Updated Guide on Remote Verification for Businesses functional in France [November 2021 Edition]
In the wake of the transposition of the Fifth Anti-Money Laundering Directive (5AMLD) into French law, French businesses are now required to follow stringent identification and verification procedures as outlined in the French Monetary and Financial Code.
These new measures, aimed at countering money laundering and terrorist financing risks, mandate a risk-based approach to customer due diligence, with higher-risk customers and transactions receiving increased scrutiny. Professionals under supervision, including financial sector professionals, are required to carry out customer identification and verification before entering into a business relationship or carrying out occasional transactions above certain thresholds.
The updated requirements include obtaining evidence of identity, verifying their authenticity, and continuously monitoring the business relationship. French businesses are also legally mandated to cooperate with the Financial Intelligence Unit (FIU France) and regulators, sharing information and responding to inquiries related to AML measures.
To onboard natural persons, businesses can accept a variety of official documents such as national identity cards, passports, driver licenses, residence permits, or receipts for a residence permit/residence card/asylum application in progress. The copy of the document must be valid and bear the owner's photo. For legal entities, a firm can obtain any act or extract from the official register not older than three months or an extract from the official Journal.
In addition, businesses must identify the beneficial owner of a company, defined as a person who directly or indirectly owns more than 25% of its capital/voting rights or otherwise exercises ultimate control over it.
If the first three approved verification solutions are not available, businesses can use a combination of at least two of the following measures: obtaining a copy of one official document, verifying and certifying a copied document through an independent third-party, requiring that the first transaction be made by an AML-obliged entity, verifying the client through a third party that meets requirements under the Article L561-7 of the French Monetary and Financial Code, using remote verification providers certified by the ANSSI under Regulation (EU) 2015/1502, or obtaining an electronic signature or an electronic seal under the eIDAS Regulation.
The new measures impact French businesses obligated to follow French AML regulations and report to the Financial Markets Authority (AMF) and the Prudential Supervision and Resolution Authority (ACPR). These entities include banks and credit institutions, payment and e-money institutions, investment companies, insurance companies, crowdfunding intermediaries, crypto businesses, and ICO issuers.
The changes were ushered in by Decree No 2020-118 issued February 12th, 2020 and Decree No 2021-387 issued April 2, 2021. Notably, remote verification is now considered as secure as face-to-face verification in France, making it a more accessible option for businesses. This has expanded the choice of remote verification solutions available to French businesses.
The adopted measures make remote verification more available for businesses while enabling them to check French users faster and easier, all without neglecting security and compliance. This development is significant as it aligns with the digital transformation of the French economy and the increasing importance of online services.
- In line with the new measures, technology now plays a significant role in the finance sector, as businesses are encouraged to use remote verification providers certified by the ANSSI under Regulation (EU) 2015/1502 to verify customers' identities, making onboarding processes more efficient and secure.
- With the digital transformation of the French economy, technology also enables businesses operating in the finance sector, such as banks, crypto businesses, and ICO issuers, to adhere to strict AML regulations outlined in the French Monetary and Financial Code, ensuring compliance and countering money laundering and terrorist financing risks in their business relationships.
