How Compliance With KYC Regulations In France Work

Building trust between financial institutions and their clientele is of utmost importance. Within this context, complying with stringent Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations necessitates the implementation of robust Know Your Customer (KYC) procedures by financial service providers.^[1]

This imperative is particularly pronounced in France, a global economic powerhouse ranked as the 7th largest economy worldwide and the EU’s second-largest.

The Remote Identification Requirements of French KYC

French KYC regulations, as outlined in the AML Law Article R561-5-2 of the Code monétaire et financier, require financial service providers to implement various measures to verify and certify the identity of their customers.

These measures include obtaining copies of official documents, implementing third-party verification, and using certified services for proof and verification of identity.^[2] Additionally, collecting a qualified electronic signature or a qualified electronic seal based on a qualified certificate is required.

Each option has its pros and cons, and financial institutions must carefully consider which method best suits their needs and compliance obligations.^[3]

AML Law and Additional Requirements

In addition to the remote identification requirements, financial institutions operating in France must comply with the French Monetary and Financial Code (CMF) and apply at least two measures of vigilance out of the six proposed in Article R561-5-2. These measures aim to enhance AML and CTF efforts and ensure the prevention of money laundering and terrorist financing.

Financial institutions must stay up to date with the evolving AML Law and additional requirements in order to maintain compliance and mitigate the risk of penalties and reputational damage.^[4]

Can eIDAS Qualified Certificates Meet French AML Requirements?

Yes, eIDAS-qualified certificates can meet the French AML requirements for KYC. The eIDAS regulation is fully compliant with French law, allowing for the creation of qualified certificates using other identification methods recognized at the national level.

As long as a qualified trust service provider is on the EU trusted list and meets the requirements set by a member state supervisory body, the qualified certificate and signature fulfill the French AML requirements.^[5]

The EU has a common market, and France is obligated to recognize qualified certificates and signatures from other EU member states. This flexibility ensures that financial institutions can choose qualified trust service providers that best meet their needs and compliance obligations.

French Laws and Standards for Onboarding to Qualified Signatures

eIDAS regulates the creation of qualified certificates (Article 24) and ensures their compliance with French law if they are on the trusted list. However, before qualified trust service providers can remotely identify users, they must comply with national regulations similar to the PVID in France.

For example, Germany has implemented the VDG (Vertrauensdienstegesetz), which outlines requirements for identity vetting centers and specific ID document examination methodologies. Financial institutions operating in France must be aware of these laws and standards to ensure compliance with both eIDAS and national regulations. This understanding enables them to choose qualified trust service providers that meet the highest legal and compliance standards.

The Relation Between German VDG and French PVID

The German VDG and the French PVID share similarities in their requirements for remote identification and information security management systems. Both regulations require liveness technology, specific ID document examination methodologies, and the highest level of information security management systems based on ETSI standards.

While the German VDG certification is performed by the Bundesnetzagentur, the French PVID certification is carried out by the Agence nationale de la sécurité des systèmes d’information (ANSSI). The key difference lies in the certification process, with PVID placing significant weight on systems testing after the documentation review stage is complete.

Understanding the relationship between the German VDG and the French PVID is crucial for financial institutions operating in both Germany and France. Complying with these regulations ensures a seamless and standardized approach to remote identification and enhances overall compliance efforts.^[6]

Final Words

Financial institutions operating in France must comply with KYC regulations. By implementing robust remote identification procedures, they can mitigate risks, prevent money laundering, and ensure compliance with AML and CTF regulations. Understanding the remote identification requirements, the role of eIDAS-qualified certificates, and the French laws and standards for onboarding qualified signatures is crucial for financial institutions to navigate the complex regulatory landscape in France.

By prioritizing compliance and embracing technological advancements, financial institutions can establish trust, mitigate risks, and contribute to a safer and more secure financial landscape in France.

References

[1] – IRS – List of Approved KYC Rules. https://www.irs.gov/businesses/international-businesses/list-of-approved-kyc-rules

[2] – Toggle – KYC Compliance in France. https://www.togggle.io/blog/kyc-compliance-in-france-steps-for-businesses-2

[3] – Investopedia – Know Your Client. https://www.investopedia.com/terms/k/knowyourclient.asp

[4] – PWC – PWC Anti Money Laundering Report. https://www.pwc.com/gx/en/financial-services/publications/assets/pwc-anti-money-laundering-2016.pdf

[5] – FATF – FATF Recommendations. https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html

[6] – ACAMSToday – eKyc in the Digital Era. https://www.acamstoday.org/e-kyc-in-the-digital-era/