Identification of beneficial owners: a new anti-money-laundering procedure for French companies from 1 April 2018

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Identification of beneficial owners: a new anti-money-laundering procedure for French companies from 1 April 2018

Since 1 August 2017, legal persons registered in France have had to file a declaration identifying their beneficial owners at the office of the commercial court with jurisdiction over their place of registration. This new obligation has been established at a time when the international community is increasingly focused on combating money laundering and terrorism financing.

The identification of beneficial owners applies to all French businesses with legal personality. Foreign companies with a single establishment in France must also comply with this reporting obligation at the court office with which their establishment is registered.

However, companies whose securities are admitted to trading on a regulated market are not required to identify their beneficial owners. 

Companies registered before 1 August 2017 have until 1 April 2018 to file their declaration. New companies formed after this date must include the beneficial owner declaration with their incorporation documents. Furthermore, the declaration must be updated if a modification to the company’s shareholding causes a change in the beneficial owner. 

For a company, a beneficial owner is any natural person:

  • directly or indirectly holding more than 25% of the company’s share capital or voting rights; or
  • who, by any other means, exercises control over the company’s management, administrative or supervisory bodies or even the general shareholders’ meeting. 

Finding the ultimate beneficial owner may involve an in-depth search of a web of companies. For French subsidiaries of a foreign company, this search must be performed according to the requirements of the law governing the declaring entity, i.e. French law. 

Ultimately, the obligation is one of means, the company should do its best to identify the beneficial owner. The French Financial and Monetary Code does not expect the beneficial owner to be identifiable in every situation (especially in the case of fragmented ownership). The forms currently available at the commercial court office allow for the identification of the company’s legal representative if the beneficial owners are not identifiable under the law’s criteria.

The declaration filed with the office is not publicly accessible. Access is limited to (i) specific legal authorities, (ii) persons subject to obligations on combating money laundering and terrorism financing, and (iii) any person showing a legitimate interest and authorised by the supervisory judge of the trade and companies registry.

In addition to being compelled to make the declaration under threat of penalty, any person who fails to file the declaration (or files an inaccurate or incomplete declaration) may be punished with six months’ imprisonment and a €7,500 fine. 

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