AML/CFT: Due Diligence Obligations in Detail

Once subject to AML/CFT regulations, a watch or jewelry professional must implement a series of measures.’vigilance obligations for each operation concerned. Here they are in detail. To find out if you are affected, see our guide. AML/CFT: What are the obligations for HBJO professionals?

The essentials in 30 seconds

• Formalize a risk assessment of your activity (mapping).
• Identify and verify the client, and go back to the beneficial owner.
• Understanding the operation and remain vigilant throughout the entire relationship.
• Increase vigilance in risky situations, and check the freezing of assets.

1. Assess the risks of your business

You must formalize a system that identifies and assesses the risks to which your company is exposed. This analysis takes into account: the products sold, the amounts, the means of payment, distance sales, customer characteristics, any intermediaries, the countries of origin or destination of the funds, and any unusual terms of a transaction.

You then establish a risk classification and procedures adapted to their level. This organization (risk mapping, internal procedures, verification of high-risk countries) must be documented, up-to-date and presentable in case of inspection.

2. Identify the customer and verify their identity

Before entering into a business relationship or carrying out a regulated transaction, you must collect the client's identity, the verify using supporting documentation, and retain proof of this verification.

3. Identify the beneficial owner

When a person acts on behalf of a third party, or when a company makes the purchase, you must identify the natural person who actually controls the entity or beneficiary of the transaction. It is not enough to know the name of the company on the invoice: it is necessary to search for and verify its beneficial owner(s), via the available registers (RBE) and, if the risk justifies it, additional supporting documents.

4. Understand the purpose and nature of the operation

You need to gather information to understand: the purpose of the purchase, the nature of the relationship with the client, the identity of the person paying, any intermediary, and the consistency between the buyer, the holder of the means of payment and the beneficiary of the invoice. This vigilance is maintained throughout the relationship: operations must remain consistent with what you know about the client.

5. Increased vigilance in risky situations

Further checks are necessary when the risk is high, particularly when:

In these cases, delve deeper into your research on the’origin and destination of funds, the purpose of the transaction and the identity of its beneficiary.

6. Verify the asset freezing measures

You must have a procedure in place to verify that the client, beneficial owner, or intermediary is not subject to asset freeze measure. If a person is affected, the transaction must not be carried out You must implement the measure without delay and inform the competent authority. This is a stricter obligation than simple vigilance: it is no longer about analyzing a risk, it is about complying with a prohibition.

In the presence of serious doubt, a suspicious activity report to TRACFIN may become necessary. And to organize all of this internally, see organize your AML/CFT compliance.

This article is for informational purposes only and does not replace applicable laws or professional advice. The AML/CFT framework is technical and constantly evolving: verify your situation with official sources (Monetary and Financial Code, French Customs and Indirect Tax Authority (DGDDI), French Financial Intelligence Unit (Tracfin)) or a professional before deciding on your specific measures.