Monaco
Last Updated: 23/5/2008CENTRAL AUTHORITY FOR REPORTING
Service d’Information et de contrôle sur les circuits financiers (Financial Channels Information and Control Unit– SICCFIN)
ARE LAWYERS COVERED BY ANTI- MONEY LAUNDERING LEGISLATION?
By Ordonnance No. 14,466 of 22 April 2000 relating to Law No.1162 of 7 July 1993, the Money Laundering Regulations were expanded beyond financial institutions to include inter alia legal and financial advisors, avocats in Monaco (other than where they may have taken up information relating to the movement of money in the exercise of their role as defence lawyers), persons who manage and control offshore companies and more generally professionals whose business involves them in effecting, participating in or advising on the transfer of capital (this would extend to Notaries).
A word about ‘lawyers’. There are four categories of lawyer we can identify and the process by which each category is affected by the AMLR is different:
- Monegasque "Avocats/Avocats Defenseurs: This is the local barrister profession;
- Monegasque "Notaires”: This is the local notarial profession;
- Monegasque "Auxiliaires de Justice": Local Sherrifs/ Bailliffs/ Registrars;
- Foreign Lawyers, not formally admitted to any Monaco legal profession, but licensed to practice law under a specific Monaco government licence.
Lawyers are subject to the same suspicious transaction reporting requirements, as financial institutions, save that compliance obligations are lighter.
LAWS REGARDING ANTI-MONEY LAUNDERING PROCEDURES
- Law No. 1,162 of 7 July 1993, as modified by law no. 1,253 of 12 July 2002, relating to the participation of financial institutions in the prevention of money laundering.
- Ordonnance no. 14,466 of 22 April 2000 gave regulatory effect to the requirements of the laws.
- Ordonnance no. 11,160 of 24 January 1994, as modified by Ordonnance no.15,453 of 8 August 2002, concerning the role of financial institutions in the prevention of money laundering.
- Act 1.253 (2003 Anti-Money Laundering Law)
IN ADDITION TO THESE LAWS, IS THERE ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS CURRENTLY IN PLACE?
Both the government of Monaco and the Association Monegasque des Banques have in the past produced guidelines on anti-money laundering procedures from the perspective of financial institutions and the management and control of offshore companies (this latter category might include lawyers in category 4 above)
A training video has been prepared by the Monegasque Bankers Association and is made available to the compliance officers of company and trust service providers to assist them in developing the level of understanding of applicable policies and procedures.
The SICCFIN also provides compliance training to lawyers and notaries.
UNDER WHAT CIRCUMSTANCES IS A LAWYER UNDER THE OBLIGATION TO REPORT?
According to Ordonnance no.14,466 of 22 April 2000, relating to Law no. 1162 of 7 July 1993, individuals subject to the money laundering prevention law are required to report all sums recorded and all transactions relating to funds that they suspect could derive from drug trafficking or organised criminal activity and the evidence which provides the basis for their report. There is no definition of ‘organised criminal activity’ although the extent of what might constitute criminal activity is broad. However, fiscal offences would not, in Monaco, amount to a criminal activity; hence, say, forming a suspicion about tax evasion is outside Monaco’s AMLR. They must also report all sums recorded in their books and all transactions relating to funds that could derive from terrorism or terrorist acts or terrorist organisations or that are intended to be used to finance them and the evidence which provides the basis for their report.
If an individual has refused to carry out a transaction that they suspect may constitute one of the above cases they are also required to make a report and any information gained subsequently to a report that is likely to change its scope must be reported as soon as possible.
The suspicion report must be made in writing and addressed to the SICCFIN, or for Sheriffs/ Bailiffs/ Registrars, Avocats and Notaires, the Procurator General.
LAWYER RESPONSIBILITY/LIABILITY
Under Monegasque law it is a criminal offence for a person to ignore his professional obligations and knowingly to assist in any transfer, placement, concealment or conversion of assets and capital of illicit origin. Any agreement or association, or attempt to commit the offence will be punishable as though the substantive offence had been committed. According to Art. 218 of law no. 1161 of 7 July 1993, this is punishable by imprisonment of five to ten years and by a fine under Art. 26.4 of the Penal code of which the maximum could be increased tenfold.
The offence of ‘tipping off’ is punishable by a fine provided for in Art. 26.2 of the Penal Code up to a multiple of three.
According to Art. 32 Law no.1162 of 7 July 1993, as modified by Law no. 1,253 of 12 July 2002, any individual who fails to comply with the obligation to declare suspicions, whether certain or not, will be committing an offence punishable by a fine under Art. 26.3 of the Penal Code.
Violation of the obligation to report information received from a client, which then materially changes and of the obligation to keep all identity and transaction documents for five years will be punished by a fine defined in Art. 26.2 of the Penal Code.
CLIENTS IDENTIFICATION AND VERIFICATION
By Art. 1 of Ordonnance no.11,160 of 24 January 1994, as modified by Ordonnance no.15,453 of 8 August 2002, relating to the application of law no.1,162 of 7 July 1993 the verification of a client’s identity is effected by the presentation of the following documents:
- For an individual: any official documents bearing a photography;
- For a legal entity: the original deed, an authentic copy of a certified copy of the deed or extract from official registers, which states the denomination, the legal form and the registered office of the entity, as well as the powers of the persons acting on the entity’s behalf.
All documents and any transaction information must be kept for five years from the close of the relationship. There is a duty to examine all transactions whose amounts exceed 15,000 EUR when the transaction is of an unusual or of a complex character, or if it does not appear to have an economic rationale.
LAWYERS PROSECUTED FOR MONEY LAUNDERING OFFENCES
None that we are aware of.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Moneyval, a FATF - Style Regional Body and the Council of Europe's AML and terrorist finance evaluation team, first evaluated Monaco's AML systems in October 2002. Since then, the Monegasque authorities have changed legislation and regulations to strengthen the principality's defences. It amended the Criminal Code to criminalise money laundering; introduced additional customer identification measures; adopted legislation to regulate electronic transfers, relations with politically exposed persons and the activity of correspondent banks; and ratified a number of international conventions.
Moneyval found, however, that the legal provisions were not sufficiently detailed or supported by appropriate secondary legislation and instructions. The 2003 anti-money laundering law, Act 1.253, has "restrictive terms" which hinder prosecutions; convictions for money laundering remain disappointing, with one conviction for money laundering to date.
Although Monaco has designated competent authorities to investigate and prosecute money laundering and terrorist financing offences, inspectors criticised the police and prosecution service's efforts to conduct inquiries in these matters. 1
They believe that Monaco's capacity to keep out, confiscate or recover the proceeds of crime is "limited" — a word that could be used to describe every other state's capacity to do these things. They also believe that its system for freezing and confiscating terrorist assets is incomplete. 2
_______
Sources
- Helen O’Gorman, “Monaco compliant with 44 of 49 recommendations, says Moneyval”, 21 December 2007, www.complinet.com.
- Helen O’Gorman, “Moneyval criticizes Monaco in evaluation report”, 26 February 2008, www.complinet.com.
