What are the legal requirements for anti-fraud banking compliance? 

According to MazarsBetween 2011 and 2019, there will be a 60 % increase in sanctions imposed in the fight against money laundering and terrorist financing (LCB-FT). Banking compliance is therefore of crucial importance to businesses. But what exactly does it cover? What regulations are in force? And what preventive measures should be adopted? We take a look together. 

Who are the players involved in anti-fraud banking compliance? 

Banking compliance is a major challenge for businesses, with a range of risks and potential consequences. Penalties for non-compliance with regulations can be severe, ranging from heavy fines to restrictions on activities and even criminal proceedings against senior management.

Banking compliance must be respected not only by financial institutions. We tell you more! 

Financial institutions

Financial institutions are the first to have to comply with a banking compliance process. For example banks, to insurance companies and asset managers. 

To ensure banking compliance, they have to implement internal processes and develop regular control systems. 

The companies

THE companies are also required to comply with current legislation. For them, the legislation takes a slightly different turn than for banking institutions. 

It's more a question of check your customer basealso known as KYC and check third parties. 

Official bodies, also known as regulators 

Official bodies play the role of regulators. They play a major role in defining standards and ensuring that they are applied. 

When we talk about regulators, we are thinking in particular of : 

• Prudential Control and Resolution Authority (ACPR) in France 
• The European Central Bank (ECB) at European level 

Their role? Oversee compliance with regulations by financial institutions. In the event of non-compliance, these authorities can impose penalties.

The fight against money laundering and terrorist financing (AML-FT) 

According to Article 561-2 of the French Monetary and Financial CodeSeveral establishments are concerned by the LCB-FT law: 

• banking and credit institutions
• insurance and provident societies

What it means is simple: all the companies concerned are obliged to check their customers' information at every stage of the process. 

To find out more about the banking industry, read our article : Focus on the different banking players 

Before the customer relationship 

Before entering into a commercial relationship, it is essential to carry out a in-depth identification of the beneficiary. In other words, it is essential to determine precisely who the true beneficiaries or owners of the transactions concerned are. This will ensure total transparency and to comply with regulations in force. 

By clearly identifying the people or entities who benefit from commercial transactions, you reduce the risk of fraud.

During the customer relationship 

Throughout the commercial relationship, it is imperative to keep the third-party repository up to date. All information relating to commercial partners must be regularly updated and checked by the teams concerned. 

For example, in the event of changing bank details such as the IBAN number, the closure of a company or its merger with another entity, a new check must be carried out, in particular through checks with external databases such as SEPA MAIL. SEPA MAIL is a database containing information on financial transactions in the SEPA zone (Single Euro Payments Area). This guarantees the accuracy and reliability of the data. 

By keeping the third-party repository constantly up to date, companies can strengthen their ability to identify and mitigate potential risks throughout the business relationship.

At the end of the customer relationship 

At the end of the commercial relationship, it is important toarchive all documents and information relating to to the beneficiary's account for a five-year period. This practice guarantees traceability and data retention. 

By keeping these documents, companies can respond to any subsequent requests for audits or investigationsand any other compliance requirements.

Internal company procedures 

To strengthen the unity of anti-money laundering measures, new internal procedures must be introduced within the company. These include 

• A la appointment of an AML/CFT officer has in-depth expertise in compliance requirements and processes 
• In accordance with Article L561-15 of the French Monetary and Financial Code, the company must report any suspected money laundering at Tracfinthe body responsible for collecting these declarations.

Transparency and the fight against corruption with the Sapin II law 

The Sapin Act is adopted in 2016 and helps combat corruption and money laundering. But who is subject to this law? It is the companies with sales of €100 million or more and with more than 500 employees. 

This law includes a number of key points that each institution must put in place: a code of conduct, an internal whistleblowing system, risk mapping, procedures for assessing third parties, internal control processes and risk training. 

The aim of this law is to involve all core businesses and all departments so that the company is armed against fraud. 

And to arm yourself against fraud, what better way than to set up an in-house anti-fraud unit ? 

Combating money laundering with Anti Money Laundering (AML) 

Shortly after the attacks of 11 September 2001 in the United States, the Financial Action Task Force (FATF) broadened its scope to include the fight against money laundering (AML) and terrorist financing. Regulations in this area aim to combat both money laundering (origin of funds) and terrorist financing (use of funds).

Arm yourself against money laundering with an anti-fraud detection solution

To combat fraud, banking institutions use what is known as SEPA MAIL. Checks with SEPA MAIL involve consult this database to validate bank detailsThis allows us to detect any anomalies or inconsistencies in bank data and avoid potential errors or fraud. This helps to detect any anomalies or inconsistencies in the banking data and avoid potential errors or fraud.

To strengthen this fight against money laundering and the financing of terrorism (AML/CFT), financial institutions are also turning to anti-fraud detection solutions. 

Thanks to tools that use advanced algorithms and artificial intelligence to analyse vast quantities of financial data and identify suspicious patterns. 

By examining transactions in real time, these solutions are able to identify unusual activities or fraudulent and immediately alert compliance teams. These solutions enable financial institutions to take rapid preventive measures to block suspicious transactions and prevent money laundering. 

At Finovox, we have developed a solution for detecting fraudulent documents. What's in it for you? So that you can divide by 6 the document fraud of your company! Invest in our solution to receive detailed reports so you can effectively flag up suspicious activity. 

By combating money laundering, you demonstrate your commitment to protecting the integrity of the financial system. Interested? Ask one of our experts for a demo to find out more.