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France Country Summary

75.78 Country Rating /100
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Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

France is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in France was undertaken in 2022. According to that Evaluation, France was deemed Compliant for 19 and Largely Compliant for 18 of the FATF 40 Recommendations. ​It was rated Highly effective for 3 and Substantially Effective for 6 of the Effectiveness & Technical Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

France was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Due to its sizeable economy, political stability, sophisticated financial system and commercial relations, especially with Francophone countries, France is a venue for money laundering. Public corruption, narcotics and human trafficking, smuggling, and other crimes associated with organized crime are sources of illicit proceeds.

France can designate portions of its customs territory as free trade zones and free warehouses in return for employment commitments. The French Customs Service administers these zones. France has an informal economic sector, and underground remittance and value transfer systems such as hawala are used by immigrant populations accustomed to such systems in their home countries. There is little information on the scale of such activity.

Casinos are regulated. The use of virtual money is growing in France through online gaming and social networks. Sport teams have become another significant source of money laundering.

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           71

World Governance Indicator – Control of Corruption             85

Corruption is a low risk for business operating or planning to invest in France. The country's investment climate is very favorable, and there exists a strong legal framework to counter corruption. Corruption is perceived to be a problem in public procurement and whenever business and politics overlap. Cases involving illegal political funding have tainted the careers of several high-ranking French politicians. The Penal Code (in French) criminalizes active and passive bribery, the bribery of national and foreign officials, and gifts and facilitation payments. The 2017 introduction of the Sapin II law is expected to strengthen the anti-corruption fight in France and crack down on the bribery of foreign officials. Demands for irregular payments are very unlikely in France.  For further information - GAN Integrity Business Anti-Corruption Portal

Economy

 

France enthusiastically welcomes foreign investment and has a stable business climate that attracts investors from around the world.  The French government devotes significant resources to attracting investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms.  France has an educated population, first-rate universities, and a talented workforce.  It has a modern business culture, sophisticated financial markets, a strong intellectual property rights regime, and an innovative commercial sector.  The country is known for its world-class infrastructure, including high-speed passenger rail, many maritime ports, extensive roadway networks, a dense network of public transportation, and efficient intermodal connections. High-speed (3G/4G) telephony is nearly ubiquitous, and 5G is now available in large and many mid-sized metropolitan cities.

According to Business France, the French government’s business promotion agency, foreign investment in France increased by 7 percent in 2022 in comparison with the previous year. Foreign investors concluded 1,725 transactions in France, resulting in 58,810 jobs being created or maintained. Among them, the United States was the leading foreign investor in France with investment in 280 new projects creating or sustaining 17,107 jobs. The United States also accounts for 15 percent of the 155 research and development (R&D) and engineering projects led by foreign investors in France. U.S. companies based in France continue to view France favorably despite a challenging overall global economic environment. Many of France’s historical challenges for foreign investors, such as overall labor costs and labor protections, social legislation, and the complexity of administrative procedures persist, but France’s capacity for innovation and research, recent pro-business regulations, and the government’s ecological transition efforts are significant draws.

France is among the least restrictive countries for foreign investment. There are no statutory limits on foreign ownership of companies, excluding those in certain specified sectors. Any acquisition of a domiciled company or subsidiary operating in sectors deemed critical to France’s national interests relating to public order, public security, and national defense, or conducting R&D on critical or dual-use technology for application in those sectors, are subject to prior notification, review, and approval by the Minister of the Economy, Finance, and Industrial and Digital Sovereignty. In the wake of the Covid-19 health crisis, France’s investment screening body lowered the threshold for its review of foreign acquisitions in these sectors from a 25 percent ownership stake to a 10 percent stake. This review pertains to potential investors from outside the European Union or European Economic Area who are seeking investments in French companies whose shares are listed on a regulated market. This temporary provision is set to expire at the end of 2023.

Since French President Emmanuel Macron’s first election in 2017, the government has pursued a business-friendly agenda making the labor market more flexible, cutting corporate tax rates from 33.3 percent to 25 percent in 2022, and pledging to abolish the contribution on added value (CVAE) tax. But President Macron’s agenda has faced obstacles, including widespread protests in 2018 and 2019 against economic inequality, the COVID-19 pandemic and resulting economic downturn in 2020, the economic fallout from Russia’s invasion of Ukraine, persistent inflation, and vocal opposition in 2023 to pension reform that would raise the legal retirement age from 62 to 64.

Despite these challenges, the Macron administration has implemented new economic policies and financing to support business growth and innovation. The 2019 “PACTE” law on business growth and transformation, the “France Relaunch” COVID-19 recovery program, and the France 2030 investment plan have all been programs to simplify corporate formation and encourage investment in underdeveloped sectors. These programs also focus on France’s green transition and support the transformation of France’s automotive, aerospace, digital, green industry, biotechnology, culture, health, and advanced technology sectors. France’s March 2022 Resilience Plan to mitigate the economic impact of the Russian invasion of Ukraine includes grants for energy-intensive companies and an expansion of State-guaranteed lending. These programs have been equally available to firms supported by foreign investment. Aid to companies under the Relaunch program were available to companies until 2022, and investments under the France 2030 and Resilience plans are available through 2026.

The Macron administration’s draft pension reform bill was unveiled in January 2023. Following contentious debate in both houses of Parliament and facing uncertainty the bill would ultimately pass in the lower house, the government pushed through its pension reform legislation by decree on March 16 using article 49.3 of the French constitution, bypassing a vote in the lower house. In response, nationwide strikes carried out by labor unions are ongoing as of the drafting of this report (March 2023), and opposition parties in Parliament are expected to contest the pension reform bill at the Constitutional Council. While public opinion polls have shown that most French citizens oppose this pension reform, which raises the age of eligibility, the French government believes changes are necessary to place the national pension system on a firmer financial footing as life expectancy rises and as the ratio of workers to retirees decreases. Opponents dispute the need for urgency.

Country Links

Intelligence Processing and Action against Illicit Financial Networks Unit (TRACFIN )

Autorité des marchés financiers (France) (AMF)

Registre unique des Intermediaires en Assurance, Banque et Finance (France) (ORIAS)

Autorité de Controle Prudentiel (France) (ACPR)

Bank of France

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