Notaries are among the professionals subject to the national asset freeze regime. The verification covers the parties to the deed, their representatives, and the legal Beneficial Owners of legal entities. It must be conducted at the time the file is opened, during the full identification process, and before the deed is executed. If a match is detected, an investigation must be conducted to determine whether the person in question is in fact subject to an asset freeze. If the match is confirmed, the applicable asset freeze measures must be implemented without delay.
The freezing of assets rarely takes the form one might imagine. In practice, the challenge does not necessarily lie in the firm receiving a court order, but rather in the ability to conduct the verification at the right time. For the notary, the challenge lies in determining at what stage of the investigation it occurs, which parties it involves, and what information to retain in case the issue arises two years later.
How does the freezing of assets affect a notary’s office?
A measure that takes effect immediately
The freezing of assets is based on a prohibition against making them available. As soon as a person or entity is listed in the national registry of the Directorate General of the Treasury or on other international lists (EU, UN, OFAC, etc.), no regulated professional may pay funds to that person or entity, transfer property to them, or carry out a transaction on their behalf. The measure applies automatically: it requires neither a court order nor individual notification.
The French asset freeze regime is governed, in particular, by the provisions of the Monetary and Financial Code relating to the freezing of assets and the prohibition on making funds or economic resources available. The duration and terms of application depend on the legal basis for the measure. The notary must verify the status of each party before executing the deed.
The Notary's Unique Role in the Process
The firm holds funds on behalf of third parties, receives instruments that transfer ownership, and maintains records tracing the origin of the funds. The freezing of assets is not limited to fund transfers: it is also necessary to examine whether the instrument directly or indirectly results in the provision of funds or economic resources for the benefit of a person or entity subject to a freezing order.
Enhanced vigilance does not replace the review of asset freezes. A politically exposed person may not be subject to an asset freeze. Conversely, a person with no specific risk profile may be subject to one following a report. The two measures apply concurrently.
At what point in the investigation is an audit necessary?
Upon opening the file
The first verification step occurs at the outset, as soon as the party’s full identity is known. To ensure the reliability of the verification, sufficiently precise identifying information must be available, including the last name, first name, and, when available, the date of birth for a natural person; for a legal entity, its name and identifying information, such as its SIREN number or its foreign equivalent.
The national registry contains transliteration variants, aliases, and entities that have changed names. The record must document this initial verification, including the date, time, scope of the query, and the result obtained.
Identification of the Parties
Full identification rarely occurs at the outset. A buyer may initially present themselves alone, then bring in a real estate investment company (SCI) in which they hold shares together with their spouse and two adult children. Each newly identified party must undergo verification before the review process can continue.
The verification process does not apply solely to the signatories. It extends to the legal Beneficial Owners s of legal entities, legal representatives, agents, and the actual payer when that person is different from the party to the transaction. For a legal entity, the chain of ownership is reconstructed using verifiable sources:
- a recent Kbis extract;
- the commercial registry of the country of registration;
- Beneficial Owners's statement.
Before Receiving the Document
Freeze lists are subject to change without notice. A person who was not subject to any restrictions when the case was opened may have been added to the list in the meantime. The average time between the opening of a real estate sale case and the signing of the contract often exceeds two months. During this period, the lists may have been updated several times.
The verification must be updated in the days leading up to receipt of the document. A verification performed six weeks prior does not protect the notary if a legal action has been published since then. In the context of ongoing client relationships, the verification must be repeated for each new transaction.
Who is the audit actually focused on?
The parties and their representatives
The verification process first focuses on the signatories to the document, such as the seller and the buyer in a sale, or the donor and the donees in a gift. If one of the parties acts through an agent, that agent must also be verified. The legal representatives of legal entities are also included in the scope of the verification.
The actual payer, when different from the signatory party, must be identified and verified. If a third party finances the purchase on behalf of the purchaser, that third party becomes a party to the transaction for the purposes of anti-money laundering regulations. Their full identity and status with respect to asset freezes must be established before the funds are released.
Beneficial Owners s of Legal Entities
For any legal entity that is a party to the instrument, the audit extends to Beneficial Owners. Article L.561-2-2 of the Monetary and Financial Code defines the beneficial owner as the natural person who ultimately owns or controls the entity.
The chain of ownership is reconstructed step by step. In the case of a real estate investment company (SCI) owned by a holding company—which is itself owned by three partners—it is necessary to verify the identities of all three individuals, not just the holding company. The register of Beneficial Owners, when it exists, does not exempt one from verifying its consistency with the articles of incorporation and the share transfer agreements.
Which cases pose challenges in practice?
Homonyms and Transliterations
The national registry contains thousands of entries. Common surnames yield multiple matches: a “Martin” or a “Durand” without a first name or date of birth returns dozens of unusable results. Transliterations pose a particular challenge, since a name written in the Cyrillic, Arabic, or Chinese alphabets can be romanized in several ways. The national registry includes aliases, but it cannot anticipate every possible variation.
Date of birth remains the most reliable distinguishing criterion. If there is no exact match for the name, the available information must be reviewed, such as nationality, address, position, or declared occupation. The reason for lifting the restriction must be recorded in writing in the file.
