Associations (Moneyval): changes up to date with Law no. 1.559 of 29 February 2024 (PART IV)

UP TO DATE WITH THE LATEST CHANGES 2024 made by Law no. 1.559 (Part IV) and Sovereign Order 10.456 of 15 March 2024

Entry into force on 30 September 2023 of the new provisions governing associations and federations of associations, following the recommendations of the MONEYVAL Report focusing on the strengthening of measures to ensure greater transparency, extended access by the competent Monegasque authorities to basic information and information on beneficial owners, assurance that funds are not used to support the financing of terrorism or the proliferation of weapons of mass destruction:

• Law 1.355 of 23 December 2008 on associations and federations of associations, as amended by Chapter III of Law 1.550 of 10 August 2023 adapting legislative provisions to combat money laundering, terrorist financing and the proliferation of weapons of mass destruction (Part II) and Law no. 1.559 of 29 February 2024 (PART IV);
• Sovereign Order 10.115 of 14 September 2023 implementing Law 1.355 of 23 December 2008 on associations and federations of associations, as amended by Sovereign Order 10.456 of 15 March 2024

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SUMMARY

The main changes for associations and federations of associations from 30 September 2023:

• Creation of a special Register held by the Department of the Interior;
• Obtaining and declaring new basic information and information on beneficial owners, keep it in Monaco, update it and make it available;
• Appointment of a person responsible for basic information and information on beneficial owners;
• Keeping a Register of members ("registre des membres") a Register of donations and grants received ("registre des dons et subventions reçus") and a Register of donations and grants made ("registre des dons et subventions versés");
• • Keep at the disposal of the Department of the Interior the minutes of the annual general meeting which approved the accounts, the moral report, the financial report and the Treasurer's or Auditor's certificate if applicable;
• Associations considered to present a particular risk of exploitation for terrorist financing purposes, on the basis of the national risk assessment, are required, at the request of the Home Office, to apply additional measures;
• Extension of the retention period for accounts, statements and proof of transactions to 10 years.
• Judicial dissolution procedure that can be implemented when the conditions for voluntary dissolution of the association cannot be met, or if an association has been inactive for more than 2 years.
• Supervision by the Department of the Interior, with regulations governing documentary and on-site inspections.
• The new obligations give rise to new administrative, pecuniary and criminal penalties in the event of non-compliance.

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IN DETAIL

¤ Articles of association

— New compulsory information in the association's articles of association: rules on dismissal, term of office of members of the administrative body. (art. 2, point 4° L. 1.355)

— Addition to the conditions for conformity of the articles of association: "7°) the association may not engage in any commercial activity, other than on an ancillary basis; 8°) the association may not use the word "foundation" in its name unless authorised to do so by the Minister of State". (art. 3 L. 1.355).

¤ Formation of the association and legal personality

— Association null and void: any association whose purpose or direct or indirect consequence is to promote the commission "or preparation" of an act of terrorism or to glorify it, regardless of the means used to that end, is deemed to be detrimental to national security (art. 6, 3rd paragraph of L. 1.355).

— Declaration of the association to the Minister of State: new basic information and information on beneficial owners, with supporting documents to be provided, and declaration procedures. The declaration of association is made by registered letter to the Secretariat General of the Government. (in accordance with the procedures laid down by Sovereign Order: art. 7 L. 1.355; art. 1, 1-1 OS 10.115)

The association's declaration must be dated and signed by at least two persons of full age, enjoying their civil rights and domiciled in Monaco.

It must include the following information and identification details:

1. the name, purpose and declared activities of the association ;
2. the address of its registered office;
3. the identity of those who, in any capacity whatsoever, are responsible for its administration or management. The identification details: their surname, usual surname, nickname or pseudonym, first names, date and place of birth, profession, nationality, home address, functions within the association and the date on which they took up or renewed their functions;
4. the identity of the person designated as responsible for basic information and information on beneficial owners as referred to in paragraph II of article 22-1 of law no. 1.362 of 3 August 2009, as amended. Identification details: a) in the case of a natural person: surname, given name, nickname or pseudonym, forenames, date and place of birth, profession, nationality and home address; b) in the case of a legal person: its name or business name, its corporate purpose, its legal form, the date of its incorporation, its principal activity and, where applicable, its secondary activities, the address of its registered office, the number and place of registration in a public register and the identification details of the natural person authorised to represent the said legal person as listed in letter a);
5. the identity of the association's beneficial owner(s). The identification details: their surname, usual surname, nickname or pseudonym, first names, date and place of birth, profession, nationality, the address of their personal domicile, as well as the terms and conditions of the control exercised over the association and the date on which they became the association's beneficial owners.

