Key Benefits:
The Insurance and Mutual Authority,
Vu le Insurance Code, including Articles L. 310-18, R. 310-18 and R. 336-1 ;
Vu le monetary and financial code, including articles L. 563-3 and R. 563-3 ;
In view of the monitoring report of 17 July 2008, comments in response to Company X of 15 October 2008 and the final findings of the controllers of 16 March 2009;
Considering the notification of the grievances of June 2, 2009, addressed by the President of the Insurance and Mutual Control Authority (ACAM) to Company X;
Considering the written comments of Company X of 18 June 2009;
Considering the letter of summons dated 2 June 2009 and the letter of postponement of the disciplinary hearing of 22 June 2009;
The parties who were regularly convened at the AMAC session, held on 16 July 2009, in the presence of:
― M. de Vulpillières, the oldest member of the Insurance and Mutual Authority present, acting as the chair of the meeting, in the absence of the president and the Vice-President prevented, Mr.Fernandez-Bollo, representing the Governor of the Bank of France, MM. Cellier, Diricq, Guerder, Vandier, members of ACCAM;
Ms. Atig, Commissioner of Government;
M. Mantel, Secrétaire général, M. Roux, secrétaire général adjoint, Mme Dreyfuss, directeur de Cabinet, M. Israël, directeur des affaires juridiques, M. Barjon, curator of insurance, M. Clerc, chargé de mission à la cell de lutte antiblanchiment, Mme Litvak, secrétaire de séance, et Mme Baras, agent du secrétariat général ;
Mr. A., President of Company X, Mr. B., Director General, Mr. C., Legal Director, Mr. D., Financial Director, and Ms. E., Administrative Director;
After hearing:
- the report submitted by Mr. Clerc, who is in charge of mission to the anti-money laundering cell;
- the observations of Mr. A. and Mr. B.; Mr. A. made the last statement.
With the required quorum meeting, the College deliberated on July 16, 2009, outside the presence of the Government Commissioner and all officers of the General Secretariat, with the exception of the sitting secretary.
Adopts this decision based on the facts and means set out below:
Considering that company X was subject to on-site control, which resulted in the drafting of a report on 17 July 2008; that it submitted its observations in response to the monitoring report on 15 October 2008;
Considering that, at its session on 28 May 2009, the Autorité de contrôle, seized by its Secretary-General, examined the report prepared by the controllers and took note of the responses made by company X; that, at the end of that meeting, the ACAAM, in accordance with the provisions of Article R. 310-18 of the Insurance Codedecided to notify the company concerned of the facts likely to be charged to it;
On the grievance relating to the non-compliance of domestic anti-money laundering and the financing of terrorism:
Considering that in terms of provisions of the first paragraph of Article R. 563-3 of the Monetary and Financial Code "the financial agencies and persons referred to in Article L. 562-1 adopt internal procedures appropriate to their activities to implement the obligations to combat money-laundering and the financing of terrorism set out in this Title VI (...)"
Considering that it is criticized for Company X not having adopted procedures in accordance with the applicable anti-laundering and the financing of terrorism provisions; Indeed, it appears from the records that the procedures established by the company have not been updated since their adoption in 2004, despite the legislative and regulatory amendments that have taken place; that, in the context of constant vigilance, these procedures do not specify the indicators and parts to be verified in case of doubt; in the end, these procedures do not indicate how the financial intelligence unit is to be seized in the event of an emergency and unavailability of the TRACFIN declarant in accordance with theArticle R. 562-1 of the Monetary and Financial Code ;
Considering that the company concerned indicated, in its written comments of 18 June 2009 as well as during its hearing, that, after monitoring, these procedures were regularly updated and differentiated according to each type of product; that, thereafter, a new procedure will be deployed and will be updated when the decrees of application of the order of 30 January 2009 are issued; that, however, the circumstance that the company has taken such measures, some of which are still to be confirmed, is without impact on the materiality of the facts at the time of the review; that the grievance is therefore founded;
On the grievance relating to the lack of training in the anti-money laundering of the staff concerned:
Considering that in terms of provisions of the second paragraph of Article R. 563-3 of the Monetary and Financial Code "the financial agencies and persons referred to in Article L. 562-1 shall provide the training and information of all concerned members of their staff";
Considering that it appears from the documents of the file and, in particular, from the findings of the ACC controllers that on the date of control the company had not trained in the anti-money-laundering struggle any of its employees concerned, including the person designated as a correspondent and reporting TRACFIN;
Considering that in its written comments of June 18, 2009 as well as during its hearing, Company X has argued that, following the control, the declarants and correspondents TRACFIN holder and alternate have followed at the end of 2008 training in the fight against laundering; that training sessions of a half-day have been held in-house during the months of July and September 2008 in order to raise awareness and inform the entire staff concerned;
On the grievance relating to internal control deficiencies:
Considering that in terms of provisions of the first paragraph of Article R. 563-3 of the Monetary and Financial Code "the financial agencies and the persons referred to in Article L. 562-1 adopt (...) an internal control device intended to ensure compliance with the procedures"; in addition, under the terms of provisions of Article R. 336-1 of the Insurance Code, insurance companies are required to "establish a permanent internal control system";
Considering that the monitoring report establishes that deficiencies in the internal control framework existed in respect of, inter alia, compliance with the anti-money-laundering and the financing of terrorism procedures, as well as the control of outsourced benefits;
