Legal News Overview / February - April 2022

Freezing of assets in application of international sanctions

Sovereign Order 8.664 of 26 May 2021 on procedures for freezing funds and economic resources pursuant to international economic sanctions (UN, EU, France, other States) was amended twice, in February and April 2022, in particular:

o Definition of frozen assets clarified, including the addition of virtual financial assets;
o Establishment of an Advisory Committee on the matter;o Clarification of the common negative obligations of professionals who have to apply freezing measures;
o Broadening the scope of persons and entities that the Minister of State may designate in the fight against terrorism, on his own initiative or at the request of another State;
o Overhaul of the regime for authorising the release or use of frozen assets.

These amendments are made in the context of the freezing of assets of Russian oligarchs following the invasion of Ukraine.

Fight against money laundering, terrorist financing and corruption

Law 1.520 of 11 February 2022 has strengthened the measures to combat money laundering, terrorist financing and corruption, to ensure that Monegasque legislation (Law 1.362) complies with the 4th and 5th (EU) Anti-Money Laundering and Anti-Corruption Directives, which Monaco is obliged to transpose by virtue of the Monetary Agreement of 29 November 2011 concluded with the European Union. Furthermore, the adversarial nature of the procedure before the Commission des Rapports de Contrôle (CERC) after the SICCFIN audit, which may lead to the imposition of administrative and financial penalties, has been reinforced.

Law 1.521 of 11 February 2022 transposed into Monegasque criminal law the requirements of the 6th (EU) Directive aimed at combating money laundering by means of criminal law, as well as the recommendations to Monaco of the Conference of the Parties to the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism.

The implementing regulations were subsequently amended by Sovereign Orders 9.125 of 25 February 2022 and 9.223 of 28 April 2022, the latter of which introduced the conditions of professional qualifications, training and professional certification for persons responsible for implementing the anti-money laundering, anti-corruption and anti-fraud measures appointed by credit, payment and electronic money institutions and persons carrying out financial activities. The Association Monégasque des Activités Financières (AMAF) is responsible for organising the training leading to the delivery of the professional certification, which is in addition to the obligation of continuous training.

The 5th round of mutual evaluation of the Principality by MONEYVAL is underway. The on-site visit took place from 21 February to 4 March 2022. The examination and adoption of the report of the 5th round is scheduled for the 64th plenary meeting of MONEYVAL to be held from 5 to 9 December 2022.

End of benchmarks (LIBOR, EONIA)

Law 1.522 of 11 February 2022 on benchmarks addresses the issue of discontinuing or abandoning benchmarks such as LIBOR and EONIA.

It is based on the principles defined by the International Organisation of Securities Commissions (IOSCO) and the provisions of Regulation (EU) 2021/168 establishing a framework for the orderly cessation or discontinuance of reference indices, given the proximity of the Monegasque banking and financial sector to French law and European Union law.

Ministerial Order 2022-120 of 9 March 2022 designated SARON as the replacement rate for CHF LIBOR in the contracts and contractual documentation of mutual funds, investment funds and financial instruments that refer to CHF LIBOR as from 1 January 2022.

Similarly, Ministerial Order 2022-121 of 9 March 2022 designated, as from 3 January 2022, the EURSTR short-term rate published by the European Central Bank as a replacement index for the weighted average overnight rate of the euro EONIA.

Ministerial Order 2022-123 of 9 March 2022, concerning fallback clauses, sets out the criteria to be taken into consideration in determining the relevance of an alternative reference index.

Modification of the usury rate (taux d’usure)

Sovereign Order 9.025 of 13th January 2022 amending Sovereign Order 2.271 of 6th July 2009 sets the average rate charged by lenders for the year 2022.

For individuals:
o Overdrafts: 14.88
o Personal loans: 3.32
o Home loans: 1.74

For companies and individual entrepreneurs :
o Overdrafts: 8.36

As a reminder, Article 357 of the Criminal Code punishes the use of an effective interest rate that exceeds by more than half the average rate charged under the same conditions by bona fide lenders for credit operations involving the same risks as the loan in question, with a fine of between 9,000 and 18,000 euros.

Excessive collections shall be deducted by operation of law from the normal interest due on the day of the proceedings and, alternatively, from the capital of the claim.

If the debt is extinguished in capital and interest, the lender shall be ordered to return to the borrower the sums wrongly collected, with interest from the day of their collection.