Financial Crime World

MONACO: INDIVIDUALS FACING CRIMINAL PENALTIES FOR INCOMPLETE OR INCORRECT SELF-CERTIFICATION

New Regulations Introduced by the Monegasque Government

The Monegasque government has recently introduced new regulations that make individuals liable for criminal penalties if they intentionally provide incomplete or incorrect self-certification to financial institutions. These rules aim to prevent tax evasion and money laundering by ensuring that financial institutions have accurate information about their clients.

Financial Institutions Required to Report Information

Financial institutions, including banks, custodians, trust companies, collective investment vehicles, and other legal structures, are required to report information as part of the automatic exchange of financial information. Retirement funds and public pension funds are exempt from reporting obligations.

  • Management companies, which are considered reportable financial institutions, are exempt from reporting obligations due to their lack of accounts to report.
  • Trusts may also fall under various categories of entity, depending on their activities, and require classification according to the Common Reporting Standard.

Reportable Accounts

Reportable accounts include:

  • Those held by individuals
  • Some entities
  • Certain investment vehicles, including trusts and Monegasque non-trading companies

The due diligence process involves identifying reportable accounts and obtaining identification information from account holders.

Due Diligence Procedures

Financial institutions must follow a solid body of due diligence procedures to determine reportable accounts and obtain required identification information. These procedures distinguish between:

  • Accounts held by individuals
  • Entity accounts
  • Pre-existing and new accounts

For low-risk accounts specific to Monaco, such as retirement and pension accounts, tax-favored accounts, temporary life insurance policies, estate accounts, escrow accounts, and deposit accounts with unreturned overpayments, no reporting is required.

Reporting Process

The competent authorities exchange information according to a secure IT schema (XML) on an annual basis, within nine months of the end of the relevant calendar year. In Monaco, financial institutions must apply due diligence rules for identifying reportable accounts since January 1, 2017.

  • Each year, reporting Monegasque financial institutions have until June 30th to send information relating to the previous year.
  • The global reporting process includes XML reports to partner jurisdictions and a compulsory nil report for jurisdictions where no declarable financial accounts exist.

Reporting Platform

A user guide is available for the automatic exchange of information reporting platform, which can be downloaded at the bottom of this page. Financial institutions must use the latest XML2.0 schema published by the OECD in June 2019 to prepare and report information.

Conclusion

The new regulations aim to promote transparency and prevent financial crimes, ensuring that Monaco remains a respected and reliable financial hub in Europe.