Regulation of Banking Activities in France

The main laws governing banking in France include the Monetary & Financial Code, the Finance Act & Banking Act. It’s worth pointing out that the Finance Act applies not only to investment entities, but also to lending establishment & their operations. Given that, individuals considering registering a financial company in France will have to have a good understanding of the major regulatory aspects of the financial services provision in France.

The two main organizations charged with regulating financial & banking activities in the French Republic include the FMA & Economic & Finance Ministry. There is also an advisory body - the FAC - which is charged with overseeing legislative and regulatory matters pertaining to financial & banking operations in France.

Getting a Banking License in France

Private banking in France represents a combination of lending & investment activities, and as such is unregulated. Furnishing investment services in the French Republic requires having investment & banking licenses. The country’s legislation doesn’t contain any specific requirements for engaging in private banking & furnishing asset-management services in the French Republic. There is, though, a licensing requirement for banking establishments which they must abide by to be able to engage in certain activities.

Obtaining a banking license in the French Republic requires applying to the ACPR. Prior to submitting their application, potential applicants are expected to comply with these requirements:

• having a proper legal status 
• having a required minimum capital
• having required financial & technical resources 
• disclose the status & identity of their investors
• providing proof that their head office is in the same territory as their legal address
• providing proof that their company is managed by a minimum of 2 individuals
• providing proof that the company’s managers comply with the requirements for knowledge, experience & suitability
• ensuring that their company’s liabilities do not exceed assets

Applying for a License Authorizing Provision of Financial Services in France

All potential applicants must submit their applications to the ACPR. Upon looking into their applications, ACPR comes up with a draft resolution suggesting that the EU Centrobank issue a permit authorizing conduct of banking activities in the French Republic. The bank makes sure that the applications are consistent with French legislation & then, if no inconsistencies are found, issues the permit within a term that doesn’t exceed 12 months.

Compliance with AML/CFT Rules 

All financial companies in France must comply with AML/CFT rules. There is a special organization called TRACFIN which is responsible for processing information & taking measures against fraudulent financial organizations. It must report any suspicious or unscrupulous activities (e.g. tax evasion) or customary offenses which entail a 1-year prison term. 

Registering Private Banking Institutions in the French Republic

Before conducting business in an EU country, authorized services providers in France must notify a respective regulatory authority by sending a special notification. Upon obtaining permission, they can furnish services authorized in France all over the EU. In addition, French services providers are also required to appoint an individual (a manager) responsible for providing financial services in a chosen EU country. Before appointing the manager, they must notify a respective French authority to gain its consent.

Conclusion

Conducting banking activities in France requires complying with the country’s legislation & AML/CFT rules. Through the French financial market, its participants can provide their services throughout the European Union, providing they observe certain rules.