In order to respond to the recommendations of the Moneyval Mutual Evaluation Report (5th cycle) published in December 2022, a legislative arsenal relating to the fight against money laundering, financing of terrorism, the proliferation of weapons of mass destructions and corruption (AML/CFT) was adopted in Monaco during 2023. These measures continue with the adoption by the National Council of Law 1.559 of 29 February 2024 (known as "Part IV").
The persons subject to Law 1.362 as amended, and indirectly many other players in Monaco's economic life with them, have therefore had to adapt in record time to the latest legislative developments in the area of compliance.
Among them are professionals in the real estate sector, which is one of the predominant sectors of the Monegasque economy and one of the highest risk sectors according to the second National Risk Assessment of Money Laundering and Terrorist Financing.
This Assessment also highlighted the high level of threat to real estate agents in particular and stated that these professions present a significant risk of being used as tools in AML/CFT strategies (1).
However, all players in the Principality's real estate sector, whether or not they are subject to the terms of Law 1.362, and in particular property dealers (2), Monegasque non-trading companies (3), trusts (4), notaries and lawyers and advisers carrying out transactions, will have to be sensitive and particularly vigilant in applying the applicable AML/CFT due diligence obligations.
1. Real estate agents, target of the AMSF's first practical sector guide
Real estate agents are subject to AML/CFT obligations under the
terms of Law no. 1.362 insofar as they engage in transactions
involving third-parties' properties as regular occupation, in
particular the purchase/sale of real estate, shares in
companies holding real estate assets and businesses, and rental
transactions involving properties for which the monthly rent is
equal to or greater than 10,000 euros. On the other hand,
persons carrying out property management transactions for their own
account are not liable, even if they have a large real estate
portfolio.
The second National Risk Assessment considered that, despite their
good involvement, the notion of a risk-based approach was not
always properly understood or formalised by real estate agents, who
can now rely on the new guidelines issued by the
Autorité Monégasque de
Sécurité Financière
(AMSF).
In the new practical sector guide for real estate agents published
in December 2023, the AMSF highlights the risk factors
specific to this activity and the obligations to which
they are subject, while reminding them that the involvement of
other parties (such as another real estate agent, notaries or
lawyers) is not likely to exempt them from their due diligence
obligations.
Real estate agents are therefore urged to check the relevance of
their internal compliance procedures in the light of this
guide.
As part of this process, real estate agents should expect
the AMSF to carry out further and more frequent
inspections and to impose sanctions in the event of
failure to comply with their obligations.
2. Property dealers, also targeted by the second National Risk Assessment
Since 2020, property dealers have also been subject to the Law
1.362 as amended, and according to the conclusions of the second
National Risk Assessment, this profession presents a high
level of final risk.
The Assessment highglights a number of shortcomings in compliance
with due diligence obligations and considers that many property
dealers do not have a system for monitoring operations and
transactions. However, here again, the fact that other liable
persons are most often involved in transactions in which property
dealers participate (real estate agents, notaries, lawyers) does
not exempt these professionals from their due diligence
obligations.
Nevertheless, it is to be expected that with the reform and
structuring of the profession of property traders, which
is an expected reform in the Principality, the vulnerabilities
presented by this profession will diminish, particularly in view of
the new conditions of access to the profession, the reduction in
tax benefits and the imposition of a minimum percentage of work to
be carried out in proportion to the value of the property
acquired.
AMSF inspections of these professionals should
also be considered.
3. Greater transparency for non-trading companies holding property assets in the Principality...
As such, non-trading companies are not liable for due diligence
obligations within the meaning of Law 1.362, as amended.
However, part 2 of the AML/CFT reform strengthened the
reporting obligations of non-trading companies in response
to the FATF recommendations and the need for transparency. As a
result, non-trading companies are now required to appoint a
person responsible for basic information, which
must now appear in the special register of non-trading companies,
as well as a person responsible for information on
beneficial owners.
The Government has sent reminder letters to non-trading companies
that have not met their reporting obligations by 15 December
2023.
Law no. 1.559 of 29 February 2024 also specified the list of
information and documents required for the registration of a
non-trading company and added an obligation for all non-trading
companies to keep a register of their members or
shareholders, indicating their identity.
The basic information listed for non-trading companies will have to
be updated on a regular basis, bearing in mind that new events in
the life of a non-trading company will now have to be reported.
This information will then be made available to the Direction
du Développement Economique (« DDE ») and
will be kept by the person responsible for it for a period of
10 years after the dissolution or winding-up of the
company.
It should be noted that the system of penalties applicable to
Monegasque public limited companies for civil purpose, non-trading
companiesquinzaine and their directors or liquidators has been
strengthened in the event of failure by authorised agents to
rectify any shortcomings.
Lastly, the Direction du Développement Economique («
DDE ») has published a list of « dormant
» non-trading companies, i.e. non-trading companies
for which it has been established that there is no registered
office, or that the statutory term has expired, or where their
authorisation or declaration to carry on business has been revoked
due to a lack of registered office or activity. This list should be
updated every fortnight.
4. ... And for trusts
With a view mainly to responding to the recommendation of the
Moneyval report on transparency concerning the beneficial owners of
legal arrangements, Law no. 1.559 of 29 February 2024 ("Part
IV" of the AML/CFT-P-C reform) devotes a chapter to the
obligations on trustees or local representatives of Monegasque
trusts or foreign trusts, which are also subject to an obligation
to register in the Monegasque register of trusts, to collect and
keep information and supporting documents.
Law no. 1.559 of 29 February 20024 stipulates in particular that
the trustee, and the local representative appointed in the
Principality if the trustee is established or domiciled abroad,
must collect, keep and permanently update adequate, accurate and
up-to-date information and the corresponding supporting documents
on the beneficial owners of the trust, including the settlor(s) of
the trust, the trustee(s), the protector(s), its
beneficiaries and any natural person ultimately exercising
effective control.
Information must also be kept concerning the list of
persons and bodies referred to in articles 1 and 2 of law no. 1.362
of 3 August 2009, as amended, and persons and bodies
governed by foreign law who, if they were established or domiciled
in the Principality, would be considered as falling within the
scope of these provisions, who provide services or who
enter into a business relationship or occasionally carry out a
transaction with the trust in order to provide services or
advice.
All of this information must be kept for auditing purposes
at a location in Monaco notified to the Direction du
Développement Economique for a period of 10
years after ceasing to be involved as a trustee or local
representative of the trust.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.