The objective of the Government of Monaco is to place Monaco on the international stage, alongside the many States which, through their membership of the International Organization of Securities Commissions (I.O.S.C.O.), participate in the protection of investors and the proper functioning of financial markets.
Furthermore, the purpose of the Draft Law is to complete the existing legislative framework relating to the performance of financial activities in the Principality, by bringing it into line with international standards and requirements.
In this summary, you will find some of the main features of the Draft Law and their impact on the regulation of financial activities in Monaco:
As a preliminary point, the Draft Law brings more clarity, to the definitions of financial activities subject to the approval of the Commission de Contrôle des Activités Financières (“CCAF“) provided for under Article 1 of Law No. 1.338.
The Draft Law to puts an end to the incompatibility between the activities of management of Monaco collective investment schemes with the activities of portfolio management on behalf of a third party, receipt and transmission of orders on behalf of third parties, execution of orders on behalf of third parties and dealing on one’s own account.
The text provides for the replacement of prior notification to the CCAF when a licensed entity intends to modify one or more characteristic elements of its application file (“dossier d’agrément”) in favour of the requirement for systematic prior approval by the CCAF.
More generally, the Draft Law modifies and reinforces the powers of the CCAF, as well as underlines its status as an independent administrative authority for the supervision of financial activities within the Principality.
In addition, and with a view to the increasing participation of the CCAF in international cooperation between financial market regulators and supervisors, the Draft Law provides, more generally, that the CCAF “… shall participate in the proper operating of financial markets, through the execution of cooperation and information exchange agreements concluded with the competent foreign authorities in this respect“.
In this respect, the Draft Law specifies that in the context of the fulfilment of its duties, the CCAF may conclude, under certain conditions, cooperation agreements with foreign authorities competent in the field of financial market supervision, in particular by exchanging information.
The Draft Law provides that licensed firms will have to implement preventive mechanisms to identify situations of conflicts of interest, and to take all reasonable measures to prevent such from affecting the interests of their clients. This mechanism also includes the obligation to establish written procedures for managing conflicts of interest, adapted to the size and activities of said licensed firm.
The Draft Law clarifies regulations relating to canvassing for financial activities and financial products that may be carried out in the Principality.
The Draft Law provides, in addition to the obligation of statutory auditors to alert the CCAF when they are aware that the activity of a licensed company is not in conformity with its license, a new obligation to report to the CCAF any fact concerning a licensed company which is likely to affect the financial situation of the company or which could lead to reservations or a refusal to certify its accounts.
Moreover, some provisions of Law 1.338 which are favourable to credit institutions are deleted by this text, in particular with regard to canvassing and the communication of commercial documents to the CCAF.
The Draft Law provides that the decisions to apply sanctions by the CCAF will no longer be automatically published in the “Journal de Monaco”. Publication becomes an option available to the CCAF, which will assess, on a case-by-case basis and in consideration of the seriousness of the facts, the appropriateness of publishing or not the sanction. Certain changes have also been made with regard to the sanctions that may be imposed by the CCAF in criminal matters.
Also, an entire section dedicated to market abuse offences is inserted in Law 1.338.
Our team remains at your disposal to assist you and to answer your questions on the above.
 Sovereign assessment of applications for licensing, control of compliance by licensed companies with their professional obligations (including control of the activity of custody or administration of financial instruments carried out by credit institutions), new powers of communication with regard to licensed companies of all information or documents necessary for the exercise of its missions, protection and information of investors, power of investigation etc…
 Condition of reciprocity between the signatory parties, exchange of information covered by professional secrecy under reciprocal conditions etc…