Monaco Banking Sector Adheres to EU Regulations Amid Bilateral Relationship with France
The Principality of Monaco, not an EU member state, has entered into a monetary union with France and uses the euro. This unique arrangement has led to the application of French and EU prudential regulations governing credit institutions in Monaco.
Foreign-Controlled Banks Dominate Monegasque Banking Sector
The Monegasque banking sector is dominated by foreign-controlled banks, with 13 branches established in the principality belonging to French, Swiss, Andorran, or Italian parent companies. The remaining 15 are locally incorporated subsidiaries of these same groups.
Monaco Adopts EU Anti-Money Laundering Directives
In 2020, Monaco adopted its Anti-Money Laundering Law (AML), aligning with the EU’s fifth AML directive. This move strengthened the country’s regulatory framework and enhanced cooperation with France and the EU.
Bilateral Relationship between Monaco and France
The bilateral relationship between Monaco and France is rooted in a treaty on exchange control signed in 1945, which established the principle of applying French banking regulations to credit institutions in Monaco. Subsequent exchanges of letters have refined this arrangement, ensuring that Monegasque credit institutions are subject to French supervision by the ACPR (Autorité de Contrôle Prudentiel et de Résolution).
Monaco’s Adoption of the Euro
Monaco’s adoption of the euro has further strengthened its ties with France and the EU. The 2011 Monetary Agreement between Monaco, France, and the EU implemented EU legislation directly applicable in Monaco, including regulations on bank notes and coins, credit institutions, and anti-money laundering measures.
Local Regulations Governing Financial Activities
Monegasque credit institutions are subject to specific local regulations governing financial activities such as:
- Portfolio management
- Collective investment schemes
- Proprietary dealing
These laws are enforced by the Commission for the Control of Financial Activities (CCAF).
Establishing a Credit Institution in Monaco
To establish a credit institution in Monaco, a company must obtain both an authorization from the government and a license from the ACPR. The representative of the government attends all meetings regarding Monegasque credit institutions, ensuring that prudential requirements are satisfied.
Conclusion
This unique regulatory framework has allowed Monaco to maintain its independence while adhering to EU standards, solidifying its position as a reputable financial center in the region.