New Legal Landscape for Financial Crimes: Monaco’s Strict Penalties and Consequences

Monaco, known for its glamour and luxury, has strengthened its legal stance against financial crimes with the enactment of new anti-money laundering laws. The adoption of Laws No 1.449 and 1.550 on July 14, 2023, and August 10, 2023, respectively, has brought about significant changes, affecting companies, foundations, and associations, and introducing new responsibilities for various professionals.

Significant Changes and New Responsibilities

Monaco’s loose regulations are a thing of the past with the introduction of the new sovereign ordinances, providing increased transparency and continuous monitoring by the Monaco authorities.

• New categories of actors: Law No 1.550 introduced a new category of “actors” responsible for the collection, transmission to several national authorities, and retention of essential basic information on legal entities and individuals.
• Expanded duties for professionals: Various professionals, including effective directors, beneficial owners, shareholders, partners, lawyers, notaries, Multi Family Offices, legal, economic, or tax advisers, chartered accountants or auditors, and Corporate Service Providers, are now responsible for upholding the new anti-money laundering laws.
• Liability for individuals and legal entities: Non-compliance comes with heightened liability for both individuals and legal entities, with consequences including professional, civil, administrative, and criminal responsibility.

Practical Implications of the New Legal Category of Actors

The creation of a new legal category of actors signifies an increased need for accountability and transparency.

• Heightened liability and need for insurance coverage: Responsibilities of the actors include enhanced controls for both administrative and judicial bodies. Liability can lead to professional, civil, administrative, or criminal consequences, requiring insurance coverage.
• New duties for the Monaco’s Court of First Instance: The Court of First Instance is responsible for verification, sanction, control of registers, and dispute resolution.

Consequences of Non-compliance

Transgressions of the new laws result in sanctions imposed by various Monaco authorities.

• Sanctions for non-compliance: Sanctions for non-compliance can amount to up to EUR 100,000, with existing actors facing increased duties and responsibilities.
• Criminal charges: Compliance Officers and liquidators may encounter criminal charges, including six months imprisonment and a fine of EUR 18,000 to EUR 90,000.

Factors for Setting up an Activity in Monaco

Given the stringent anti-money laundering provisions, companies must demonstrate a legitimate interest and invest in technical and human resources to meet the new requirements.

• Internal organization and control: A strong internal organization, control, and governing bodies are essential factors for setting up an activity in Monaco.
• Future developments: Future developments, to be addressed in implementing legislation, will continue to shape the financial landscape in Monaco.