How are French auditors dealing with new regulations: Anti-money laundering and terrorist financing
By Carole Hong Tran and her team, FIDAG SARL
French auditors draw particular attention to regulations on antimoney laundering and combating terrorist financing (AML/CFT). The aim is to identify and to assess money laundering and terrorist financing risks. Risk levels are defined according to the type of client (natural or legal client, trust, unincorporated collective investors, persons acting on behalf of the client), the client’s situation (activity, location, particularities) and auditor missions (legal or contractual).
Auditors must check the client identification before accepting an engagement. Depending on risk level and the auditors’ professional judgement, simplified, reinforced, or complementary due diligence measures are applied. During the mission, auditors remain vigilant when updating information, identifying clients and if applicable, beneficial owners. If the risk is too high, auditors should not accept or cease the mission unless services are related to court procedure and/or legal consulting.
New regulations emphasise diligences for beneficial owners and persons domiciled, registered, or established in a high-risk country included on the lists published by the Financial Action Task Force (FATF).
Declaration to TRACFIN
Auditors report to TRACFIN sums or transactions which they know, suspect, or have good reason to suspect, arise from offences punishable by a custodial sentence of more than one year, or derive from terrorist financing. In cases of tax fraud, a declaration should be made under certain conditions. Regulations specify the procedure and confidentiality of this declaration. If proof exists, any criminal actions are reported to the public prosecutor.
Auditors’ files must be kept for five years after engagement with the client to avoid liability in case of fraud disclosure. Since summer 2020, the CNCC, the French auditing professional body, requires auditors to complete a one-day training course on these new regulations.
Carole Hong TranGGI member firm
Audit & Accounting, Tax, Advisory and Corporate Finance
T: +33 1 42 80 20 81
FIDAG SARL was created in 1985 and specialises in accounting, auditing, and advice to SMEs where they are engaged in international operations, particularly tax issues, social and labour law, legal problems, accounting, and the management of operations taking place in at least two different countries.
Carole Hong Tran is a Partner with FIDAG, French Chartered Accountant, and ACCA member, with considerable expertise in statutory audit and due diligence operations.
Published: Auditing, Reporting & Compliance Newsletter, No. 06, Autumn 2021 l Photo: tippapatt - stock.adobe.com