New rules of procedure before the Commission d’Examen des Rapports de Contrôles (CERC) after an on-site inspection by SICCFIN

Law No. 1.520 of 11 February 2022 supplementing Law No. 1.503 of 23 December 2020 strengthening the fight against money laundering, terrorist financing and corruption (JDM No. 8577 of 11 February 2022) supplemented the rules of procedure before the CERC provided for in Law No. 1.362 of 3 August 2009 on the fight against money laundering, terrorist financing and corruption, as amended, with regard to the respect of the rights of the defence.

Presentation

The CERC’s mission is to formulate proposals for sanctions to the Minister of State in the event of serious, repeated or systematic breaches of their AML/CFT obligations by the entities referred to in Article 1 of Law No. 1.362.

As a reminder, Law n° 1.503 of 23 December 2020 had already adapted the procedure before the CERC, by introducing a new simplified procedure (art. 65-2 Law n° 1.362):

When the CERC considers that the findings made by the SICCFIN, constituting serious, repeated or systematic breaches, may be subject to a simple warning, it shall propose to the Minister of State to pronounce this sanction. [1]

[1] In particular, the following circumstances are taken into account (Art. 66 Law No. 1.362)

• the seriousness of the breaches committed, the frequency of their repetition and their duration;
  formal notices sent by SICCFIN pursuant to Article 58-2;
  the degree of responsibility of the perpetrator;
  losses suffered by third parties as a result of the breach;
  the benefit obtained by the breaching party;
  the degree of cooperation of the offender in the sanction procedure;
  the breaches previously committed by the offender and any sanctions imposed;
  his financial situation.

> In the event that the Minister of State decides to issue a warning, the person concerned may :

• either accept this sanction, waiving any subsequent appeal against this decision ;

• or refuse the sanction, which triggers the usual adversarial procedure before the CERC.

• If there is no response, the sanction is deemed to be refused.

> If the Minister of State refuses to issue a warning, he postpones the issue of the sanction pending the completion of the usual adversarial procedure before the CERC.

The composition of the CERC is communicated to the accused person who may request the recusal of one of its members if there is a serious reason to doubt the impartiality of the latter.

* * *

New procedural rules for the long procedure:

Law No. 1.520 of 11 February 2022 introduced new rules applicable to the lengthy procedure, the adversarial nature of which is reinforced (Art. 65-3, 65-4 Law No. 1.362) as follows:

— Grievances likely to be qualified as serious, repeated or systematic breaches of the obligations prescribed by Law No. 1.362, notified by the CERC to the respondent, must include “a precise statement of the facts complained of, as well as the provisions which they would contravene”.

— Grievances must be “accompanied by a copy of the [SICCFIN] inspection report and all the documents on which it is based”;

— Grievances must be notified to the respondent within “a period of eighteen months from the date of referral to the [CERC] by the Minister of State” (which is intended to ensure that sanctions can be imposed within a reasonable time). In the absence of notification within the time limit, “no procedure leading to the pronouncement of one of the [administrative or/and financial] sanctions may be initiated”.

— The defendant may be granted by the Chairman of the CERC to formulate his written observations “upon reasoned request (‘ ) an additional period [to the initial two-month period from receipt of the notification of the objections], the duration of which he shall determine, but which may not exceed two months. The request must be made no later than five working days before the expiry of the initial two-month period”;

— The accused person also has the new option of requesting “in support of his or her written observations and by separate request (…) the hearing, in his or her presence, of any person he or she deems useful for his or her defence, with the exception of officials and agents of the Service d’informations et de contrôle sur les circuits financiers and any other official or agent of the State”;

— The summons to the person concerned by the CERC to be heard “indicates the action reserved for the possible request for a hearing and informs the accused person of the identity of the persons whose hearing the commission has deemed useful”.

— After the notification of the Minister of State’s decision, the accused person may obtain a copy of the [CERC’s] reasoned opinion from the Minister of State upon request.

The above procedural rules are applicable to :

– proceedings initiated as from their entry into force (12 February 2022) ;

– sanction proceedings initiated before their entry into force in which the respondent has already been notified of the grievances (except of course the new provisions relating to the form and conditions of notification of grievances by the CERC to the respondent).

Sanctions imposed by the Minister of State may be appealed before the Court of First Instance (CFI) within two months of the date of notification (Art. 67-4 Law No. 1.362).