The criminal enforcement landscape has clearly changed in France over the course of 2019, with unprecedented fines being imposed against UBS and a rise in the number of French-style DPAs (Convention Judiciaire d’Intérêt Public). Money-laundering, tax evasion and corrupt practices have been a key focus, and are likely to remain so. The National Financial Prosecutor’s Office changed hands towards the end of 2019, with its director Eliane Houlette being replaced by Jean-François Bohnert. In light of the latter’s experience in Germany and with Eurojust, cross-border cooperation is likely to increase in 2020. The revitalisation of the French Blocking Statute may make it more difficult for a company to cooperate with a non-French authority during an investigation.
- Investigations trends/developments
- Significant law reforms impacting corporate criminal liability
- Internal investigations – key developments
- Sectors targeted by law reforms or enforcement action
- Cross-border co-ordinated enforcement activity
Of the 513 ongoing cases at the National Financial Prosecutor’s Office (the PNF) in January 2019, 47% related to corrupt practices (eg corruption, influence peddling, favouritism, misappropriation of public funds). 45% was linked to damage to public finances (tax evasion, VAT fraud and the laundering of the proceeds of these offences) and 8% concerned market abuse (insider dealing, price manipulation, dissemination of false information)1.
In February 2019, French judges ordered a large Swiss bank to pay a record EUR3.7 billion fine for illicit banking solicitation and aggravated money-laundering of the proceeds of tax evasion. This is the largest fine incurred in French history and represents a major shift in approach. Although it has been appealed, the ruling is viewed as a benchmark for future similar cases, and may encourage other entities to reach a settlement instead of facing a trial at all costs.
Settlements by corporates are already becoming more common. Since the Sapin II law entered into force in late 2016, French authorities have entered into ten French-style deferred prosecution agreement (known as CJIPs – Convention Judiciaire d’Intérêt Public) with entities accused of corruption, tax evasion or laundering the proceeds of tax evasion. They have resulted in the payment of significant fines, particularly by banks (eg, EUR300m for HSBC Private Bank Suisse SA, EUR250m for Société Générale SA, EUR3m for Bank of China) although Airbus SE recently broke the record by paying a fine of more than EUR2b to the French treasury as part of its co-ordinated settlement2 of investigations led by the French PNF, the US Department of Justice and the UK Serious Fraud Office into alleged corrupt practices.
Enforcement risk for financial services regulatory breaches has increased as the limitation period has been extended from three to six years by French Statute No. 2019-486 dated 22 May 2019 on business growth and transformation (known as the “PACTE” law). Time begins to run on the day of infringement, or if the breach has been hidden or concealed, on the day on which the breach appeared and could be notified to the regulator, with a maximum limitation period being capped at 12 years. This means that the limitation period applicable to market abuse is the same, irrespective of whether such abuse is enforced by the AMF or the PNF.
The PNF and the Anti-corruption Agency (the AFA) issued joint guidelines in June 2019, setting out their expectations for internal investigations in the context of a CJIP. The guidelines highlight the degree of co-operation with prosecution authorities as a key factor taken into account when deciding whether to offer a CJIP. Prosecutors expect a company to proactively reveal wrongdoing, establish the facts and identify failures in systems and controls.
The guidelines make clear that if a company conducts its own internal investigation, before the authorities become involved, it must ensure the preservation of evidence. An internal investigation conducted in parallel with a criminal investigation must be conducted in coordination with criminal authorities. In both cases, the internal investigation must result in a report, which must include precise and accurate reporting of the facts, and must be provided to prosecutors.
In its recently published guidelines, the Paris Bar Council addressed issues that may arise relating to the status and role of a lawyer while conducting an internal investigation.2 It reminds lawyers that they are required to defend the interests of their clients and to do so in a manner compliant with the applicable statutory and professional conduct rules.3
AFA-PNF guidelines on privilege are controversial. They make it clear that if an entity refuses to provide documents on the basis of privilege, the PNF will decide if this refusal appears justified under French privilege rules. An unjustified (in the PNF's view) refusal will reduce a company's co-operation credit. The PNF expressly states that it expects investigation reports and interview notes, as well as any relevant documents and documents relied upon in interview, to be made available. The guidelines are the subject of discussion within the Paris Bar Council, particularly as they relate to privilege, and new Bar Council guidelines for lawyers instructed to conduct internal investigations are expected soon.
The increasing level of fines and penalties incurred by banks and financial services corporates illustrates that the French financial and banking industry has been particularly targeted by enforcement authorities.
It is perhaps too early to tell if any particular sectors are being targeted in the anti-corruption sphere. The first decision to be issued under Sapin II concerned a French group specialising in the distribution of electrical products, solutions and related services. The company and all individuals were acquitted. A second action concerns a French multinational company which specialises in the production and processing of industrial minerals.
According to the AFA’s 2018 Annual Report published in June 2019, the AFA conducted 47 inspections in 2018; four were conducted in execution of monitorships set out in CJIPs and 43 were carried out on its own initiative. 28 inspections concerned corporates, including two public companies and 11 French subsidiaries of foreign groups, while 15 inspections concerned public actors and associations. In comparison, in 2017, the AFA conducted six inspections, which concerned five French private companies and one French public company5. A major automobile group has also recently announced that it is being inspected by the AFA. These figures show that the enforcement agency is now fully operational and is subjecting more multinationals, with French subsidiaries, to scrutiny. Read more: The French Anti-Corruption Agency’s Enforcement Committee issues its first decision: First lessons learned…
There is increased co-ordination with overseas authorities. In 2018 the PNF issued 103 requests for mutual legal assistance to its foreign counterparts. By comparison, in 2014 only 14 such requests were submitted6.
The joint guidelines published by the PNF and the French Anti-corruption Agency in June 2019 reiterate that where wrongdoing spans across different jurisdictions and a company’s compliance programme is under scrutiny, it is preferable for only one authority to conduct a monitorship, hence encouraging co-operation with the relevant foreign jurisdictions.
Detecting and preventing corrupt practices, data protection breaches and cyber security attacks, market abuse and terrorist financing will stay high up on the agenda for 2020.
Another challenge will be the French blocking statute (Law No. 68-678 of 26 July 1968), which prohibits the transfer of information abroad in the context of, or with a view to, foreign judicial or administrative proceedings, outside the relevant international co-operation channels (ie the Hague Convention, MLATs, MOUs between agencies). It is currently gaining significant traction in France. Whilst a violation of the Blocking Statute is criminally sanctioned and may therefore be prosecuted by French prosecutors, the AFA is now in charge of ensuring compliance with the Blocking Statute.7 This means that a French company that provides certain types of information to a foreign authority may fall foul of the Blocking Statute, and will have to carry out a delicate balancing exercise between refusing to comply with the demands of a foreign investigating authority and risking prosecution under the Blocking Statute. To date there has been only one prosecution under the Blocking Statute, in 2007.8 A report drawn up by an MP in June 2019 at the request of the French Prime Minister recommends increasing the penalties for violations of the statute, on the grounds that the current punishments (six months’ imprisonment and/or a EUR18,000 fine for individuals and EUR90,000 fine for entities) are ineffective.
This article is part of the Cross-border White Collar Crime and Investigations Review. Read our overviews and insights in other jurisdictions here.
 https://www.tribunal-de-paris.justice.fr/75/going-proceedings https://www.tribunal-de-paris.justice.fr/75/going-proceedings
 Cour de cassation, Chambre criminelle, 12 décembre 2007, No. 07-83228
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