AMF Sanctions M Capital Partners for Unauthorized Activities and Deep-Seated AML Failures

The Autorité des marchés financiers (AMF), together with its enforcement committee, has concluded a sanction procedure against M Capital Partners, imposing a total fine of 150,000 euros on the portfolio management company and several of its executives. The decision, rendered on December 31, 2025, targets a series of serious regulatory breaches, notably the provision of investment services without proper authorization and long-standing failures in the firm’s anti-money laundering and counter-terrorist financing (AML/CFT) framework. The ruling serves as a stark reminder of the obligation placed on asset management firms to comply strictly with the professional and legal requirements set out in the Monetary and Financial Code.

According to the findings of the regulator, M Capital Partners operated beyond the scope of its approved activities by acting as a placement agent without holding the necessary legal status or authorization. This unauthorized activity was compounded by profound weaknesses in its internal control environment, particularly in relation to financial crime prevention. The investigation established that, over a period spanning from 2018 to 2023, the firm failed to maintain an effective and operational AML/CFT system capable of detecting, analyzing, and reporting suspicious transactions, despite these obligations being fundamental pillars of the regulatory framework governing portfolio management companies.

The AMF noted that the firm did not implement the mandatory technical procedures required to ensure compliance with AML obligations. In particular, the company lacked a structured and operational process to monitor asset freezing measures, both at the level of the assets held and the liabilities of the funds under management. This omission was considered a major vulnerability, as asset freezing is a core mechanism designed to prevent sanctioned or illicit funds from circulating within the financial system. The enforcement committee stressed that such shortcomings are sanctioned precisely because they undermine the integrity and reputation of the financial marketplace.

A central criticism concerned the absence of a clear, dated, and functional risk cartography. For several years, the firm operated without a comprehensive risk map, preventing it from identifying and assessing the money laundering and terrorist financing risks associated with its investors, counterparties, and investment strategies. The regulator observed that internal documentation relating to AML/CFT was largely non-existent or purely formalistic, lacking operational substance. Where documents did exist, they failed to specify the precise due diligence measures required depending on the nature of the assets, the structure of transactions, or the risk profile of clients. This lack of precision meant that the firm was effectively conducting business without the safeguards intended to prevent illicit capital from entering the regulated financial system.

In its defense, M Capital Partners attempted to characterize these failures as minor administrative oversights. The enforcement committee firmly rejected this argument, emphasizing that the absence of traceability in client knowledge and transaction monitoring is a hallmark of systemic compliance failure. By expanding its activities without putting in place appropriate oversight mechanisms, the firm placed itself in a position where it could not ensure that its funds and financial instruments were not being used for money laundering purposes. The lack of defined criteria for assessing and scoring risk left the firm operating in a regulatory grey zone, contrary to the transparency principles that underpin the stability and security of the global financial system.

The audit conducted by the supervisory authority further revealed what it described as an almost total absence of operational procedures for preventing money laundering and the financing of terrorism in the firm’s day-to-day activities. For more than five years, M Capital Partners failed to establish a sufficiently detailed framework to oversee asset freezing obligations, despite managing third-party capital within the European Union. Internal rules did not explain the level of diligence required for different types of investments, nor did they clearly set out the protocols for identifying, escalating, and reporting suspicious transactions to the relevant authorities.

The regulator also highlighted that a usable and up-to-date risk map was only produced very late in the inspection process. As a result, the firm was unable to demonstrate that it had ever properly assessed the specific vulnerabilities linked to its property and private debt investment strategies. Without a genuine risk-based approach, the firm was deemed to have been operating “without a compass” in a sector inherently exposed to financial crime risks. The absence of a dated risk cartography made it impossible for the AMF to verify whether the firm had a meaningful understanding of the threats posed by its clients, investors, or investment targets.

Further weaknesses were identified in the firm’s reliance on external screening tools. Internal policies governing their use were insufficiently detailed and failed to provide staff with clear guidance on how to interpret risk scores or determine when enhanced due diligence or escalation was required. The enforcement committee noted that, without robust and operational procedures, the firm’s capacity to detect and prevent the introduction of illicit funds into its managed vehicles was severely impaired, thereby exposing the wider financial system to reputational and integrity risks. Even where employees may have wished to comply with legal requirements, the lack of clear instructions and standardized processes resulted in a fragmented and unreliable compliance environment.

The investigation also uncovered serious deficiencies in customer identification and transaction monitoring practices. Between 2019 and 2023, the firm did not conduct adequate due diligence on investors or on the sellers of assets acquired by its funds. In numerous cases, it failed to verify the origin of funds or to identify the beneficial owners of counterparties involved in acquisition and disposal transactions. The company relied heavily on an automated screening solution that lacked sufficient precision and did not define clear criteria for assessing high-risk situations, including those involving politically exposed persons.

In addition, the AMF found that M Capital Partners did not provide its staff with regular or sufficient training on AML/CFT matters, despite such training being referenced in its own internal manuals. This left employees ill-equipped to recognize or respond to suspicious behavior. File reviews conducted during the inspection revealed superficial client knowledge, missing identification documents, and an absence of information regarding the economic rationale of transactions. In some instances, funds were accepted from subscribers before mandatory identity verification steps had been completed, a breach considered particularly serious given the trust placed in financial intermediaries.

The regulator further noted that alerts generated by the firm’s own monitoring systems were not adequately followed up, meaning potential red flags were effectively ignored. This pattern of neglect significantly increased the risk that the firm could be used, knowingly or unknowingly, as a conduit for laundering the proceeds of crime.

In its final assessment, the sanctions committee pointed to broader governance failures and weaknesses in the firm’s permanent control framework. The lack of traceability throughout the investment process prevented regulators and auditors from verifying compliance with fund constraints and internal policies. Oversight of conflicts of interest, especially those involving other entities within the same corporate group responsible for structuring financial instruments, was found to be largely absent. Taken together, these shortcomings demonstrated that senior management had failed to ensure the effectiveness of periodic controls or to keep the firm’s activities within legal boundaries.

The enforcement committee concluded that the duration of the breaches, their seriousness, and the level of responsibility held by the individuals involved justified a financial penalty of 150,000 euros. While the firm had taken steps to address some of the deficiencies after the inspection began, the historical failures were deemed too significant to be excused. The decision underscores that effective internal control is not merely a regulatory formality but a core element of a management company’s fiduciary duty to its clients and to the public. By allowing compliance obligations to take a back seat to business objectives, the firm exposed itself and its executives to sanctions, reinforcing the message that regulators will hold leadership personally accountable when control systems fail over time and across multiple areas of activity.

By fLEXI tEAM