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Monaco Banking Sector Faces Regulatory Challenges
The Monaco banking sector is facing significant regulatory challenges, including the implementation of anti-money laundering (AML) legislation and consumer protection rules. Despite having no government ownership or deposit insurance scheme, Monegasque banks are subject to strict regulations from various authorities.
Supervision and Regulation
According to a report by the Commission de Contrôle des Activités Financières (CCAF), local banks are supervised in connection with the provision of financial services, including:
- Discretionary portfolio management
- Financial advisory services
- Management of local or foreign funds
Monegasque banks are also subject to AML obligations with the SICCFIN and data protection requirements with the Personal Data Supervision Commission.
Deposit Guarantee and Resolution Fund
In a unique arrangement, Monegasque credit institutions have been affiliated with the French Deposit Guarantee and Resolution Fund (FGDR) since 1999. The FGDR provides compensation for depositors and investors in the event of unavailability of their deposits or other repayable funds, up to a maximum limit of €100,000 per depositor.
Transactions between Banks and Affiliates
Transactions between banks and affiliates are subject to general corporate law rules, but there are no specific limitations on such transactions. However, banks are authorized to carry out ancillary activities related to banking, provided they do not create conflicts of interest or harm the reputation of the bank.
Regulatory Challenges
The principal regulatory challenge facing the banking industry in Monaco is the implementation of AML legislation, which has been amended several times over the last decade. The latest reforms aim to strengthen due diligence requirements and impose professional certification requirements for AML managers.
Consumer Protection Rules
There are currently no specific consumer protection rules applicable to banks under Monegasque law. However, case law requires credit institutions to provide stronger information and advice to non-professional clients. Cross-border activities can also trigger the application of foreign consumer public policy rules under certain conditions.
Looking Ahead
The signing of an association agreement between Monaco and the European Union could have significant consequences for the domestic legal framework and potentially open the Monegasque banking market to new competitors.
Accuracy Date: February 15, 2021