French regulatory update

At the end of 2016, the French authorities published a number of changes and new initiatives that will impact participants of the payments industry, Paris partner Lise Breteau summarises each in date order.

E-money

Anonymous e-money

On 10 November 2016, the French government issued a decree against the financing of terrorism which contains various measures addressing anonymous electronic money. This new regulatory measure applies to electronic money issuers as well as their distributors, credit institutions, finance companies, consumers, and to any person who physically transfers money above a certain amount. The decree introduces changes to the conditions for when e-money is considered anonymous and for which, therefore, the customer due diligence measures do not apply. These include:

• the maximum amount stored does not exceed €250, and when the payment instrument is reloadable, the payment instrument has a maximum payment transactions limit of €250 every 30 days, and can be used only for payments within the French territory;
• the payment instrument cannot be funded with cash (however, this condition does not apply to electronic money used to buy goods and services within a limited network of individuals, or to buy a limited range of goods or services);
• the payment instrument cannot be funded with electronic money where the holder is not identified in accordance with the relevant provisions of the Monetary and Financial Code;
• the withdrawal or redemption operations of electronic money exceeding €100 are subject to due diligence measures – previously the threshold was €1,000.

Previous conditions still apply, for example, e-money must only be used to purchase goods and services. The amendments introduced by this decree entered into force on 1 January 2017.

Payment limits

On 1 December 2016, the French government issued an ordinance which amended the French Monetary and Financial Code by including a revised Article L.112-6 which confirmed that a payment cannot be made in cash or e-money above a financial limit set out by decree which takes into account the tax residence of the payer, the professional or non-professional purpose of the operation and the person to whom the payment is made – the beneficiary criteria was a new addition. On 30 December 2016, a decree was issued which changed the financial limit of e-money payments in France made by French residents or for non-professional purposes from EUR1,000 to EUR3,000.

Limits to pre-paid cards

On 15 December 2016, the French Government issued a decree which was effective from 1 January 2017 and subjected e-money used through a physical device (whether anonymous or not) to the following limits:

• a EUR 10,000 maximum storage capacity;
• cash or anonymous e-money loadings are limited to EUR1,000 per month; and
• cash withdrawals and refunds are limited to EUR1,000 per month.

ACPR’s recommendation: social media

On 16 November 2016, the French insurance supervisory authority (Autorité de Contrôle Prudentiel et de Resolution (ACPR) published a recommendation relating to social media use for commercial purpose. This recommendation reiterates that the use of social media is subject to general legal principles including the requirement for transparency, clear and fair content and prohibition of unfair or deceptive practices, particularly as provided for in consumer laws. The ACPR specifies approach as regards: (i) identification of the sender; (ii) presentation of the content; and (iii) archiving of content. The recommendation also considers rules regarding the dissemination of content (e.g. retweeting).

This recommendation will be effective from 1 October 2017 and, as a soft law instrument, may only be an indirect basis for enforcement.

Anti-money laundering and financing of terrorism provisions

On 1 December 2016, the French government issued an ordinance that implements the Fourth Money Laundering Directive (EU 2015/849) into French law. Key aspects of the new legislation include:

• an extension to the application of the rules to, for example, cryptocurrency exchange platforms and bank intermediaries as well as a clarification regarding passported entities, including in relation to the appointment of a local point of contact;
• strengthened customer due diligence requirements and enhanced risk management assessments at both the national and firm level;
• establishment of the register of beneficial ownership as an annex to the French register of business and trade; and
• enhanced supervision and sanction measures, with sanctions being increased to a maximum of € 100m or 10% of total turnover, and potential personal liability for executives. Strengthened supervisory powers include the right for the French Financial Intelligence Unit to request information from industries outside financial services.

Payments Account Directive (PAD): French implementation

Although the PAD has already been partially implemented within France, the French government issued an ordinance and a decree on 22 December 2016 which provides the right for non-French customers to open a basic payment account. The ordinance will be effective from either February or June 2017, the applicable date will depend on which criteria is satisfied at the relevant time.