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Banking Industry Compliance Standards in Monaco
The financial sector in Monaco is governed by a complex regulatory framework, derived from both local and international policies. In this article, we will delve into the key principles that govern the banking industry in the principality.
Key Policies
French Laws and Regulations
Monegasque credit institutions are bound by a limited number of French laws and related general regulations under an agreement between France and Monaco, dated October 20, 2010. Consequently, these institutions must be authorized by the French banking regulator, ACPR, before they can operate in the market.
European Union Directives and Regulations
The European Union’s policies also apply to Monaco, as the principality is an EU member state. The country has adopted several EU directives and regulations, including those related to anti-money laundering (AML), consumer protection, and data protection.
Local Laws and Regulations
Local laws and regulations govern the banking industry in Monaco. These rules are designed to protect consumers and ensure that banks operate fairly and transparently.
Government Deposit Insurance
Unlike other countries, the Monegasque government does not provide deposit insurance for its citizens. However, since June 25, 1999, Monaco’s banks have been affiliated with the French Deposit Guarantee and Resolution Fund (FGDR), which provides coverage up to €100,000 per depositor.
Transactions Between Affiliates
Monegasque law does not impose specific restrictions on transactions between a bank and its affiliates. However, the general corporate rules applicable to Monaco corporations must be followed.
- Banks are authorized to conduct ancillary activities, including representation, commissioning, and brokerage for subsidiaries.
- Ancillary activities may also include real estate management or service provision if related to banking activities.
Regulatory Challenges
The main regulatory challenge facing the banking industry in Monaco is compliance with AML legislation. The law has been strengthened recently by widening its scope, tightening identification and vigilance obligations, and creating a new register of banking accounts.
- Banks will have to implement these new requirements and disclose information about banking accounts held on their books to the AML regulator, SICCFIN.
Consumer Protection
There are no specific consumer protection rules applicable to banks under Monegasque law. However, case law requires credit institutions to provide stronger information and advice duties for non-professional clients.
Future Changes
The signing of an association agreement between Monaco and the European Union is expected to have significant consequences on the country’s domestic legal framework and may open up the banking market to new competitors.
Law Stated Date
The information above is accurate as of February 15, 2021.