Following Order no 2020-1342 of 4 November 2020 reinforcing the system for asset freezing, aiming at implementing into French law certain provisions of the Directive (EU) 2018/843 of 30 May 2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, the adoption of the French Decree no 2021-387 of 2 April 2021 (the Decree) clarified the requirements relating to digital assets (1) and the anti-money laundering and terrorist financing (AML CFT) national framework (2). These provisions became effective on 5 April 2021, with the exception of those relating to digital assets, applicable as of 1 May 2021.
1. Specification of AML CFT rules applicable to digital assets
Various provisions of the French monetary and financial Code (Code monétaire et financier, the “Financial Code”) on AML CFT and asset freezing requirements were amended to tackle anonymity in relation with digital assets. Those provisions apply inter alia to registered digital assets services providers (DASPs) - as opposed to authorized - and token issuers (émetteurs de jetons) whose offering was granted a visa from the French financial markets authority (Autorité des marchés financiers, the “AMF”).
The Decree detailed the procedures of verification of the clients’ identity of entities subject to AML CFT requirements, including above mentioned DASPs and token issuers, when they enter into a business relationship. Besides the identification schemes notified to the European Commission, the entities subject to AML CFT requirements can now rely on schemes validated by the French National Agency for the Security of Information Systems (Agence nationale de la sécurité des systèmes informatiques, the “ANSSI”) presenting a substantial, thus not the highest, level of guarantee with respect to Regulation (EU) no 910/2014 (eIDAS Regulation). In addition, the Decree required DASPs and token issuers to perform due diligences regarding a client’s identity prior to any occasional transaction. This requirement will be applicable to any transaction, regardless of its amount, as of 1 May 2021. Prior to the Decree, this identification was only required for transactions exceeding EUR1,000.
The AML CFT requirements on electronic money (e-money) are also clarified by the Decree: when e-money is used for the purchase of digital assets, e-money issuers are subject to customer due diligence requirements. Conversely, the purchase of any other consumer goods or services using e-money is allowed and benefits from an exemption regarding these requirements, to the extent that there is no suspicion of money laundering or terrorist financing.
The modalities of asset freezing regarding inter alia DASPs and token issuers will be detailed in upcoming regulations.
2. Specification of asset freezing measures
Pursuant to the Decree, the scope of the entities in charge of the implementation of European measures is extended to asset freezing measures. The Directorate General of the French Treasury (Direction générale du Trésor) is designated as the competent entity for receiving information on possible violations of the asset freezing measures.
In addition, the Decree modified the requirements on internal organization and procedures that entities subject to AML CFT requirements must set up to comply with their obligations with regard to asset freezing. The scope of the information that these entities have to transmit to the Ministry of the Economy and Finance when they implement asset freezing measures is for instance extended to the effective implementation of any authorization to release any frozen assets in accordance with EU regulations, and not only French regulations.
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