Yacht sales and charters: the Narcotrafic law brings anti-money laundering rules

Key points

• The Narcotrafic law of 13 June 2025 brings habitual sellers and lessors of yachts within the scope of anti-money laundering rules, above a price threshold still to be set by decree.
• Deadline: 10 July 2027 at the latest, the date on which the European anti-money laundering regulation also becomes applicable.
• Firms will have to classify risks, identify each client and their beneficial owner, understand the origin of funds, train their teams and report suspicions to Tracfin.
• Economic sanctions already apply to everyone, whether or not subject to AML/CFT rules: checking a name against a list is not enough.
• A price held in escrow by a lawyer adds an independent, documented and traceable check on the origin of funds.

Why yachting is in the spotlight

A yacht combines everything that attracts the attention of the authorities: considerable value, frequent ownership through companies or trusts established in several countries, tailor-made financing, and a movable asset that changes flag and port. Banks and insurers in the sector already require extensive due diligence. The legislator is now taking the next step: what was commercial prudence becomes a legal obligation, supervised and sanctioned.

Who will be covered, and when

The Law no. 2025-532 of 13 June 2025 aimed at freeing France from the narcotrafic trap adds to the list of professionals subject to anti-money laundering and counter-terrorist financing (AML/CFT) rules those who sell or lease pleasure craft on a habitual and principal basis, for transactions whose price exceeds a threshold set by decree (article L. 561-2 of the French Monetary and Financial Code). Builders and importers who sell to a distributor or dealer are excluded. The entry into force will be set by decree, at the latest on 10 July 2027.

Still to be determined are the price threshold and the authority responsible for supervising these newly covered firms, which has not yet been designated. The situation of the broker who neither sells nor leases on their own account will also have to be assessed in light of the decree. Even if a broker escapes coverage, they remain subject to economic sanctions, and their covered partners (banks, sellers, insurers) will ask them for reliable information on clients.

On the same day, Regulation (EU) 2024/1624 becomes applicable. It creates a new obligation: to report to the financial intelligence unit, Tracfin in France, the sale of a vessel worth at least 7.5 million euros acquired for non-commercial purposes, even where there is no suspicion at all. Institutions that finance these acquisitions will also be bound by it.

What coverage changes day to day

A risk map

Everything starts with a written, regularly updated risk classification (article L. 561-4-1 of the French Monetary and Financial Code). For a vessel dealer, it cross-references the client profile (high-net-worth individuals, politically exposed persons, multi-tier ownership structures), the nature of the transaction (new or used, sale or charter, amount), payment methods, the use of intermediaries, and the geography specific to the sector: flag, port of registry, cruising areas, countries of origin of the funds. It is one of the first documents requested during an inspection.

Knowing the client and their beneficial owner

The client must be identified and, where it is a company, its beneficial owner: the natural person who holds more than 25% of the capital or voting rights, or who controls it. When the yacht is bought through a dedicated company, which is common, the whole chain of ownership must be traced back to the natural persons. Depending on the risk level, it will also be necessary to understand how the client built up the funds and to obtain supporting documents. Politically exposed persons and high-risk third countries call for enhanced measures.

Recognising the warning signs

• An opaque ownership structure, or a beneficial owner who cannot be found.
• A payment coming from a third party unrelated to the sale, or from several accounts and countries without explanation.
• A client reluctant to justify their wealth or the origin of the funds, or whose profile does not fit the price.
• A newly formed buyer with no apparent activity.
• Rapid changes of owner or flag, in particular a yacht that left the Russian flag after 24 February 2022.
• A resale or final destination in a country known for being used to circumvent sanctions, or unexplained gaps in the automatic identification system (AIS).

None of these elements is proof on its own. Each, however, calls for questions to be asked and for the analysis to be recorded.

Reporting, and sometimes refraining

If the checks do not dispel the doubt, and the professional suspects that the funds derive from an offence punishable by more than one year of imprisonment or finance terrorism, they must file a suspicious transaction report with Tracfin (article L. 561-15 of the French Monetary and Financial Code). They may not carry out the transaction if they have been unable to identify the client or the beneficial owner, nor before having reported a suspicion. Whether or not to proceed with a sale ceases to be a purely commercial decision.

Training teams, sales staff included

Decree no. 2026-310 of 24 April 2026 clarified the training obligation: every employee involved in the system must be trained upon arrival and then regularly, with evidence. At a yacht seller or lessor, this also covers the sales teams in contact with clients. Documents must be kept for five years.

Economic sanctions: a risk already present

Whether or not covered by AML/CFT rules, every operator must comply with economic sanctions. The measures taken against Russia have shown how exposed yachting is, and US or UK regimes may also apply as soon as there is a link with those countries, for example a payment in dollars. Breaching an asset freeze or a sectoral prohibition is a criminal offence that can engage the company and its officers, and Directive (EU) 2024/1226 will further tighten the repression of circumvention.

First risk: the asset freeze. Selling a yacht to a designated person amounts to making an economic resource available to them. Yet a company that appears on no list may be owned 50% or more, or controlled, by a sanctioned person: screening must therefore cover the beneficial owner, the shareholders and all parties involved, not just the buyer's name. A vessel owned by a designated person is itself frozen, which can prohibit even the services provided around it.

Second risk, less well known: sectoral prohibitions, which hit a transaction even if no one is sanctioned. Regulation (EU) No 833/2014 notably prohibits selling yachts to any person in Russia or for use in Russia, buying or importing yachts originating in or exported from Russia, and closes EU ports to Russian-flagged vessels, including those that left the Russian flag after 24 February 2022. Financing, insurance, maintenance or brokerage may also be caught. The right question is no longer “is my client sanctioned?” but “is the transaction as a whole permitted?”.

The two regimes do not reason in the same way: AML/CFT assesses a risk and may lead to a report; sanctions impose prohibitions that no favourable assessment lifts, except with authorisation from the French Treasury (Direction générale du Trésor). But they rely on the same information, client, beneficial owner, ownership structure, characteristics of the transaction: it is better to handle them in a single programme.

Preparing before July 2027

• By the end of 2026: assess your exposure, to both AML/CFT and sanctions, for each type of transaction.
• In the first half of 2027: draft the procedures, adapt a KYC questionnaire to nautical transactions, set up screening, set the rules on proof of origin of funds, and appoint a reporting officer and a Tracfin correspondent.
• Before the deadline: train the teams and provide a fast track to escalate a sensitive file and obtain an outside opinion.

Escrow, an ally of compliance

Routing the price of a yacht through a lawyer's CARPA account does not relieve the seller of their own obligations. But the lawyer who handles funds is themselves subject to anti-money laundering rules: before accepting the funds, they identify the parties and the beneficial owners and verify the origin of the sums, and the CARPA monitors every movement. The file thus gains a second line of control, independent and documented, useful with the bank, the insurer and, tomorrow, the supervisor.

The buyer, as depositing party, pays the funds only after these checks; the seller, as beneficiary, receives them only once the agreed conditions precedent are met: survey, release of marine mortgages, flag transfer, delivery of documents. For the full process, see our article on escrow of a yacht purchase price and our guide to KYC and AML/CFT in escrow.