Law n°1.559 dated February 29, 2024, adapting legislative provisions in relation to Anti-Money Laundering, the financing of terrorism and the proliferation of weapons of mass destruction was published in Monaco's official Journal on March 1st 2024.
This bill constitutes the fourth part in the series of legislative reform aiming at drawing the consequences of the observations made by Moneyval Experts committee in its last report.
Among the disposition of the Law, the legislator has introduced a Section VII entitled: "Aggravation of hidden employment".
The sole article of this section increases the quantum of the penalty for failure to comply with article 1,3 and 4 of Law n°629 dated July 17 1957, which, in summary, deal with statutory duties to make prior declaration in case of hiring and to obtain the delivery of a work permit.
The government's stated aim in its explanatory memorandum is to ensure that the quantum of the penalty allows the hidden employment criminal offense, to be apprehended as an "offence underlying money laundering".
To achieve this, the offence must be punishable by more than one year's imprisonment (article 218-3 of the Monaco "Code pénal").
However, until the adoption of this law, the penalty in case of breach of these provisions was limited (except in case of repeated offences) to a prison sentence of between 6 days and one month, in addition to a possible fine.
Now, in addition to a more significant fine, a sentence of 6 to 18 months' imprisonment is incurred.
It should be noted that Monegasque court rulings relating to this offence show that punishment is almost exclusively aimed at the managing director or legal representative of the Company, and not at the Company itself (within the exception of one ruling which resulted in the conviction of both the Company and its director).
The aggravation of the penalty provided for in the text reiterates, if there were any need to do so, the need for all Directors to consider the possibility of drafting a delegation of powers entailing delegation of the criminal liability associated with this duty, to a company employee.
Finally, it is important to keep a close eye on the possible short-term evolution of the offences covered by the notion of "hidden employment".
Hidden Employment, a term which to date was unknown in Monegasque legislation, refers to several concepts in France.
Firstly, hidden employment may be characterized through a concealed activity, notably in the situation where an activity is carried out without prior registration with the relevant authorities.
Secondly, hidden employment can be characterized in case of concealment of salaried employment, which can take the form of (i) failure to make a declaration prior to hiring, (ii) the absence or irregularity of a pay slip, and (iii) failure to make an appropriate declaration of wages.
All these situations could have been covered by the Monegasque legislator.
Indeed, the opportunity could have been taken to increase the penalty for carrying on a commercial, industrial or liberal activity without justification of a declaration or authorization to practice issued by the Minister of State (Law no. 1.144 of July 26, 1991 regarding the exercise of certain economic and legal activities).
Also, the text could have updated the - currently light - penalties for failure to declare wages (Ordinance-Law no. 397 of September 27, 1944 creating a compensation fund for the social services of the Principality of Monaco).
Indeed, it seems no less necessary for the Principality to be able to apprehend these forms of hidden employment as underlying offences of money laundering.
For the time being, however, and until such time as the legislature takes up the issue, "Monegasque hidden employment" is reduced to "disregarding of articles 1, 3 and 4" of Law n°629 of July 17, 1957, i.e. failure to comply with obligations to declare employment and obtain a work permit.
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.
