Amendments to Regulation 2022 on fight against money laundering, terrorist financing and corruption

SUMMARY

The provisions of Sovereign Order no. 2.318 implementing Law no. 1.362 of 3 August 2009 on combating money laundering, the financing of terrorism and corruption (amended by Law no. 1.520 of 11 February 2022) were amended three times in 2022, by:

• Sovereign Order no. 9.125 of 25 February 2022 (finalisation of the upgrade to the 5th (EU) anti-money laundering and terrorist financing Directive);
  
• Sovereign Order no. 9.170 of 4 April 2022 (CERC procedure);
• Sovereign Order no. 9.223 of 28 April 2022 (diplomas or professional skills, professional certification of persons responsible for implementing the AML/CFT system in the banking and financial sector).
  

PRESENTATION

— Sovereign Order no. 9.125 of 25 February 2022 (JDM n° 8580 of 4 March 2022)

Order no. 9.125 amends Sovereign Order no. 2.318, taking into account the recent amendments made to Law no. 1.362 and the decision of the Supreme Court TS 2021-18, 2021-19, 2 December 2021, Chambre monégasque de l'horlogerie et de la joaillerie, UCAM and FEDEM c/ Etat de Monaco having annulled art. 1 and 2 of Sovereign Order no. 8.634 of 29 April 2021 (which had added a figure 26° to art. 1 and art. 1-1 to Sovereign Order no. 2.318):

• Amendment of Art. 1: definitions ;
• Amendment of Art. 5: identification and verification of the identity of the legal person customer;
• Amendment of Art. 12-1: written report of the results of the Specific Examination (PE) of the context and purpose of atypical transactions and operations involving a counterparty with links to a high-risk State or territory;
• Amendment of Art. 13, 14: identification of beneficial owners (BE);
• Amendment of Art. 24: Politically Exposed Persons (PEP);
• Deletion of Art. 33: transmission of a report on the procedures for internal control, communication and centralisation of information intended to prevent money laundering, terrorist financing and corruption, as the case may be, to the Public Prosecutor or to the President of the Bar Council of avocats-défenseurs and avocats;
• Amendment of Art. 51: Contact Group against money laundering, financing of terrorism and proliferation of weapons of mass destruction and corruption;
• Amendment of Art. 55, 56, 57, 58 and deletion of Art. 56-1, 56-2: procedure before the Audit Review Commission (ARCC);
• Amendment of Art. 64: fixing the amounts provided for by Law No. 1.362.

[1] The Supreme Court annulled :

- on the one hand, Article 1 of the Sovereign Order of 29 April 2021 which added to Article 1 of Sovereign Order no. 2.318 a number 26° as follows: "persons referred to in number 26°) of the aforementioned Act n° 1.362 of 3 August 2009, as amended: in particular traders and persons organising the sale, hire or rental of the following goods: antiques, precious materials, precious stones, precious metals, jewellery, watches, leather goods, land, air or sea vehicles and other objects of great value" (disregarding the scope of number 15° of Article 1 of Act n° 1.362);

- on the other hand, Art. 2 of the Sovereign Order of 29 April 2021 which inserted in Sovereign Order no. 2.318 an article 1-1 as follows "Traders and persons referred to in number 15°) of Article 1 of the aforementioned Act of law n° 1.362 of 3 August 2009, as amended, shall declare to the Service d'Information et de Contrôle sur les Circuits Financiers, under conditions set by ministerial order, transactions or series of related transactions, paid in cash, the amount of which is equal to or greater than the amount set out in the second paragraph of Article 64" [10.000 euros] (incompetence of the regulatory power, as this declaratory obligation is not provided for by the Act n° 1.362)

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— Sovereign Order no. 9.170 of 4 April 2022 (JDM no. 8585 of 8 April 2022)

The procedures for the recusal of a member of the Audit Report Review Commission - Commission d'Examen des Rapports de Contrôle (CERC) are defined in the new Article 57-1 of Sovereign Order no. 2.318 of 3 August 2009 as amended (by application of Article 65-1, 7th paragraph, of Law no. 1.362):

"The composition of the committee, including the appointed rapporteur, shall be communicated to the accused person with the summons referred to in the first paragraph of the previous article.
A request for the disqualification of a member of the committee may be made in a reasoned document to the secretary general of the committee by the accused person or his or her representative, at the latest within ten working days of the notification of the committee's composition.
To be accepted, the request must be addressed to the committee member concerned by name, state precisely the reasons for the challenge and be accompanied by the supporting documents for the reasons for the challenge invoked.
The Secretary General shall issue a receipt for the request.
The member of the committee who is the subject of the challenge request shall receive a copy.
Within eight working days of this communication, he or she shall make known in writing either his or her agreement to the challenge or the reasons why he or she opposes it.
If he agrees, the President, or if he is the subject of the challenge, the Vice-President, shall ask the challenged member to refrain from sitting and shall substitute another member to complete the committee which is deciding the case in his absence.
If the member concerned contests the grounds for the challenge or fails to reply within eight working days, the challenge request shall be examined by the committee without the participation of the member concerned by the challenge request.
The committee shall decide on the application for disqualification in an unmotivated decision which may not be appealed.
If the challenge is accepted, the President or, if he or she is the subject of the challenge, the Vice-President, shall ask the challenged member to abstain and substitute another member to complete the committee. The Secretary General shall give notice of this to the person challenged.
If the challenge is rejected, the Secretary General shall also notify the person challenged of the committee's decision.
The actions of the challenged member before he or she became aware of the challenge may not be challenged."

