customer through proof-worthy documents, article R.561-5-1 of the CMF states that the document could either be digital or paper-based.
For individuals, such verifications requires the presentation of a valid identity card ID or other official documents that showcase a picture of the customer.
As for corporations, an original document, or a copy of the registration on an official register is required providing that the document is not older than three month and contains the corporate name, the legal status, the address of the headquarters etc.
Trusts, however, need to provide the original or a copy of their trust contract.
If the business relationship happens to be remote some other conditions need to be satisfied in accordance with article R.561-20 of the CMF such as the requirement of another document, alongside the ID or other official documents that might prove the identity of the customer or the implementation of verification mechanisms in regard to the documents transmitted.
However, if the identification is done through electronic devices that are deemed reliable in accordance with Regulation (EU) No 910/2014 called eDIAS (Regulation (EU) No. 910/2014) or article L.102 of the Code des postes et des communications électroniques (electronic communications and postal code), the identificati