The Prudential Supervision and Resolution Authority (ACPR) is a reliable commercial regulator responsible for the oversight of banks and insurers in France. It is also involved in efforts to combat money laundering and terrorist financing, as well as promoting the legitimacy of the financial sector. Established in 2010 through the merger of the French Banking Commission, CECEI, and ACAM, the ACPR is a government agency that handles conflict resolution and enjoys financial and administrative autonomy. As an organization linked to Banque de France, it has access to the central bank's economic and financial expertise. Unlike other specialized authorities, the ACPR focuses solely on the banking and insurance sectors, with the aim of safeguarding clients, policyholders, members, and beneficiaries under its jurisdiction, while actively combating financial crimes.
Mission and Responsibilities of The ACPR
The ACPR aims to enhance France's influence in Europe and global negotiations while prioritizing financial stability and consumer protection and representing France on a global scale.
- The objective of the ACPR is to ensure the continuity and oversee the banking and insurance sectors through a risk-based approach to prudential regulations. It strives to establish financial stability for the French financial system by implementing robust rules against AML/CFT and publishing them. Additionally, it aims to comprehend the various risk profiles and cater to the demands of different organizations.
- ACPR collaborates with the AFM, the financial markets, and regulators to safeguard the customers of financial institutions by enforcing the regulations implemented to protect consumers effectively.
- ACPR represents France on the global stage, including in the EU and multinational banking and insurance bodies such as the Financial Action Task Force (FATF), in partnership with the Banque de France.
In order to fulfill its key missions, the ACPR focuses on four critical areas. Firstly, it is responsible for granting banking and insurance companies the necessary licenses to operate through its licensing of firms program. Secondly, the ACPR continuously monitors the financial situation and operational conditions of these companies in accordance with solvency and liquidity laws. Thirdly, the ACPR contributes to national and European financial stability by implementing recommendations from various European community supervisory bodies and collaborating with responsible authorities in other Member States.
The French supervisory model is unique in its fully centralized organizational framework, which includes all authorities responsible for financial sector stability. This approach allows for a comprehensive view of challenges facing the financial system by collecting micro and macroeconomic data across the entire financial market, including financial services. It also provides joint analysis resources and bodies, as well as better integration of measures taken to detect, analyze, prevent, and manage risks in order to ensure financial system stability.
Additionally, the ACPR assists the French Treasury in drafting laws, such as the Monetary and Financial Code. It also conducts preventive and methodological work with supervised agencies and implements sector compliance standards and principles. These tools are negotiated in advance with the industry through the ACPR College consultative group.
The ACPR also has responsibilities related to AML/CFT:
In order to meet its AML/CFT obligations, the ACPR requires financial institutions to implement an effective internal AML/CFT program that includes risk evaluation, customer identification and information, risk-based transaction due diligence, monitoring of suspicious transactions, and notification of suspicious purchases to Tracfin directly under AML/CFT.
Risk evaluation is a crucial component of an effective AML/CFT program. Financial institutions are required to assess the risks associated with their customers, products, and services, as well as the countries and regions in which they operate. This risk assessment should be based on a number of factors, including the nature of the customer's business, the type and frequency of transactions, and the customer's geographic location.
Once the risks have been identified, financial institutions must implement appropriate measures to mitigate them. This may include enhanced customer due diligence procedures, such as obtaining additional documentation or conducting more frequent reviews of customer accounts. It may also involve implementing transaction monitoring tools that can help identify suspicious activity in real time.
Transaction monitoring is a critical component of any AML/CFT program, as it allows financial institutions to detect and investigate potentially suspicious transactions. AML transaction monitoring tools can help identify patterns of behavior that may be indicative of money laundering or other financial crimes. For example, if a customer is depositing large sums of money in an account and then quickly transferring the funds out of the account to another country, this could be flagged as suspicious activity and investigated further.
In addition to monitoring transactions, financial institutions are also required to freeze assets at the national and European levels, especially those introduced in the fight against terrorism. This may involve freezing the accounts of individuals or entities suspected of involvement in terrorist financing or other criminal activity.
Research Capabilities Enhanced by The ACPR
The Autorité de Contrôle Prudentiel et de Résolution (Prudential Supervision and Resolution Authority) (ACPR) has improved research capabilities, boosting prudential supervision's consistency and giving it a greater voice in global negotiations. The financial crisis revealed a lack of understanding of the causes and processes that distribute human and structural financial difficulties. In order to overcome these limitations and engage in international research programs, the ACPR has been working in recent years to strengthen its in-house research and analytical resources while also supporting external partnerships. Its study has looked at industry risks, stress testing results, and regulatory impact study planning.
The ACPR also develops analytical research and thematic reviews (solvency, liquidity). These cross-cutting assessments enable managers to place particular institutions concerning the rest of the sector, which is a massive help in terms of maintaining successful supervision and identifying individual shortcomings. As a result, the ACPR's review and development programs aim to increase prudential regulation, which helps to enhance control at the administrative level.