Cascading Detention Facilities
An SCI owned by a Luxembourg holding company—which is itself owned by a trust under Anglo-Saxon law—cannot be verified with just two clicks. Tracing the chain of ownership requires documents that the client does not always have.
Complex ownership structures are not illegal in and of themselves, but they increase the risk of failing to identify a frozen beneficial owner. When it is not possible to fully reconstruct the ownership structure within the time frame of the investigation, there are two options:
- postpone signing until the missing documents are obtained;
- cancel the operation.
Estates and Nonresident Parties
An estate may involve heirs, some of whom reside abroad. It can be difficult to establish their full identities, as foreign civil status records do not always include a date of birth in the European format. Nonresident parties also raise the issue of verification against international registries.
The French national register covers only the measures adopted by France. A comprehensive review also requires consulting the European Union sanctions registry and that of the United Nations Security Council.
What do you need to be able to show during an inspection?
What Makes a Trace Usable
During an audit, an unverified check is equivalent to a check that was not performed. Traceability is not limited to checking a box in the study management software. It requires time-stamped evidence that includes:
- the date and time of the interview;
- the data fields queried, such as last name, first name, date of birth, or license plate number;
- the result obtained;
- If there is a match, the reason for removal.
A screenshot of the query results can serve as evidence of the verification process. Automated screening software generates a time-stamped report for each query. This report is kept on file and serves as proof that the verification was indeed performed.
The reason for canceling a flight
A match with a frozen record does not constitute identification. The registry sometimes returns results that share the same name but refer to a different person. Distinguishing factors can help resolve any uncertainty, such as a different date of birth, an incompatible nationality, or a position or entity unrelated to the record.
The reason for lifting the hold must be documented in writing. Simply checking “mismatched records” is not sufficient: the reason must be specified. The statement “Different date of birth (client born in 1972, frozen record born in 1965)” is an acceptable reason, unlike the phrase “Not the same person.”
If the available information does not rule out a match, further verification is required to determine whether the person or entity in question is in fact subject to the measure. If a match is confirmed, the transaction cannot proceed: the funds must be frozen, and a report must be submitted to the Directorate General of the Treasury (TRACFIN).
How can we address this review without making the study too cumbersome?
The two areas where the manual falls short
The freezing of assets is not always included in the firm’s internal procedures. It is mentioned in training sessions on anti-money laundering, but is rarely described as a distinct step in the investigation.
The first point of failure occurs when the file is opened. The initial verification is performed, but it is not documented: no date, no screenshot, and no report are retained. The second point occurs before the document is signed, when the clerk verifies the information again, finds an ambiguous entry, and does not know which details to use to resolve it.
Internal procedures must designate the person responsible for the audit, specify when it is to be conducted and which tool is to be used, and indicate where the audit trail is to be retained.
What Automated Screening Covers
AP Scan, our screening solution, simultaneously checks the national registry, the European lists, and those of the United Nations Security Council, as well as the lists at PEP. Each query generates a time-stamped report, which is kept on file.
The false-positive reduction engine automatically compares date of birth, nationality, and known aliases. It filters out clearly incompatible matches and flags those that require manual review. The clerk or notary retains control over the final decision.
The tool does not replace professional judgment. It speeds up the verification process, reduces oversights, and produces the documentation required during an audit. To assess the effectiveness of your due diligence procedures, the analysis should focus on the frequency of checks and the traceability of the reasons for clearance that were selected.
Frequently Asked Questions
Is a notary subject to asset freeze requirements?
Yes. Notaries are among the professionals subject to the “ AML-CFT ” and must ensure that the parties to the deed are not subject to an asset freeze before accepting it. This obligation applies to the parties, their representatives, and the “ Beneficial Owners ” of the legal entities involved. If a client is identified as a “ PEP ” (e.g., a person holding a prominent political or public office), the notary must apply additional due diligence measures.
At what point must the notary verify that the assets have been frozen?
Verification takes place when the case is opened and once the parties have been fully identified; it is then updated before the document is accepted. Between the time the case is opened and the time it is signed, the lists may have been updated several times. In the context of ongoing relationships, a periodic review is conducted in addition to these one-time verifications.
Who is subject to verification in a notarized document?
It applies to all parties, whether individuals or legal entities, as well as to their representatives and the o Beneficial Owners s of the entities involved. The actual payer must also be identified when it is different from the signatory party. The chain of ownership of a legal entity is reconstructed using verifiable sources.
What should you do if you're communicating with someone who's "frozen"?
A match does not constitute identification. It requires an examination of the available distinguishing factors—such as date of birth, nationality, or address—to confirm or rule out the match. If the match is confirmed, the operation cannot proceed, and the reporting procedure applies. The reason for the decision must be recorded in writing in the file.
What records must the firm retain to substantiate its audits?
In the absence of sufficient audit trails, the study may have difficulty demonstrating, during an audit, that the verification was actually performed. A usable audit trail includes the date and time of the query, the scope of the query, the result obtained, and the written reason for dismissal when a match was rejected.
