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Monaco’s Banking Sector: A Regulatory Overview
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The Principality of Monaco’s banking sector operates under a unique regulatory framework that ensures stability and integrity while providing a favorable environment for businesses and individuals. This article provides an overview of the key regulatory challenges facing the banking industry in Monaco.
Supervision and Regulation
The Commission de Contrôle des Activités Financières (CCAF) is responsible for supervising Monegasque banks, including discretionary portfolio management, financial advisory services, and management of local or foreign funds. Additionally, banks are also supervised by other authorities such as:
- Service d’Intervention et de Coordination pour la Prévention des Fraudes et des Crimes Financiers (SICCFIN) for anti-money laundering (AML) obligations
- Personal Data Supervision Commission for data protection requirements
Deposit Insurance
Unlike many other countries, the Monegasque government does not provide deposit insurance. However, since 1999, Monegasque credit institutions have been affiliated with the French Deposit Guarantee and Resolution Fund (FGDR), which provides indemnification to depositors and investors in case of unavailability of their deposits or other repayable funds.
Transactions between Affiliates
Under Monegasque law, there are no specific limitations on transactions between a bank and its affiliates, except for general corporate law rules applicable to Monegasque corporations. However, banks are authorized to carry out activities ancillary to banking activity, such as:
- Representation
- Commissioning
- Brokerage for subsidiaries
Regulatory Challenges
The principal regulatory challenge facing the banking industry in Monaco is implementing and complying with Monegasque AML legislation, which has been amended multiple times over the past decade. The latest reform aimed to:
- Widening the scope of the law
- Increase enhanced due diligence obligations
- Strengthen due diligence requirements for corresponding banking relationships
- Impose a professional certification requirement for AML managers
Consumer Protection
There are 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. Additionally, cross-border activities may trigger the application of foreign consumer public policy rules in certain circumstances.
Future Changes
The banking sector in Monaco is expected to undergo significant changes over the next few years, particularly with ongoing negotiations between Monaco and the European Union for an association agreement. The conclusion of such an agreement could lead to fundamental changes in the domestic legal framework and potentially open the Monegasque banking market to new competitors.
Accuracy Date
The information provided above is accurate as of February 15, 2021.