In recent years, as a result of toughening of money laundering laws in France and across Europe, notaires have been under a stronger obligation to be vigilant on the source of funds and to inform the regulatory authorities if they suspect money laundering.
The steps required in law by the notaire to prevent money laundering are not, however, detailed in law.
The system in place is based on an assessment of the risk. At the very least, where the risk is low, simple control procedures must be put in place, such as verification of the identity of the buyer.
The notaire is also entitled to ask the buyer about the origin of the funds they intend to use.
Beyond that, it is up to the notaire to define the risk assessment criteria and classify by them by nature of risk, eg, country or territory of origin or destination of the funds.
Factors that may lead a notaire to be suspicious include a buyer paying substantially over the market value for a property, or a buyer using a foreign company to purchase the property. A purchase that is manifestly incoherent with the buyers financial or professional status may also be an alert signal.
As a result, many notaires now appear to be demanding a bank certificate on the origin of funds on a routine basis in all cases, and which they require be provided by the bank with the transfer of funds. Funds reaching the notaire without such a certificate may not be accepted.
However, the law does not require that a buyer provides such a certificate, despite the impression that is given to the contrary in guidance issued by the notaires.
This certificate is called an 'attestation de provenance des fonds'.
It is normally prepared in English and in French. There is no standard format to the certificates; some will merely ask the bank to confirm that the funds have originated from the buyer's bank account, but others may ask the bank to say more about whether the funds come from savings, inheritance, a gift or other source, often requiring the bank to declare that the funds are not of a criminal origin.
The provision of such a certificate does of course alleviate notaires of their own responsibility in making enquiries and an assessment about the source of the funding. Notaires can be fined and be subject to disciplinary action by their professional body in the event of serious and repetitive failure of due diligence.
Each year the notaires report up to around 2,000 cases of suspected money laundering to the authorities, most either in the Ile-de-France and Provence-Alpes-Côte d’Azur where many of the larger transactions take place. This is a figure which has increased in recent years due to toughening of the legislation and the consequences for notaires who neglect their responsibilities.
Perhaps not surprisingly many foreign banks in particular are unwilling to commit themselves to signing such a declaration, as they have no involvement in the transaction, and it is often difficult or impossible to say with precision the origin of funds.
Where this occurs the notaire may well be unwilling to complete the transaction. At a minimum it can delay completion. In a small number of cases it has resulted in the transaction being terminated.
That being the case, buyers need to prepare for the eventuality by establishing with the notaire if a certificate will be required, and with their bank on whether they are prepared to offer a certificate.
Faced with a notaire who is demanding a certificate and a bank that is unwilling to supply one, there is no reason in law why a buyer cannot simply offer a signed statement as to the origin of funds.
Where a notaire is unwilling to accept that solution, then one option is to try and mediate between the bank and the notaire about the wording of the declaration to try and reach a mutually acceptable form of words. Thus, most banks would be prepared to provide a certificate stating the funds came from your current account, provided that was also acceptable to the notaire.
The only other solution is to change the notaire or your bank.
It is not possible to use a cheque, as under a law dating from 2013 the use of cheques as a form of settlement is not permitted for sums in excess of €3,000.
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