Financial Crime World

Monaco’s Financial Crimes Regulations: An Overview of Anti-Money Laundering Requirements, Politically Exposed Persons, and Tax Offenses

The Principality of Monaco, known for its global financial hub status, has implemented robust regulations to combat money laundering and financial crimes. In this article, we provide an overview of Monaco’s key financial regulations.

Monaco’s Anti-Money Laundering (AML) Regulations

Monaco’s AML regulations include:

  • Sovereign Ordinance No. 2.318 of 2009
  • Act No. 1.362 of 2009 and its amendment Act No. 1.462 of 2018

These laws apply to private banking and wealth management sectors and aim to equal the standards of the European Union’s 4th AML Directive:

“Entities subject to Monaco’s rules include banking services providers and companies performing financial activities governed by Act No. 1.338 of 2007.”

Entities must follow the main AML duties:

  1. Identification of clients (Know Your Customer - KYC) with constant due diligence.
  2. Strong internal AML organization for reporting and monitoring potential money laundering, terrorism financing, and corruption activities.

Politically Exposed Persons (PEPs)

According to Monaco’s AML laws, a PEP is:

“a person who holds or has held within the preceding three years a prominent public function in a foreign country (or their family members and close associates).”

This category includes clients, beneficial owners, or proxies and imposes due diligence measures:

  • Strict scrutiny of their acceptance for business relationships.
  • Verification of their assets’ origin and source of funds.
  • Ongoing monitoring of these clients to prevent potential misconduct.

Documentation Requirements

To establish private banking relationships in Monaco, professionals need:

  1. Identification documentation: For natural persons, official documents bearing their photograph in their presence are required. For entities, corporate and trust documentation is necessary.
  2. Address verification: Professions must confirm actual addresses, requesting bills like water, gas, or electricity to validate.

Tax Offenses

Monaco recognizes tax offenses as predicate offenses for money laundering, subject to imprisonment terms exceeding one year.

Conclusion

Monaco’s financial crime regulations mandate rigorous anti-money laundering and Know Your Customer procedures. Additionally, professionals must adhere to PEP identification and treatment, while tax offenses may lead to money laundering prosecutions.

This information is accurate as of 27 May 2020.