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Authority of French banking regulator to extend its investigations to branches of a French bank located outside the EU

March 2013 

The Enforcement Committee (EC) of the Autorité de Contrôle Prudentiel (ACP) has found that the ACP lacked the necessary authority to pursue claims relating to investigations conducted in branches of a French bank located outside the European Union (EU).

Autorité de Contrôle Prudentiel, procédure No 2011-02, 24 October 2012

The ACP was conducting on-site investigations at a bank registered in France relating to the bank’s alleged failure to comply with money laundering and terrorist financing obligations. These investigations were focused on the wealth management division of the bank. The ACP decided to extend its investigations to a branch of the bank located outside the EU.

Prior to extending the scope of their investigations, the ACP General Secretary exchanged a series of emails with the relevant regulatory authority where the branch was registered, requesting permission to carry out on-site investigations. The relevant authority entered into an agreement in principle with the ACP but requested additional information on the precise scope of the investigations before giving its full permission. No further information was ever provided by the ACP, and it appeared that no final and official agreement was entered into between the ACP and the relevant regulatory authority.

Following investigations at the bank’s branches both within and outside the EU, the bank was issued with a statement of complaint (notification des griefs). This statement of complaint notably stated that the branch located outside the EU had failed to comply with certain applicable regulations. The bank, which had a right of response, challenged the ACP’s authority to extend its investigation to this branch and claimed that, as a result of this breach of authority, all investigations carried out within the wealth management division of the bank should be declared invalid.

The EC was called upon to decide whether the exchange of emails between the ACP and the relevant regulatory authority was sufficient to authorise the ACP to carry out investigations in the extra-EU branch and, if not, what the implications of this lack of authority were for the whole investigation into the wealth management activities of the bank.

The EC considered that, while Articles L.612-26 and L.632-13 of the French Monetary and Financial Code (FMFC) allow the ACP to extend its investigations to a bank branch located outside the EU, it must do so by entering into an international convention with the relevant foreign banking regulator. The EC considered that exchanges of emails with the relevant regulator did not amount to an international or bilateral convention. In addition, it confirmed that the ACP General Secretary did not have the authority to enter into such an agreement, unless it was officially instructed to by the Board (Collège).

The EC did, however, reject the bank’s claim that all investigations carried out by the ACP into the wealth management division of the bank be declared invalid and the subsequent statement of complaint abandoned. It considered that, as long as the complaints concerning the bank could be distinguished from those concerning the branch, the complaint against the bank could be maintained.


The decision is interesting insofar as it confirms the scope of the ACP’s authority to carry out investigations outside France and, in particular, outside the EU. Had the EC ruled to the contrary, this would have granted considerable authority to the ACP. In light of this decision, banks and other institutions under ACP investigations are encouraged to conduct a detailed analysis of the ACP’s authority when challenging its findings.

Finally, it is worth noting that the conditions under which the ACP can extend its investigations to a branch of a French bank located within the EU are less stringent. Article L.632-12 of the FMFC provides that the ACP may do so by requesting permission from the relevant EU banking regulator. In other words, there is no need to enter into an international convention.

Western Europe