The fight against money laundering and the financing of terrorism ( AML-CFT ) is a pillar of economic regulation.
At the heart of this system is the intelligence service Tracfin ( Intelligence processing and action against clandestine financial networks ) Attached to the Ministry of Economy and Finance, its mission is to receive, analyze, and exploit the information transmitted by professionals subject to AML-CFT obligations in order to detect suspicious financial flows and hinder their use for criminal or terrorist purposes.
Complying with one’s obligations in relation to Tracfin is therefore not only about adhering to a legal requirement. It is also about aligning one’s activities to mitigate the risks of sanctions, reputational damage, and even criminal prosecution. But what exactly does this compliance entail and how can it be implemented in practice ?
I. The legal framework and the professions involved
The articles L561-1 and following of the Monetary and Financial Code (CMF) set forth the general obligations regarding AML-CFT. This framework is supplemented by European texts ( as the anti-money laundering directives ) and by guidelines published by Tracfin in connection with the ACPR ( Prudential Control and Resolution Authority ) and the DGCCRF ( Directorate General for Competition, Consumer Affairs and Fraud Control ). These guidelines are not legally binding, but they are essential for interpreting and applying the legal obligations set forth by the CMF.
The professions concerned are numerous, including in particular real estate intermediaries, individuals engaged in the activity of domiciliation, and those who negotiate works of art and antiques.
The real estate sector is particularly exposed due to transactions involving high amounts, complex legal arrangements, and even cross-border operations. The 2023 report of the National Sanctions Commission ( CNS ) has thus shown that real estate was the most sanctioned sector for failures to comply with AML-CFT obligations, representing more than 60% of sanctions imposed.
II. The 3 compliance axes to follow
A. Axis 1: the risk-based approach
The key word of the system is the risk-based approach . This means that each professional must establish a risk mapping tailored to their activity, clientele, and size.
This mapping consists not only of identifying situations that present a particular risk, based on the criteria identified by the CMF ( client profile, nature of the transaction, origin and destination of funds, countries involved, beneficial owners, etc. ) and to systematically classify them according to their level of risk ( low, medium, high ). Then, the third step ( Art. L561-32 CMF) will consist of address these risks through the implementation of internal measures and procedures.
Attention : The risk assessment and management framework that each professional must implement cannot be generic, nor can it be based on a single model. It must be custom-designed , based on the specific reality of each organization.
The DGCCRF and Tracfin emphasize this point: to fully comply with the obligations of the CMF – and in particular its article L561-32 – a professional cannot merely copy the legal texts or reproduce the guidelines as they are.
▶ Compliance therefore involves a real and individualized adaptation internal procedures. This process of appropriation is essential.
B. Axis 2: Vigilance
Vigilance constitutes the second pillar of compliance. It encourages the adoption of knowledge of its clientele by the relevant professional ( KYC – Know Your Customer ).
The professional must thus identify their client as well as the beneficial owner of the transaction, that is to say, the natural person who ultimately controls the company or for whose benefit the transaction is carried out. This step is crucial.
Vigilance is exercised at different levels :
- « standard »,
- « strengthened when the risk is higher »,
- « simplified ».
▶ Vigilance does not stop at the initiation of the relationship and must persist throughout the business relationship.
C. Axis 3: the declaration of suspicion
The third pillar, and undoubtedly the most well-known, is the suspicion declaration . As soon as a professional identifies a set of indicators suggesting that funds may originate from an offense or be intended for the financing of terrorism, they must inform Tracfin. The sets of indicators generally concern :
- The structure that operates, the nature or logic of the transaction ( ex. complex legal arrangement, asset purchased at a reduced price, opaque shareholding) ;
- the source of funds ( e.g. unidentified sources, tax-favored country, transfer for the benefit of a seller but to a third party’s account) ;
- The identity and behavior of the parties ( e.g. atypical behavior, lack of transparency, concealment behind shell companies).
▶ The declaration is made via the secure ERMES platform, through a designated Tracfin correspondent within the organization.
▶ It is important to recall that the declaration is based on suspicion and not on evidence. The objective is not to demonstrate fraud but to transmit to Tracfin the elements that allow for a more thorough investigation.
▶ This statement is confidential, so the client must never be informed that they have been the subject of a report. Professional secrecy is reinforced in this regard.
III. Internal organization and best practices
Establishing a compliant framework is not limited to fulfilling formalities. On the contrary, it involves organizing the entire structure around the three previously mentioned axes.
This involves the designation of an AML-CFT officer who is responsible for coordinating the measures and centralizing the reports and by drafting internal procedures , adapted to the activity. In real estate, for example, the identification of the client and the beneficial owner must specifically occur at the time of the expression of interest in a property.
The training of employees is essential. Without ongoing awareness, procedures remain theoretical. However, detecting an anomaly requires the ability to recognize indicators, which can sometimes be subtle : an abnormally low selling price, a client who refuses to provide supporting documents, an intermediary who acts in an opaque manner.
Finally, compliance also involves an effective internal control with the retention of documents for a certain period, the conduct of audits, the updating of the risk mapping, and the monitoring of procedures. It should be noted that the lack of internal control is often highlighted during audits and in numerous sanctions from the CNS.
▶ Compliance with Tracfin is a culture to be developed. It requires combining three reflexes: knowing one’s clients, monitoring their operations, and reporting when necessary.
▶ The more exposed the activity is – as is the case in real estate or the luxury goods trade – the greater the vigilance must be and the more rigorous the documentation.
Secure your AML/CFT compliance today
In light of the intensification of controls and the increase in sanctions in the real estate sector, it is essential to have a robust, individualized, and compliant AML/CFT system in accordance with the requirements of the Monetary and Financial Code. Our firm supports you at every stage: establishing a risk mapping, drafting internal procedures, preparing for a TRACFIN control, managing a TRACFIN report, referral to the National Sanctions Commission (CNS)…
AUMANS Avocats is at your disposal to advise and assist you in matters of AML/CFT.
