France remains a hub for white-collar crime enforcement. Spearheaded by the National Financial Prosecutor’s Office (PNF), the white-collar criminal enforcement landscape continues to move towards greater collaboration with overseas enforcement authorities, corporate settlements, and heavy fines. The fight against money laundering, tax evasion and corrupt practices remains at the forefront of enforcement action, alongside a rising number of investigations in the area of Environmental and Social Governance (ESG).
Several bills have been presented by MPs to the French Parliament over recent months, relating in particular to the fight against corrupt practices, the internal investigation process and the protection of whistleblowers. Depending on how they progress through the French Parliament, they may give rise to new obligations for corporates with a French nexus in 2022.
- Investigations trends/developments
- Significant law reforms impacting corporate criminal liability
- Internal investigations – key developments
- Sectors targeted by law reforms or enforcement action during 2021
- Cross border coordinated investigation or enforcement activity
- Financial crime predictions for 2022
Criminalisation of ESG breaches
The criminalisation of companies’ breaches of their Environmental and Social Governance (ESG) policies with regard to human rights is an emerging trend. In particular:
- An investigation was opened in July 2021 by the National Financial Prosecutor’s Office (PNF, Parquet national financier) against several multinational groups in the textile industry, accused of benefiting from (recel) the proceeds of crimes against humanity perpetrated against Uyghurs in their Chinese subcontractors’ factories.
- Two other complaints were filed in 2020 and 2021 against multinational groups. Plaintiffs argue that the violations of Uyghurs’ human rights in Chinese subcontractors’ factories amount to a breach of the ethical commitments of the multinational groups and therefore constitute misleading commercial practices (pratiques commerciales trompeuses).
- In October 2021, a French tech company was placed under formal investigation (mise en examen) for allegedly aiding and abetting torture and enforced disappearances, and selling cyber surveillance material to the regime of Abdel Fattah al-Sisi, which would have enabled it to track its political opponents.
A focus on tax evasion
2021 also saw a move towards enhanced prosecution of tax evasion. In the context of French-style deferred prosecution agreements (known as CJIP, Convention Judiciaire d’Intérêt Public), a foreign bank agreed to pay EUR25 million for aiding and abetting a tax evasion by issuing loans to the perpetrators of such tax evasion. New guidelines published by the Ministry of Justice in October 2021 intend to facilitate the exchange of information between prosecutors and the French tax authority in order to help prosecutors characterise the constituent parts of tax evasion. The PNF stated in mid-2021 that two-thirds of the French guilty plea procedures that it led (known as CRPC, Comparution sur Reconnaissance Préalable de Culpabilité) were related to tax evasion.
Offences against the EU budget
At the European Union (EU) level, the European Public Prosecutor’s Office (EPPO) started its mission in July 2021 for the prosecution of offences against the EU budget, such as fraud, corruption and cross-border VAT fraud. The Paris section of the EPPO has taken on five cases out of the 40 complaints reported to the Paris section since July 2021, and intends to increase the volume of investigations in the upcoming years.
A recent ruling by the French Supreme Court (Cour de cassation) asserts that a company may be placed under formal investigation (mise en examen) for aiding and abetting a crime against humanity. The mere fact that the multinational company paid an organisation while it was allegedly aware of the organisation’s purely criminal purpose is sufficient to characterise that the company aided and abetted such organisation. This ruling is likely to extend the scope of corporate criminal liability. French banks have already been subject to investigations for aiding and abetting crimes against humanity over recent years and the ruling will inevitably increase this trend.
Ongoing legislative reforms are likely to affect corporate criminal liability, although they may evolve during parliamentary debates:
- MP Sylvain Waserman presented a bill before the French National Assembly aimed at clarifying and enlarging the definition of whistleblowers, the scope of information considered to constitute a whistleblowing and the possibility for whistleblowers to use both internal and external reporting channels (bill of 21 July 2021 transposing the Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report violations of Union law (EU Whistleblowing Directive)).
- MP Raphaël Gauvain presented a new anti-corruption bill (hereafter the Sapin III bill) before the French National Assembly on 19 October 2021, aimed at enhancing the French anti-corruption framework, notably the French Law No. 2016-1691 of 9 December 2016 (known as the Sapin II Law). In particular, it suggests extending the scope of the anti-corruption compliance requirements to the French subsidiaries of foreign parent companies.
