Financial Crime World

Monaco Tightens Grip on Financial Services, Data Protection, and Anti-Money Laundering

The Principality of Monaco has taken significant steps to strengthen its financial services sector, data protection laws, and anti-money laundering (AML) regulations in 2022. These efforts are aimed at ensuring the integrity of the financial system and maintaining Monaco’s position as a reputable financial centre.

Strengthening Financial Services Regulations

In December 2021 and July 2022, new statutes were passed to regulate portfolio/investment management services. According to these laws:

  • Only entities authorized and regulated by the Monaco Commission de Contrôle des Activités Financières (CCAF) can undertake portfolio/investment management services “habitually or professionally”.
  • Non-licensed entities are prohibited from soliciting investors in Monaco, with certain exceptions.
  • Licensed entities must comply with stricter legal obligations to ensure the integrity of the financial system. Non-compliance can result in criminal sanctions.

Harmonizing Data Protection Laws

Monaco is working to harmonize its data protection laws with the EU’s General Data Protection Regulation (GDPR). A draft “Monaco GDPR” was presented to parliament in December 2021, but the legislative process has stalled since March 2022.

Strengthening Anti-Money Laundering Regulations

As a member of MONEYVAL, the Council of Europe’s anti-money laundering body, Monaco implemented the 5th EU AML Directive in December 2020 and enacted anti-bribery legislation. However:

  • MONEYVAL’s latest evaluation report highlighted key vulnerabilities in Monaco’s AML/CFT frameworks.
  • To avoid being placed on the “grey list”, Monaco must address these vulnerabilities by March 2024.

E-commerce, Digital Projects, and Blockchain Regulations

Monaco is a hub for e-commerce, e-signatures, and digital projects. The country has implemented regulations for token offerings and blockchain technology to confirm its position as an attractive financial centre.

Important Considerations for Foreign Investors

Foreign investors should be aware of Monaco’s specificities in corporate, employment, and foreign investment law:

  • Sole shareholder companies are not allowed.
  • Directors must hold company shares.
  • Business sales require registration and fees.
  • The country is updating its HR/employment law to simplify the hiring and firing process for staff employed in Monaco.

Conclusion

As the global economy continues to evolve, Monaco remains committed to maintaining its position as a reputable financial centre. By strengthening its financial services regulations, harmonizing data protection laws, and addressing anti-money laundering vulnerabilities, Monaco is well-positioned for future growth and success.