February 2024
The new Law No. 1.559 of 29 February 2024 adapting legislative provisions on the fight against money laundering, the financing of terrorism, and the proliferation of weapons of mass destruction was published in the Journal de Monaco on 1 March 2024 (hereinafter the “Law“).
The Law is the fourth and final text of the reform that aims to adapt Monegasque legislation following the report of the MONEYVAL Committee, published in December 2022. Our notes on Parts I to III are available on our website.
- Firstly:
On the one hand, the Law details the obligations of trustees who manage trusts set up or transferred to Monaco and, on the other hand, strengthens the criminal deterrence system and brings Monegasque legislation in line with international recommendations.
With regards to trusts, the scope of the Law of 12 July 1936 on trusts (hereinafter the “Trust Act“) has been amended.
The concept of domicile has been added to the concept of residence to determine whether the appointment of a local representative of the trustee is necessary, in order to comply with the Code of Private International Law using the concept of domicile as a criterion to determine the applicable law.
- Secondly:
The trustee’s local representative, who is domiciled or resident in Monaco, is now subject to the same legal obligations as the trustee, if the trustee himself is not domiciled or resident in Monaco.
These legal obligations have not been substantially modified, since they remain obtaining and keeping information on the beneficial owners of the trust, including the settlors, trustees, protectors, beneficiaries, as well as any natural person who would have ultimate control over the trust.
With regard to the obligations relating to the provision of information by trustees, necessary for the fulfilment of their legal obligations under Law No. 1.362 of 3 August 2009 on the fight against money laundering (hereinafter the “AML Law“), trustees are now required to retain information relating to Monegasque bodies subject to the AML Law and foreign bodies which, if they were located in the Principality, would have been subject to the same obligations in the event of the provision of services to the trust, the entry into a business relationship or the completion of transactions.
From now on, the storage of this information and related documents must be in premises located in Monaco, the address of which is communicated to the Department of Economic Development – Direction du Développement Economique (‘DDE‘), which is given new prerogatives in this regard in terms of supervision of trustees.
The retention period for information and related documents is extended from 5 to 10 years, starting from the end of the trustee’s duties.
Administrative monetary penalties are added to the provisions of the Law that are intended to be a deterrent. The amount of the administrative fine increases drastically as long as the breach is not remedied, from 5,000 € in the first instance to 100,000 € in the second phase. Criminal penalties apply if the breach persists.
With regard to adaptation measures relating to international recommendations, the Law amended certain elements of the legislation concerning registration in the Trade and Industry Register (Répertoire du Commerce et de l’Industrie), civil partnerships, charities, federations of charities, as well as foundations.
Finally, the Law introduces a criminal qualification of disclosure, by the recipient of a request relating to the identification of property by the authorities, to the person who is the subject of the request, prior to the transmission of the required information.
In practice, a Monegasque professional will therefore not be able to warn its client of a request from the authorities, at the risk of being sentenced to:
- a fine ranging from 18,000 € to 90,000 € and,
- a prison sentence ranging from six months to two years.
It should be noted that other reinforcements to criminal policy have been included to ensure that Monaco takes the necessary measures to fight money laundering, the financing of terrorism, and the proliferation of weapons of mass destruction.
Our team remains at your disposal to support you and answer your questions in this area.
A.L.F.A. MONACO