On November 10, 2016, the French Government issued a decree against the financing of terrorism which contains various measures addressing anonymous electronic money [source in French]. This new regulatory measure applies to electronic money issuers as well as their distributors, credit institutions, finance companies, consumers, and to any person who physically transfers money from a certain amount.
In addition to reinforcing the powers of the Ministry of Economic and Financial Affairs agency against money-laundering (TRACFIN) -which will now have access to the wanted person files for the needs of criminal investigations-, the decree removed the duty of care of the financial intermediaries in the absence of any particular suspicion of money laundering and under strict conditions pertaining to electronic money:
- Money must only be issued for the acquisition of goods and services.
- The maximum monetary value stored must not exceed EUR 250.
- These funds must only be used for payments on the national territory.
- The electronic money device may neither be reloaded through cash nor through electronic money when the initial owner of such money cannot be identified.
Aside from such conditions, financial intermediaries remain subject to the duty of care, which consists in verifying an individual’s identity prior to entering into a contractual relationship, or collecting information about the purpose and the nature of the business relationship, as well as any other relevant factors on this customer to prevent money laundering and terrorism financing.
While the intent of the French government may not officially be to limit the use of bitcoins and other cryptocurrency, the decree may nonetheless hinder any development thereof. Indeed, one of the advocated purposes of this decree is to “limit the conditions for anonymous electronic money issuance”, notably by carving out a new limited exception whose impact will actually lead to impose the systematic identification of electronic money owners for the use of electronic money devices.
First published on K&L Gates FinTech Law Blog.