A reform of the French judicial system, which is being reviewed by the French Constitutional Council (Conseil constitutionnel), has led to strong debates on the scope of attorneys’ legal privilege in France. The bill explicitly recognises the existence of attorneys’ legal advice privilege, aligned with legal privilege relating to the rights of defence. It also memorialises the inability of attorneys and their clients to rely on legal advice privilege where communications between them may have helped perpetrate or facilitate corruption, tax fraud and terrorist financing.
The Sapin III bill proposes new provisions in the French Code of Criminal Procedure to strengthen the rights of individuals during an internal investigation. The proposed law provides, inter alia:
- New guarantees, directly inspired by the rights of persons in police custody, including notification of rights and reading of the interview transcript prior to signature.
- The right of an interviewee to have access to the criminal case file where there are reasonable grounds to suspect that he/she participated in the misconduct under investigation;
- The possibility for the Public Prosecutor, if a CJIP is being considered, to request the appointment of an ad hoc representative or a special committee to conduct the internal investigation. This provision is intended to avoid potential conflicts of interest that may arise in the event that certain directors are involved in the acts of which the entity is accused.
The French Anti-Corruption Agency (AFA, Agence française anticorruption) has published various guidelines this year on internal/external investigations:
- The new version of its Recommendations, published in January 2021, recommends that companies which are subject to the obligation to implement a compliance programme should define and formalise an internal investigation procedure.
- The practical guide on anti-corruption verifications in merger and acquisition transactions, updated in March 2021, recommends that internal investigations be conducted (by the buyer or the seller, depending on the situation) at the level of the target company.
- The guide to preventing conflicts of interest in companies, published on 18 November 2021, encourages the reporting of any conflict of interest situation, which could lead to an increase in internal investigations.
- The draft practical guide on anti-corruption accounting controls in companies provides that in the event that a discrepancy flagged by such a control highlights suspicions or facts about corruption, this must be brought to the attention of the compliance officer and the management body, which may decide to conduct an internal investigation.
The French bill transposing the EU Whistleblowing Directive goes beyond the provisions of the Directive and could, if adopted, lead to an increase in whistleblowing and subsequent internal investigations.
The economic sectors at risk of being investigated by the PNF remain those targeted by the so-called “Belloubet Circular” (published June 2020), namely: construction, mining, transportation, telecommunications, pharmaceuticals, energy and military equipment.
The French regulatory authorities will continue to focus their efforts on compliance with AML/CTF and corruption regulations by the financial services sector, including financial institutions, payment service providers and accountancy firms.
The AFA, which is responsible for ensuring that companies comply with their obligation under the Sapin II Law to implement anti-corruption systems and controls, could focus its inspections on:
- the public sector, where the implementation of anti-corruption measures remains weak according to the parliamentary information report intended to assess the impact of the Sapin II Law. In response to this finding, the Sapin III bill provides for the transfer of the AFA’s advisory and control functions for public actors to the High Authority for the Transparency of Public Life (HATVP, Haute Autorité pour la transparence de la vie publique).
- the sports sector, given the economic stakes it represents and the recent scandals surrounding the awarding of competitions and within international federations, which have highlighted the need to adopt specific anti-corruption measures in this field.
Although no coordinated CJIPs were reached in 2021 between the French authorities and their foreign counterparts, there is still a strong willingness amongst French criminal authorities to nurture cross‑border coordinated investigation and enforcement activity.
In June 2021, the head of the PNF affirmed to the French press that 80% of the investigations conducted by the PNF have an international component and that the coordinated CJIP between Airbus, the PNF, the U.S. Department of Justice and the Serious Fraud Office constituted a turning point in international cooperation.
As early as 2020, the PNF was getting ready to create “optimal cooperation” with the EPPO. According to the impact assessment conducted with respect to the bill on the EPPO and specialised justice, between 60 and 100 cases dealt with each year by the PNF, the inter-regional specialised criminal authorities and customs authorities could be referred to the EPPO.
The French financial and banking industries are likely to continue to be key targets of enforcement action, with an increasing level of fines and penalties.
The fight against corruption is likely to remain a hot topic. Should the Sapin III bill succeed through the French Parliament, the French subsidiaries of foreign parent companies will have to conduct a gap analysis between their existing anti-corruption programmes and the anti-corruption requirements set out by French law.
The number of ESG-related investigations is likely to increase, with the protection of human rights and the environment being at the forefront of debates. Under French law, alleged victims and certain associations have the power to force the opening of a formal investigation, even if a public prosecutor considers that it is not worth pursuing the issue.
This article is part of the Allen & Overy Cross-border White collar Crime and Investigations Review. Please visit the review homepage for our overviews and insights in other jurisdictions.
 Cass. Crim., 7 September 2021, n° 19-87.367.
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