Lately, lawmakers of many countries started to support more actively transparency in business as well as fighting money laundering and financial crime. Accordingly, governments started to introduce new AML legislation and request banks and other financial institutions to follow the new regulations. Among other issues, regulators put their attention to the prevention of usage of cryptocurrencies for money laundering. However, in the majority of countries, the industry of crypto assets is not regulated efficiently. Moreover, the market participants find the new regulations impractical and predict the opposite of the regulators’ goal – the cryptocurrency transactions may become less transparent.
When it comes to the Principality of Monaco, there are also new AML policies coming up. This is why this article will come in handy for newly opening financial companies in Monaco.
The trackage of suspicious transactions
Starting from the beginning, banking institutions in Monaco are obliged to authenticate the identities of each client, their agent and their beneficial owner for the case of legal entities. Moreover, firms registered in Monaco are expected to submit the earlier mentioned information to the supervising authority.
Another fact to consider prior to establishing a banking company in Monaco is the regular requirement of due diligence on clients’ transactions. All the unusual transactions deemed suspicious by a banking institution must undergo a strict and detailed analysis. Keeping in mind the current situation during the global pandemic, customers’ behavior is going through a period of changes. This results in the growing level of fraud and abuse of tax optimization. Therefore, companies that used to be transparent before, become less and less so.
During the analysis of the transactions, banking institutions in Monaco are supposed to be extra attentive towards special features like “breaking” the purpose of payment in the process of receiving and canceling funds, as well as to the correspondence of the content of payment with the proclaimed activity type.
AML and crypto activity
As for now, technologies that would allow verification of user data, and the exchange process between process do not exist. Adding to this, the new regulations dictate all cryptocurrency users including crypto providers and individuals will have to obtain a license. This, however, requires a broad and interconnected legislative system for digital assets, which does not exist in Monaco yet.
Cooperating on AML
For individuals who plan to start a financial business in Monaco would be useful to know that this jurisdiction provides banks and asset managers with an opportunity to share information in order to achieve joint coordination in the fight against money laundering.
Since the whole process of payment analysis is quite labor-consuming, it requires thorough attention. The automation of this procedure is complicated due to being based on machine learning, Mostly, it is not enough to have transactions from one or two rather small banks for building a highly accurate algorithm.
Additionally, banking institutions must have a clear overview of their clients’ activities to prove a real functioning business.
Financial regulators of Monaco oblige financial companies to report all transactions that seem engaging in crime or corruption to the Service for information and control over financial structures.
According to the law, violation of AML policies and other financial crimes are subject to penalty according to administrative or criminal law. Furthermore, it is in the bank’s interest to imply regulative policies in time, since with the time passing the fines for non-compliance grow as well and pose a threat to its business.
In case of any other questions or misunderstandings of private banking regulation in Monaco, make sure to contact our experts in COREDO. Our legal advisors will take great care of your starting business and registration issues connected to it.