Created by the Financial Security Act of 1 August 2003^[1], the Autorité des marchés financiers (AMF) moved into its offices at 17, Place de la Bourse – which was then the headquarters of one of its predecessors, the Commission des Opérations de Bourse (COB) - on 24 November of the same year. It celebrated last fall its 20th anniversary.

This anniversary was an opportunity for the Authority itself and for those involved in its ecosystem - regulated institutions, investors, law professors and lawyers - to take a look back over the past years but also to look ahead to the future.

Over the past two decades, the AMF has dealt with a wide range of issues, defining its supervisory priorities in response to market developments and industry crises. It has tackled these issues with the various tools at its disposal - and even with new ones^[2] - from defining or clarifying standards and supervising market participants to imposing sanctions.

The drafting of this article required choices to be made, and the following comments will focus more specifically on the regulator's enforcement activities with regard to regulated institutions.

Although the AMF now seems to have demonstrated its ability to impose sanctions, often severely and relatively quickly, there is one area in which the regulator has not yet reached the stage of enforcement, whether in the form of a sanction decision or a settlement: sustainable finance. However, this seems imminent.

The AMF's enforcement record: severe and fast

Kicking off the festivities, the Enforcement Committee Symposium held on 12 October 2023 at the Maison de l'Océan devoted its first panel discussion to the assessment of the AMF's enforcement activities over the past two decades and the prospects of the Enforcement Committee for the next ten years.

Through the representatives of the Legal Affairs Division, who assist the Board (prosecuting body), and the Enforcement Committee, the AMF mentioned as the main indicators of the effectiveness of enforcement (i) the amount of the sanctions and (ii) the length of the proceedings.

• On the first point, it is true that within the European Economic Area (EEA), which includes the Member States of the European Union as well as Norway, Liechtenstein and Iceland, the AMF appears to be a very severe financial regulator, far ahead of its counterparts, with fines totalling over €500 million in twenty years.

With regard to regulated institutions in particular, according to statistics published by the European Securities and Market Authority (ESMA), between 2016 and 2022, the AMF imposed 94% of the amount of the financial penalties based on the UCITS Directive^[3] with more than €174 million, whereas in 2022 UCITS domiciled in France represented only 8% of the assets of UCITS domiciled in the EEA^[4].

And the amount of sanctions is increasing. During the Symposium on 12 October 2023, the Chairman of the Enforcement Committee mentioned that a total of €126 million in fines had been handed down over the past twelve months, underlining the particular inflation over this period^[5].

• In AMF proceedings, the time taken for investigations and judgment are relatively short and the trend is towards greater speed. The regulator has made this one of its objectives.

For example, it is aiming for a length of six months for "traditional" inspections and four months for "SPOT" inspections^[6].

A survey carried out in 2022 by the AMF and the BVA Institute among management companies and investment service providers revealed that 52% of those who had already been audited considered the time taken to complete the audit to be reasonable (22% did not express an opinion), this figure being 42% for institutions that had never been audited^[7].

Regarding proceedings before the Enforcement Committee, the AMF also announced at the end of 2021 that it had exceeded some of its objectives by reducing to less than ten months the time taken to examine cases between the notification of grievances and the rapporteur's report, which is issued shortly before the public hearing^[8].

The AMF's record of enforcement activity does not make unfounded the fear of the regulator among management companies and ISPs, who were 83% to express it in the 2022 survey^[9].

Sanctions on sustainable finance expected soon

At the Entretiens de l'AMF held at the Ministry of the Economy on 23 November 2023, second round of the 20th anniversary celebrations, a panel discussion was dedicated to public’s expectations of the financial regulator.

Sustainable finance and the risks of greenwashing were at the heart of the debate, with speakers expressing very strong expectations of the AMF on these issues.

In essence, (i) regulated institutions expect the AMF to help them navigate a new and complex regulatory environment (ii) while other stakeholders believe that the regulator, which was given in 2019 the specific task of "ensuring the quality of the information provided by management companies on their investment strategy and their management of risks related to the effects of climate change"^[10], is slow to sanction in this area.

It is difficult to reconcile these expectations immediately: the time to educate and support market operators in implementing regulatory changes must precede the time to impose sanctions.

In fact, regulations on sustainable finance are very recent. Although the first standards were adopted at European level in 2014 with the NFRD Directive^[11] and in French law in 2015 and 2016 with the law on energy transition for green growth^[12] and the creation of the socially responsible investment (SRI) label, most of the regulatory framework in this area has been adopted over the last five years and has not yet come fully into force. These include the SFDR Regulation^[13], which came into force in 2021 and its Delegated Regulation^[14], which came into force in 2023, the Taxonomy Regulation^[15], which came into force in 2022 and 2023, and the CSRD Directive^[16], which comes into force at the beginning of this year 2024 and has already been described as a revolution by the AMF Chair^[17].

In this context, the AMF considers that it is carrying out "significant work to educate, clarify and inform financial stakeholders about the applicable rules"^[18]. When it made sustainable finance one of its key priorities in 2018, the AMF adopted a dedicated roadmap highlighting its role in providing support. This included defining good and bad practices.

With this in mind, it devoted in 2018 one of its first "SPOT" inspections to the SRI systems implemented by asset management companies (AMCs) and the integration of environmental, social and governance (ESG) criteria. In March 2020, it also published its first policy on investor information for funds incorporating extra-financial criteria.

In 2022, it conducted a new wave of “SPOT” inspections on compliance with non-financial contractual commitments by portfolio asset management companies, the summary of which was published in June 2023.

This work has led the AMF Chair to say: "we are making [...] public our expectations, which means that we don't betray anyone, but also that the radar is announced on the side of the road, and that the police are not far away "^[19].

The first sanctions in this area should therefore be taken soon.

It will be interesting to observe how severely the enforcement will be exercised in a regulatory environment that is still under construction^[20] and how the need for predictability of rules and support for market participants in a context of regulatory changes will be reconciled with the AMF's desire to demonstrate its severity in the fight against greenwashing.