French Regulator AMF Fines M Capital Partners 150,000 Euros for AML Gaps

amf M Capital Partners AML financial sanctions france

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The AMF and M Capital Partners recently concluded a sanction procedure resulting in a 150,000 euro fine against the firm and its executives for serious regulatory breaches. This decision, issued by the enforcement committee on December 31, 2025, penalizes the portfolio management company for providing unauthorized investment services and failing to maintain effective internal AML/CFT controls. The investigation revealed that the firm operated outside its approved activities by acting as a placement agent without the necessary legal permissions. Furthermore, the regulator identified systemic deficiencies in the company framework for preventing financial crimes between 2018 and 2023. This enforcement action underscores the necessity for management firms to strictly adhere to the professional obligations dictated by the monetary and financial code.

AML Compliance Deficiencies and Regulatory Oversight

The investigation conducted by the national regulator determined that the management firm failed to maintain an operational framework for preventing financial crimes, specifically regarding its anti-money laundering obligations. Between 2018 and 2023, the entity did not implement the mandatory technical procedures required to detect and report suspicious transactions, which is a fundamental requirement under the Monetary and Financial Code. The committee observed that the firm lacked a structured process for monitoring asset freezing at both the asset and liability levels of its managed funds, creating a significant vulnerability in its defensive architecture. Such omissions are strictly penalized to protect the integrity of the financial center, and the firm’s decision to operate without a functional risk cartography prevented it from identifying the high-risk profiles of its investors and counterparties. The regulator noted that the internal documentation was largely non, non-operational, failing to specify the exact due diligence steps required for various asset classes or investment scenarios. By neglecting these requirements, the firm engaged in business activities without the essential safeguards intended to block illicit capital from entering the regulated financial system, leading to a major pillar of the sanction. The committee emphasized that a management company must have a clear and dated risk map to ensure that all investment activities remain under proper AML supervision. The firm defense, which attempted to minimize these gaps as administrative oversight, was rejected because the lack of traceability in customer knowledge is a hallmark of systemic compliance failure. This deficient expansion of business activities without proper oversight created a situation where the firm could not guarantee that its financial instruments were not being utilized for laundering proceeds of crime. The absence of precise criteria for risk scoring meant that the firm was operating in a dangerous grey area, bypassing the transparency rules that are fundamental to the stability and security of the global financial system.

Systemic Weaknesses in Financial Crime Prevention Frameworks

The audit conducted by the oversight body exposed a total lack of operational procedures regarding the prevention of money laundering and the financing of terrorism within the firm’s daily operations. For a period spanning over five years, the firm failed to implement a sufficiently detailed framework to monitor the freezing of assets, which is a critical requirement for any financial institution handling third-party capital in the European Union. The existing internal documents did not specify the exact diligence required for diverse investment types, nor did they outline the necessary protocols for identifying and reporting suspicious transactions to the tax administration or other relevant bodies. A functional risk map was notably absent until very late in the investigative process, meaning the firm could not adequately assess the specific vulnerabilities associated with its property and private debt investment strategies. This absence of a risk-based approach meant that the firm was essentially operating without a compass in a high-risk sector of the financial world. The lack of a dated and operational risk cartography made it impossible for the regulator to verify if the firm had ever truly understood the threats posed by its client base or its investment targets. Furthermore, the internal rules regarding the use of external screening tools were found to be insufficient, as they did not provide staff with clear guidance on how to interpret risk scores or when to escalate a file for enhanced scrutiny. The regulator pointed out that without a robust and operational procedure, the firm’s ability to detect and prevent the entry of illicit funds into its managed vehicles was severely compromised, posing a threat to the reputation of the broader financial system. The gaps in the internal manual meant that even if employees wanted to comply with the law, they lacked the clear instructions and standardized processes necessary to do so effectively, resulting in a fractured and unreliable compliance environment.

Deficiencies in Customer Identification and Transactional Oversight

Serious weaknesses were highlighted regarding the way the firm identified and monitored its business relationships with both investors and the sellers of assets acquired by its funds. Between 2019 and 2023, the organization did not perform adequate due diligence on the counterparties involved in its acquisition and disposal transactions, often failing to verify the origin of funds or the beneficial ownership of the entities involved. The firm relied heavily on an automated screening tool that lacked the necessary precision, failing to provide clear criteria for risk scoring or the specific documentation needed for high-risk profiles such as politically exposed persons. Additionally, the regulator found that the firm did not provide its staff with regular or sufficient training on financial crime prevention, which directly contradicted its own internal compliance manuals and left employees ill-equipped to detect illicit activity. In several sampled files, the mission of control found that the knowledge of the client was superficial at best, with missing identity documents and a lack of information regarding the economic purpose of transactions. This pattern of negligence created a significant risk that the firm could be used as a vehicle for laundering illicit proceeds without the knowledge of its compliance department. The investigation noted that in many instances, the firm accepted funds from subscribers without completing the mandatory identity verification steps required by law. This failure to perform basic KYC checks is a fundamental breach of the trust placed in financial intermediaries and represents a significant vulnerability in the fight against global money laundering. The committee found that the firm did not follow up on alerts generated by its own monitoring systems, effectively ignoring potential red flags that should have triggered a more thorough investigation into the sources of capital.

Analysis of Governance Failures and Lack of Control

The concluding analysis by the sanctions committee pointed to a broader failure in the governance and permanent control environment of the management firm. There was a lack of traceability in the investment process, which made it impossible for external auditors or regulators to verify if projects were truly compliant with the specific constraints and policies of the managed funds. Oversight of potential conflicts of interest, particularly those involving other entities within the same corporate group that were in charge of structuring financial instruments, was found to be largely nonexistent. These cumulative failures across multiple years demonstrated that the leadership did not ensure that periodic controls were effective or that the firm’s activities remained within legal limits at all times. The fine of 150,000 euros acts as a necessary deterrent to ensure that all management companies prioritize the security and transparency of the financial system over rapid growth or administrative convenience. The committee emphasized that the duration of the breaches and the seniority of the individuals involved necessitated a firm financial response to uphold the standards of the financial center. The ruling also noted that while the firm had taken some steps to remediate these issues after the audit began, the historical lack of oversight was too severe to go unpunished. Effective internal control is not just a regulatory hurdle but a core component of a firm’s fiduciary duty to its clients and the public. The leadership’s failure to foster a culture of compliance led to a situation where legal requirements were treated as secondary to business objectives, resulting in the significant financial penalty and public reprimand issued by the enforcement committee. This case highlights that regulators will hold executives personally responsible for the failure of the control systems under their supervision, particularly when those failures persist over several years and affect multiple areas of the business.

Key Points

The regulator imposed a 150,000 euro fine on the management firm and its top executives for multiple professional breaches.
Internal procedures for combating money laundering and asset freezing were found to be non, non-operational and lacked specific risk mapping.
The firm failed to conduct adequate due diligence on the counterparties of acquisition and disposal operations between 2019 and 2023.
Staff training on financial crime was insufficient and did not meet the frequency requirements established in the firm’s own internal policies.

Source: AMF

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