Updated Instructions for Remote Authentication for Companies Active in France [November 2021]

In a move to enhance transparency and combat money laundering, French businesses are now subject to updated identification and verification requirements under the Fifth Anti-Money Laundering Directive (5MLD) and recent decrees. These changes aim to make remote verification more accessible for businesses while ensuring faster and easier onboarding without compromising security and compliance.

From February 2020, clients no longer need to provide a second supporting document to confirm their identity. This simplification applies to both foreign firms onboarding French clients and domestic businesses obligated to follow French AML regulations and report to the Financial Markets Authority (AMF) and the Prudential Supervision and Resolution Authority (ACPR).

The updated regulations primarily involve enhanced verification of identities of beneficial owners and company officials. The Fifth AML Directive, effective from January 10, 2020, expanded the scope of EU AML regulations by lowering thresholds for customer identification and requiring EU member states, including France, to establish central registries of beneficial owners of companies for greater transparency.

In France, the AML framework under 5MLD has been implemented with national decrees issued in 2020 and 2021. These decrees detail customer due diligence (CDD) measures, verification processes, and reporting obligations. Some key updates include mandatory identification of beneficial owners and verification of their identity using official documents, enhanced due diligence for high-risk customers, centralization of identification data in French registries accessible to competent authorities, and clear definitions and procedures for verifying corporate clients.

Remote verification is now considered as secure as face-to-face verification in France. Natural persons onboarding online can provide one of several official documents for identification, such as a national identity card, passport, driver license, residence permit, or receipt for a residence permit/residence card/asylum application in progress. The amendments to the French Monetary and Financial Code simplify requirements for remote verification and expand the list of qualified providers, including services certified by the National Cybersecurity Agency of France (ANSSI).

Businesses can choose from three sole verification solutions approved by French regulators: national identification schemes, providers certified by ANSSI, and software certified by ANSSI. If the first three 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 meeting certain requirements, using remote verification providers certified by ANSSI, or obtaining an electronic signature or electronic seal under the eIDAS Regulation.

The new rules apply to banks and credit institutions, payment and e-money institutions, investment companies, insurance companies, crowdfunding intermediaries, crypto businesses, and ICO issuers. France has transposed the principles of the Fifth AML Directive into its Financial and Monetary Code.

For legal entities, a firm can obtain any act or extract from the official register (for example, K-bis) not older than three months or an extract from the official Journal. The beneficial owner is a person who directly or indirectly owns more than 25% of a company's capital/voting rights or otherwise exercises ultimate control over it.

These measures augment previous AML requirements to reduce risks associated with anonymous ownership and facilitate regulatory oversight within France and across the EU. The changes were ushered in by Decree No 2020-118 issued February 12th, 2020 and Decree No 2021-387 issued April 2, 2021. The new rules are in line with the principles of the Fifth AML Directive, which champions the use of remote verification by businesses.

As the Fifth Anti-Money Laundering Directive (5MLD) expands the scope of EU AML regulations, technology-driven remote verification solutions are now essential for French businesses operating in finance and technology, adhering to strict identification and verification requirements.
Leveraging technology, the updates in France's AML framework enable businesses to onboard clients more swiftly and securely, as they can now choose from approved verification solutions, such as national identification schemes, providers certified by the National Cybersecurity Agency of France (ANSSI), and software certified by ANSSI, for remote verification of both natural persons and beneficial owners.

Updated Instructions for Remote Authentication for Companies Active in France [November 2021]