Sanctions

Administrative fines – criminal sanctions (2004 law and Penal Code) – judgment on agreement

Anti-money laundering and countering the financing of terrorism (AML/CTF) requires professionals to comply with a strict and multi-source regulation.

As set out in the section describing relevant requirements (read more here), professionals shall implement a reliable, permanent and effective vigilance mechanism based on a risk assessment.

In case of failure to do so, professionals may therefore be sanctioned for failure to comply with the applicable AML/CTF obligations.  

Professional are subject to three types of sanctions including :

• negligent behaviour in the field of AML/CTF, which is subject to an administrative fine;
• sanctions for breaches of the 2004 law on the fight against money laundering and terrorist financing, as amended (the “Law”), which concerns, among other things, the obligation of vigilance, cooperation, etc;
• money laundering offences punishable under Article 506-1 of the Criminal Code.

I. Administrative sanctions

The Law provides that supervisory and self-regulatory authorities (i.e. the bodies responsible for the supervision of a specific sector of activity) have authority to impose sanctions.

The sanctions may apply to the professionals (legal persons), but also to the members of their management bodies, or other persons responsible for the professional’s failure to comply with these obligations.

Fines of up to 250,000 euros may be imposed, notably where the professional concerned do not cooperate adequately.

Fines of up to EUR 1,000,000 (or EUR 5,000,000 in the case of credit institutions) are also applicable in the event of failure to comply with:

• the obligation to carry out a risk assessment;
• the obligation of vigilance with regard to clients;
• the obligation of adequate internal organisation.

In addition, warnings, reprimands and professional bans may also be pronounced.

According to Article 5-1 of the Law, the supervisory authorities and the self-regulatory organisations shall inform the Cellule de Renseignement Financier (Financial Intelligence Unit or FIU) without delay when, in the course of their supervisory duties, they suspect AML/CTF infringements.

The administrative sanctions described above may be appealed, depending on the circumstances, to the disciplinary bodies of the professional order concerned, where applicable, or to the administrative courts.

II. Criminal sanctions

• A. Penalties related to the obligations of vigilance, organisation and cooperation referred to in the law

As indicated above, professionals who have breached their AML/CTF obligations are subject to administrative sanctions, but they may also be subject to a criminal penalty.

Article 9 of the Law provides for criminal fines ranging from 12,500 euros to 5,000,000 euros for those who have knowingly contravened the provisions relating to:

• the obligation to carry out a risk assessment;
• the obligation of vigilance with regard to customers;
• the obligation of adequate internal organisation.

It is worth recalling, depending on the circumstances, that the fines may be imposed against legal persons, managers or employees subject to AML/CTF obligations.

In practice, based on the information transmitted by the FIU, the State Prosecutor may prosecute the various suspected offences.

B. Convictions related to the money laundering offence referred to in the Criminal Code

Where the conduct in question is likely to constitute a money laundering offence, Articles 506-1 et seq. of the Criminal Code apply.

Perpetrators of the money laundering offence, but also those who have facilitated the commission of this offence or have received any benefit from it, may be prosecuted on this basis.

In other words, professionals who have facilitated a money laundering operation may be sanctioned on this basis (read more here).

Article 506-1 of the Criminal Code provides for a penalty of imprisonment of 1 to 5 years and a fine of EUR 1,250 to EUR 1,250,000 or either of these sanctions.

The sanction is increased to imprisonment of 15 to 20 years and a fine of EUR 1,250 to EUR 1,250,000 or one of these penalties only, if they constitute acts of participation in the principal or accessory activity of an association or organisation.

Furthermore, in case of legal persons, the maximum fine applicable is double the rate provided for natural persons (this rate is fivefold in the case of terrorist financing).

In addition to the above-mentioned sanctions, complementary penalties may be applied:

• • • Confiscation

Article 36 of the Criminal Code also provides that in AML/CTF matters, the perpetrator of the money laundering offence may:

• have the property involved in the laundering confiscated (real estate or movable property);
• confiscate the proceeds of money laundering.

These confiscations are supplemental to the fines that may be imposed. Moreover, even in the event of acquittal, confiscation may be applied (e.g. in the event that the holder was acting in good faith with regard to the origin of an asset resulting from a money laundering operation, confiscation may nevertheless be ordered).

• • • Professional bans

Where the offender has knowingly used the facilities provided by the exercise of a professional or social activity, the court may prevent her/him to engage in this activity in any form or manner for a period of up to five years.

C. Procedural aspects: what about a judgment on agreement (jugement sur accord)?

Criminal sanctions are imposed by Courts. However, the professional who cooperates could consider the possibility of entering into a judgment by agreement with the prosecution authorities.

This procedure was introduced by a law of 2 February 2015, which is reminiscent of negotiated/transactional forms of criminal justice such as “pleading guilty” (mechanism existing in other countries).

The judgment by agreement is a simple and rapid procedure. It allows a person who has committed an offence and who admits the facts to agree with the public prosecutor’s office on the applicable sentence by means of an agreement which is then validated by a judge.

Judgment by agreement is may apply for offences punishable by imprisonment of five years or less, or by a correctional fine.

This procedure is therefore possible where the prosecution is based on (recognised) violations of the Law and in matters of money laundering (provided that the aggravating circumstance of participation in the principal or accessory activity of a criminal association or organisation is not present). In practice, this procedure is particularly suitable for breaches linked to the obligation of risk assessment.

It can be reached at any stage of the proceedings as long as a judgment has not been passed.

It may be entered into either on the initiative of the State Prosecutor or of the person prosecuted himself (each party may accept or refuse both its principle and/or its terms).

The assistance of a lawyer is required.

The agreement shall then be approved by the District Court (criminal chamber).

Ordinary appeal procedures are applicable. All parties to the agreement can therefore appeal against the decision of the criminal chamber.

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If you would like more information on any of the above, or have any other questions, please do not hesitate to contact us.