Financial Crime World

Monaco’s Securities and Financial Sector: A Model for Transparency and Regulation

The Principality of Monaco has implemented a robust framework of regulations to ensure the integrity of its financial sector, making it a model for transparency and regulation.

Regulatory Framework

Monaco’s securities industry is governed by Law No. 1.130 of January 8, 1990, as amended by Law No. 1.230 of July 6, 2000. Portfolio management activities are regulated by Monaco Law No. 1.194 of July 9, 1997, and implemented by Sovereign Orders (SO) No. 13.184 of September 16, 1997, and SO No. 14.966 of July 27, 2001.

Oversight of Company Service Providers

The Minister of State is responsible for regulating and supervising company service providers, with operational responsibility resting with the Counselor for Finance and Economy (equivalent to Minister of Finance and Economy). The General Administration Division of the Direction de l’Expansion Économique (DEE) carries out actual oversight.

Anti-Money Laundering (AML) Measures

Monaco’s AML Law, enacted in 1993, contains two lists of institutions subject to its provisions. Financial institutions, including:

  • Banks
  • Insurance companies
  • Brokerage firms
  • Securities houses
  • Bureaux de change

are required to implement customer identification procedures, conduct special scrutiny for certain transactions, maintain records, exercise vigilance, and report suspicious transactions.

Additionally, the law requires company service providers, statutory auditors, chartered accountants, liquidators in bankruptcy, legal and financial advisers, business agents, property dealers, estate agents, cash transporters, retailers, and persons organizing the sale of precious stones and other valuable objects to implement AML measures.

Assessment of Monaco’s AML/CFT Elements

Experts have concluded that Monaco’s legal requirements for financial service providers are largely compliant with international standards. The assessment highlights that:

  • Financial institutions in Monaco are required to identify their customers on the basis of official identifying documents.
  • They must maintain records of customer transactions for at least five years.
  • They are required to report suspicious transactions.

Conclusion

While some gaps remain, including a lack of requirements for special attention to be given to politically-exposed persons and periodic reviews of customer accounts, Monaco’s financial sector is widely regarded as one of the most transparent and regulated in the world.