Banking activity regulation in France - read in the blog of the company COREDO

Banking activity regulation in France

11.07.2020

The Monetary and Financial Code as well as the Finance and Banking Act are the principal laws regulating banking in France. It should be taken into consideration that the Finance Act is not only valid for investment entities but also applies to lending establishment and their actions. Afterall, for those individuals who would like to register a financial company in France it would be useful to learn about main principles of the financial services provision in France.

There are two central regulators who control financial and banking activities in France – the FMA and Finance Ministry. Additionally, another organization acts as an advisory body and is called the FAC. Its task is to monitor regulatory and legislative issues connected to financial and banking operations in France.

Obtaining a banking license in France

Activities of private banking in France as lending and investments are not regulated. However, in order to provide financial service in the French Republic one needs to obtain an investment and banking licenses. When it comes to delivering asset-management services and engaging in private banking, the French government does not have any special obligations for these activities. Yet, for banking establishments it is necessary to have a license.

Filing an application to the ACPR is a necessary step to obtain a banking license in France. Before doing so, applicants need to ensure that they comply with the following conditions:

  • Have a proper legal status
  • Have a required minimum capital
  • Have mandatory technical and financial resources
  • Disclose the status and identity of their investors
  • Provide the evidence of their head office being in the same territory as their legal address
  • Provide the evidence of their company being managed by at least 2 individuals
  • Provide the evidence of the company’s managers’ fulfillment of the requirements concerning knowledge, suitability, and experience
  • Ensure that the company’s liabilities are not higher that assets.

Financial services license application

The potential applicants send their applications to the ACPR. After taking a look at the applications, the ACPR issues the draft resolution that suggests that the EU Centrobank gives a permission to deliver banking activities in France. Firstly, the bank makes sure that the applications do not violate the French legislation. If no conflicts are found, afterwards the bank provides a permit for a maximum of 12 months.

AML/CFT rules

AML/CFT rules are mandatory to comply with for all financial companies in France. An organization called TRACFIN is dedicated to examining information and taking measures accordingly to fight against fraudulent financial organizations. Any cases of suspicious activities or customary offenses must be reported by TRACFIN.

Private banking institution – how to register in France

Authorized services providers in France have to send a notification to a respective regulatory authority before they start executing their business activities. Once the permission is obtained, they can provide their services anywhere in the EU. Although, for doing so a French services provider must appoint a responsible manager, for which a respective authority in France has to give its consent.

Conclusion

It is necessary to comply with the legislation and AML/CFT rules to be able to offer banking services in France. By participating on the French financial market, the services providers have a right to execute their activities in the whole European Union as long as they fulfill certain rules.

If you are planning to establish a financial company in France, COREDO’s specialists will provide you with legal advice on banking regulation in France.

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