Considering that, in its written comments of 18 June 2009 as well as during its hearing, Company X argued that actions were undertaken after the control to remedy them; that they have, in particular, resulted in the creation of a position of compliance officer, but not that the recruitment process has not yet resulted in the inclusion in the 2008 internal report of a presentation of the anti-money-laundering device and, in the case of increased control of outsourced benefits, by obtaining certificates of registration to the ORIAS of intermediate insurance intermediaries prior to the payment of the commissions,
On the grievance concerning the absence of constant vigilance and enhanced vigilance:
Considering that to terms of the first paragraph of Article R. 563-3 of the Monetary and Financial Code anti-money-laundering and counter-financing procedures, "which are documented in writing, organize a constant vigilance to allow the detection of operations to be subject to a particular review or declaration";
Considering, in addition, that in terms of provisions of Article L. 563-3 of the Monetary and Financial Code in its writing applicable at the time of the control: "any significant transaction relating to amounts of which the unitary or total amount is greater than an amount fixed by decree in the Council of State [150KEUR] and which, without entering the scope of the article L. 562-2, presents itself under unusual conditions of complexity and does not appear to have any economic justification or lawful object, shall be the subject of the particular section of the body referred to by 62 In this case, the financial agency or the person referred to in section L. 562-1 shall inform the client of the origin and destination of the sums and of the subject matter of the transaction and the identity of the person who benefits them. The characteristics of the transaction are recorded in writing and retained by the financial organization or the person referred to in section L. 562-1 under the conditions set out in section L. 563-4. The service established in section L. 562-4 and the control authority may only obtain communication of this document and related documents. (...)
Considering, in the first place, that it appears from the control operations that Company X did not organize a constant vigilance device adapted to its activity, nor proceeded to control operations, for example, on the terms of payments or redemptions or their amounts; that, in particular, a contract entered into in January 2001 and which, apart from the subscription premium, had registered only two free payments of 30 KEUR and 125 KEUR, had an unusual operation illustrated by partial redemptions of similar amounts which then occurred over a period of two to seven months; that it appears from the documents of the record that this contract operation had not been identified or analyzed under constant vigilance;
Considering, secondly, that it also results from the documents of the record that society has not known the obligation of enhanced vigilance; that, in fact, X has failed to meet its obligation to identify, intelligence and consignation on the occasion of contracts with transactions of more than 150 KEUR, of an unusual character and appearing without economic justification; that, in particular, two contracts signed in May and June 2004 by an insured person through a credit institution and in the form of a single premium, respectively, of 225 KEUR and 600 KEUR, were the subject of total redemptions six months later, which is unusual for a life insurance contract; that the economic justification for these transactions is not established since the calculated return is close to 1% annual, which is clearly less that, therefore, it was necessary to identify these transactions and record the information sought pursuant to the above-mentioned article L. 563-3 in order to raise suspicions that might justify a declaration within the meaning of Article L. 562-2 applicable at the time of the facts, which the company did not;
Considering that, while in its written comments of 18 June 2009 as well as during its hearing, Company X states that it has taken initial steps to fill these gaps, and undertakes to implement other actions during the second half of 2009, this circumstance is not, once again, in a way that eliminates the materiality of the facts at the time of the audit; that, as a result, this grievance must be retained against it;
On the sanction:
Considering that it is the result of all of the foregoing that Company X has ignored the essential provisions of the regulations applicable to it in the fight against money laundering and the financing of terrorist activities; that, in the light of the nature of the obligations in question, the company cannot usefully invoke, to mitigate its responsibility, or the economic and financial circumstances affecting its activity or the direction it had given to it; that the penalties imposed are justified provisions of Article L. 310-18 of the Insurance Code ;
Considering that, in the light of the efforts made by the company to remedy the deficiencies found, a warning must be made against it, with a monetary penalty of 200,000 €; that it should be expected that the publication of this decision will be made in an anonymized form,
Decides:
A warning is made against company X.
A monetary penalty of EUR 200,000 (two hundred thousand euros) is imposed against company X.
This decision will be published in the Official Journal of the French Republic as well as on the website of the Insurance and Mutual Authority, after occultation of the name of the company concerned and of its representatives.
This decision will be notified to Company X.
Deliberated at the end of the hearing, where were sitting: Mr. de Vulpillières, sitting chair, Mr.Fernandez-Bollo, representing the Governor of the Bank of France, Mr. Cellier, Diricq, Guerder, Vandier, members of ACCAM, assisted by Ms. Litvak, secretary of the session.
Done in Paris, July 16, 2009.
The presiding officer,
J.-F. de Vulpillières
Note. ― Pursuant to the provisions of Article L. 310-18 of the Insurance Code, this decision may, within two months of its notification, be appealed to the State Council.
