First use of the procedure of "appearance on prior admission of guilt" in relation to financial and economic offences
For the first time in France, the National Financial Prosecutor has applied the procedure of "appearance on prior admission of guilt" (referred to in French as a "CRPC") to financial and economic offences. Previously, application of the CRPC had been exclusively reserved, in practice, for common misdemeanours (for example, traffic violations, theft, etc.).
The financial institution in question, Suisse Reyl, became subject to a judicial investigation for laundering of tax fraud proceeds and agreed, under the framework of a CRPC procedure, to plead guilty, paying a fine of 2.8 million euros as proposed by the National Financial Prosecutor.
On 5 January 2016, the Presiding Judge approved the sentence at a public hearing, after verifying the findings of fact and their legal characterisation, for which Suisse Reyl had admitted its culpability.
This first application of a CRPC to financial and economic crimes was made possible through legislative developments effected since the introduction of the CRPC by a Law of 9 March 2004. These legislative developments have extended the scope of the CRPC while also expanding its implementing provisions (see Article 495-7 et seq. of the French Code of Criminal Procedure).
Initially, the CRPC was reserved for misdemeanours punishable by a fine or imprisonment up to five years. The Law of 13 December 2011 subsequently extended the scope of the CRPC to all misdemeanours, with the exception of certain offences (including press offences, involuntary homicide, and voluntary or involuntary personal injury offences), and has further allowed the investigating judge to propose a CRPC during the course of an investigation (see Article 180-1 of the French Code of Criminal Procedure).
Based on these legislative developments, the conditions for the CRPC to apply in the case of white collar offences have thus been established.
In using this procedure for the first time, initial progress has been made in paving the way for negotiated plea settlements to apply to "white collar" proceedings in France.
Publication of the National Commission on Sanctions' first Activity report
On 12 January 2016, the President of the National Commission on Sanctions (CNS) submitted the organisation's first activity report to the French Minister of Finances and Public Accounts.
Operational since October 2014, CNS is a French independent administrative authority whose mission is to sanction breaches of obligations relating to the fight against money laundering and the financing of terrorism, committed by the following:
- real property professionals;
- persons engaged in a domiciliation business; and
- professionals from the gaming and gambling sectors
Pursuant to the obligations derived from their activity, these professionals must:
- implement money laundering risk management and evaluation mechanisms,
- carry out the identification and verification of clients and beneficiaries' identities (and, in the event this proves impossible, abstain from continuing the business relationship),
- exert constant vigilance on business relationships and on the transactions undertaken, and;
- provide training for staff relating to money laundering and terrorism financing issues.
If it finds a breach of one or more of these obligations, CNS may impose severe sanctions on the aforementioned professionals, such as (i) the prohibition from exercising their activity for a maximum period of 5 years, (ii) a fine of up to US$5 million, and/or (iii) the publication of the sanctions decision in a media of its choosing. The CNS may also refer the identified breaches for public prosecution.
Based on its annual report published on 12 January 2016, it appears that during the period October 2014 - November 2015:
- CNS has reviewed thirty-three cases and issued fifty eight sanctions, the most severe being a temporary prohibition on exercising a profession, and a fine of 8,000 euros ;
- CNS' decisions have concerned real estate agents and domiciliation agencies exclusively ;
- The breaches noted are often derived from a total ignorance, by the professionals, of the specific obligations to which they are subject.
Faced with these findings, CNS calls on real estate and domiciliation professionals to "implement and generalise the safeguards and training procedures for their staff without delay as required by law", emphasising the important role of professional organisations in this regard.