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— Sovereign Order no. 9.223 of 28 April 2022 (JDM no. 8589 of 6 May 2022)

Order no. 9.223, issued in application of Article 27, 4th paragraph of Law no. 1.362[1], introduced into Sovereign Order no.. 2. 318 the requirements in terms of diplomas or professional skills, training and professional certification of persons responsible for implementing the anti-money laundering, anti-corruption and anti-terrorist financing measures designated by credit, payment and electronic money institutions and persons carrying out financial activities (bodies and persons referred to in numbers 1°) to 3°) of Article 1 of Law no. 1.362)[2]. The Association Monégasque des Activités Financières (AMAF) is responsible for organising the training leading to the delivery of the professional certification.

These new provisions inserted in Sovereign Order 2.318 (new Articles 31-1 to 31-4) will come into force on 7 November 2022 (6 months after the publication of Sovereign Order 9.223).

Please note:

- The persons responsible for the implementation of the AML/CFT system as well as the persons placed under their authority who have been in office for less than five years on the date of entry into force, must register, through the organisations or companies within which they work, for the first professional certification session as from the entry into force of the new provisions.

- Only the persons responsible for the implementation of the AML/CFT system and the persons placed under their authority who have been in office continuously for at least five years as of the date of entry into force are deemed to have the knowledge required for the functions they perform and are therefore not subject to the regime of the new Articles 31-1 and 31-3 of Sovereign Order 2.318.

New provisions (Articles 31-1 to 31-4 of Sovereign Order 2.318):

> Conditions relating to qualifications or professional skills that managers responsible for implementing the AML/CFT system ("AML/CFT managers") must meet in order to be recruited:

1°) hold either a Master's degree or a diploma certifying at least four years of higher education after the baccalaureate, in the fields of banking, finance, economics or law, or a diploma recognised as equivalent by the professional's effective management body;

2°) failing this, provide evidence of experience acquired in one of the fields referred to in the previous paragraph, after a period of professional practice considered sufficient by the professional's effective management body.

> Obligation to enrol in a training session, through the organisations or companies in which AML/CFT managers work, within six months of taking up their duties, in principle (for reasons of service or internal organisation, an extension may be requested from the AMAF), at the end of which a professional certification is issued.

→ The organisation of training is entrusted to AMAF, which includes:

1°) the organisation of training sessions involving instruction provided on paid working time, in AML/CFT ;

2°) the determination of the content of the lessons given during the training sessions, as well as the level of knowledge and minimum skills required for the delivery of the certification;

3°) the organisation of a knowledge examination at the end of the training sessions, which is sanctioned by the issue of a professional certification jointly approved by the AMAF and the Service d'Information et de Contrôle sur les Circuits Financiers ("SICCFIN").

→ The Regulations specifying the examination procedures are drawn up by AMAF and validated by SICCFIN, after consultation with the newly established "Anti-Money Laundering, Combating the Financing of Terrorism and Corruption" Professional Certification Commission (any amendment to the Regulations must also be validated by SICCFIN, after consultation with the aforementioned Commission). The Regulation is published on the AMAF website (https://www.amaf.mc/).

→ The task of the LCB/FT-C Professional Certification Committee is to issue opinions (by a majority vote of the members present, with the Chairman having a casting vote) on any matter falling within its remit pursuant to Sovereign Order 2.318 and the Regulations specifying the examination procedures. It is composed of the following members

- President of AMAF or any person he may appoint to represent him, Chairman of the Commission ;

- Vice-Chairmen of AMAF ;

- Secretary General of AMAF ;

- Director of SICCFIN ;

- Secretary General of the Commission de Contrôle des Activités Financières ("CCAF");

- a maximum of six members appointed each year by the AMAF Board on the basis of their expertise in the prevention of money laundering, terrorist financing and corruption and their knowledge of the Monegasque economic fabric.

→ The deliberations and opinions of the Commission are recorded in a register kept by the AMAF at the disposal of the Government Councillor-Minister for Finance and the Economy. Any person may request consultation of the said register from AMAF provided that the request is justified.

[1] Article 27, 4th paragraph of Law no. 1.362: "The persons appointed as managers by the bodies and persons referred to in numbers 1°) to 3°) of Article 1 must prove, for their recruitment, that they have diplomas or professional skills defined by Sovereign Order. In order to carry out their duties, they and the persons placed under their authority are required to obtain professional certification following training, issued under the conditions laid down by Sovereign Order. The cost of this professional certification and of the training shall be borne by the bodies and persons referred to in points 1) to 3) of Article 1."

[2] Bodies and persons referred to in numbers 1°) to 3°) of Article 1 of Act 1.362: "1°) credit institutions, including branches established in the Principality of Monaco of credit institutions whose registered office is located abroad, and finance companies 2°) payment institutions and electronic money institutions, including branches established in the Principality of Monaco of payment or electronic money institutions whose registered office is located abroad 3°) persons carrying out the activities referred to in Article 1 of Act 1.338 of 7 September 2007 on financial activities, as amended;"