On the 16th of July 2020, the Financial Markets Authority (Authorité des marches financiers) (AMF); Made available to professionals a guide on freezing assets to help them better understand the various existing regimes.
The goal is to clarify and provide details as to the scope of application of these regimes, as well as to highlight the obligations to which professionals are subject. In doing so, the AMF complements the AML-CFT’s preventive measures in the fight against terrorist financing.
The regulations on the freezing of assets are sufficiently complex to justify that the institutions endeavor to provide some clarification. The AMF is not the first to take an interest in the subject, a guide to good conduct having already been published to this regard by the Directorate General of the Treasury on 1st September 2014. Other examples include the "EU best practices on the effective implementation of restrictive measures" published by the Council of the European Union on the 4th of May 2018, and the joint guidelines of the Directorate General of the Treasury and the (Autorité de contrôle prudentiel et de résolution) on the implementation of the asset freezing measures of June 2016.
The AMF guide is addressed in particular to collective investment management companies, such as portfolio management companies, legal entities that manage Alternative Investment Funds (AIFs), managers of European venture capital funds and managers of European social entrepreneurship funds (Monetary and Financial Code, Article L.543-1 ). The guide also covers collective investment schemes under French law when they are self-managed, branches of European management companies of undertakings for collective investment in transferable securities (UCITS) and AIFs as well as cow funding investment advisers.
The guide begins by recalling the plurality of regimes dealing with (considering) the freezing of assets in France. The AMF thus underlines the distinction between the so-called UN and European regimes, i.e. regimes resulting from the resolutions of the United Nations Security Council (UNSC) or the decisions of the Common Foreign and Security Policy (CFSP) of the Council of the European Union, and the national regime framed by the Monetary and Financial Code. The guide shall specify, in particular, the scope of these regimes.
In addition, the guide discusses the most important definitions, such as the asset freeze itself. The Guide recalls that this expression was instigated by the UNSC and that it refers to the deprivation of a natural or legal person of his ability to control the thing being frozen. Generally speaking), the asset freezing consists of freezing the economic resources of persons who commit or attempt to commit terrorist acts. The freeze also applies to persons who have facilitated or took part in in the commission of such acts, as well as any entity that is either owned, controlled or acted on behalf of or on behalf of the perpetrators of terrorist acts or attempted terrorist acts. In this sense, the Minister for the Economy and the Minister for the Interior may decide to freeze the assets of this type of person jointly and for a renewable period of six months (Monetary and Financial Code, Article L.562-2). The guide clarifies that freezing does not involve transfer or seizure of the concerned property .
The guide also stresses that traders must have a mechanism (system) to detect persons or entities subject to a freezing measure, as well as assets to be frozen. Such a system aims to allow the identification of customers as well as their beneficiaries, and can be set up in an automated way as soon as the regulations on personal data are respected. The guide also highlights the existence of lists of persons and entities designated by freezing measures, such as the national register of persons subject to an asset freeze measure available on the website of the Directorate-General of the Treasury, or even the list published by the European Union covering persons (encompassing the people) targeted not only by freezing measures but also by restrictions of other kinds.
As regards the implementation of freezing measures, the Guide specifies that they constitute an obligation of result, which implies that a trader (professional) who detects that one of his clients is subject to one of those measures must apply the measure in question as soon as it enters into force. In the event that this obligation is not respected by the professional, the latter would be liable to sanctions from the AMF, or even criminal penalties.
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