The Government, by a letter of April 25th, 2018 informed the Monaco parliament (“Conseil National”) of its decision to change the draft law n°232 relating to the creation of the right to a bank account from a parliamentary initiative to a Government initiative, draft law n° 991 (« Draft Law »).
Tabled in public session on April 3rd, 2019, the Draft Law aims to draw the consequences from a reality: keeping an account with a credit institution is now essential, whether for the needs of everyday life for individuals or for the legal and economic existence of commercial companies established in the Principality.
The Draft Law provides for a right to open a deposit account with a credit institution appearing on a list to be established by a Ministerial Decree. This right is available to the following who/which do not already have an account opened in the Principality:
- Individuals (i) of Monegasque nationality, (ii) domiciled in the Principality1, (iii) exercising a professional activity there or (iv) in the process of setting up for personal or professional reasons (who obtained a receipt for an administrative authorization request for such purpose)2.
- Legal entities domiciled in the Principality and which carry out their commercial activities there, or pending incorporation (which obtained an administrative authorization request (or authorization) for such purpose)3.
This right to a bank account is accompanied by a number of basic banking services, such as opening, maintaining and closing the account, issuing bank account statements, on request, effecting bank transfers, carrying out cash transactions, two check books per month or equivalent services, etc.
The Draft Law aims, however, at maintaining a legal balance between, on the one hand, the contractual freedom of banks and their obligations under the fight against money laundering, corruption and the financing of terrorism, and, on the other hand, the right to open a bank account.
Thus, banks would retain the right to refuse to open a bank account based on one of the reasons restrictively provided for in the Draft Law. These legal grounds for refusal would be as follows:
- In the event of a criminal conviction for crimes or offenses listed in the Draft Law, such as laundering the proceeds of an offense or the commission of terrorist acts;
- In the event of a conviction based on the provisions of Sovereign Order n° 15.320 of April 8th, 2002 relating to the fight against terrorism;
- In the event of a conviction based on the provisions of Law n° 890 of July 1, 1970 relating to drugs;
- If the person does not meet the conditions laid down by the Draft Law to benefit from the right to an account (natural or legal person not domiciled in Monaco, existence of another account opened in the Principality);
- When the verification of the identity of a customer or of the beneficial owners cannot be carried out within the meaning of Law n° 1.362 of August 3rd, 2009, modified by Law n° 1.462 of June 28th, 2018, relating to the fight against money laundering, terrorist financing and corruption.
In the event of a refusal, the bank will be required to communicate to the petitioner in writing the reasons for such refusal, free of charge.
Furthermore, the consecration of the right to an account would entail as a corollary the obligation to hold an account with a bank in Monaco for natural or legal persons, regardless of their legal form (personal license, SAM, SNC, SCS, SCA or SARL), exercising an economic activity in the Principality4.
Any dispute following a refusal to open a deposit account may be brought before the courts under common law conditions.
Finally, the Draft Law also provides that a deposit account opened under the right to an account may only be terminated unilaterally by the bank for limited reasons, mainly those that may be opposed to the applicant when opening the account, cited above. Under the terms of the Draft Law, the consecration of the right to an account aims in particular at giving a favorable impulse to the creation of activities in the Principality.
The obligation to justify refusals with regard to legal criteria specifically listed adds transparency and will allow eligible candidates, whose opening of the account is very often a determining aspect of their personal or professional project, to verify their eligibility upstream and to better prepare their file. In addition, in case of a refusal, they will better understand the decision of the bank and be in a position to assert their rights, if need be.
1 Within the meaning of article 2 of the P.I.L. Code, the place where the person has his/her main establishment. Companies and legal persons having their registered office in the Principality are deemed to be domiciled there.
2 The Draft Law provides that this right to the account can only be exercised if the petitioner does not benefit from any other deposit account opened in the Principality or if the latter is being terminated. In addition, a natural person may benefit from this right to the account when the latter acts in the context of his professional activity, even if he has one for his personal needs.
3 The Draft Law is not exhaustive so that all companies, foundations or even associations may exercise this right.
4 This obligation is already provided for with regard to Limited Liability Companies (SARL) under article 35-3 of the Commercial Code, which requires the release of the share capital in an account opened for this purpose with a credit institution established in the Principality.