The declaration of association must be accompanied by the following documents, failing which it will be inadmissible:

1. the association's articles of association, drawn up in duplicate, initialled page by page and signed by at least two of the founders referred to in the first paragraph of article 1 of law no. 1.355 of 23 December 2008, as amended, referred to above;
2. a document proving the address of the association's registered office, accompanied by a certificate of ownership or lease, and mentioning, where applicable, the owner's agreement;
3. for the natural persons referred to in numbers 3°) to 5°) of the second paragraph of article 7 of law no. 1.355 of 23 December 2008, as amended, a valid official document proving their identity and bearing their photograph;
   where the address given on the document referred to in point 3°) is not correct, a copy of proof of address less than three months old, for the natural persons referred to in points 3°) and 4°) of the second paragraph of article 7 of law no. 1.355 of 23 December 2008, as amended, referred to above;
4. where the persons referred to in point 4°) of the second paragraph of Article 7 of Law no. 1.355 of 23 December 2008, as amended, referred to above, are legal entities, a certified copy of any deed, document or extract from an official register dating back less than three months and certifying the items listed in letter b) of point 2°) of the second paragraph of Article 1.

— Definition of the beneficial owner of an association: "the natural person or persons, whether third parties or members, who ultimately exercise effective control over the association, in particular over its activities, or who have entered into contracts enabling a third party to obtain indirect control of the association". The methods of application of the previous paragraph are defined by sovereign ordinance: "the persons who exercise management functions, who make up the body responsible for administration, or any other person who, by any other means, directly or indirectly, may exercise effective control over the association". (new art. 7-2 L. 1.355; art. 2 OS 10.115)

— Extension of the period for issuing the receipt ("récépissé") by 4 months (instead of 2 months) when the provisions of the articles of association require consultation of the Council of State. (art. 8, 1st paragraph L. 1.355; art. 6 and 7 OS 10.115)

— Directors ("administrateurs") may not receive any remuneration in respect of their executive duties or benefit from an employment contract within the association, unless the following 5 cumulative conditions are met (new art. 8-1 L. 1.355):

1. the association's articles of association do not prohibit the combination of the positions of director and employee;
2. the position for which the person is employed is distinct from his duties as a director;
3. the person's directorship is exercised in complete independence;
4. the salary corresponds to actual work in a state of subordination and does not conceal a sharing of profits;
5. the employee refrains from taking part in any deliberation relating to his/her employment contract or leading to a conflict of interest.

¤ Obligations of the association, persons responsible for basic information and information on beneficial owners, and liquidators

— The "association" (instead of the "president or, failing that, a director") is required to declare any changes, acquisitions or disposals of real estate and decisions to dissolve the association, and to publish these in the Journal de Monaco (art. 10 and 11 L. 1.355, art. 5-1 and 5-2 OS 10.115).

This declaration is filed with the Secretariat General of the Government.

It is signed by the chairman or a director and mentions the changes made.

Where the changes concern the identity of those who, in any capacity whatsoever, are responsible for the administration or management of the association, or the identity of the person appointed as the person responsible for basic information and information on beneficial owners, or the identity of the beneficial owner(s) of the association (referred to in numbers 3°) to 5°) of the second paragraph of article 7 of law no. 1. 355 of 23 December 2008), the amending declaration shall mention the identification details provided for in the second paragraph of Article 1).

The declaration must be accompanied by the following documents, failing which it will be inadmissible:

1. if the amendment concerns a change in the name, object or registered office address of the association, or any other amendment to the articles of association: a) the amended articles of association of the association drawn up in duplicate, initialled on each page and signed by a director; b) an extract certified as true and sincere by the declarants of the deliberations, as the case may be, of the administrative body or the general meeting which took the decision subject to declaration; c) and, in the event of a change in the address of the registered office, the proof provided for in point 2°) of the second paragraph of article 1-1;
2. if the change concerns the composition of the administrative body, the duties of its members or any renewal of the term of office of its members, or in the event of a change in the person designated as responsible for basic information and information on beneficial owners or in the beneficial owner(s): the corresponding documents referred to in points 3°) to 5°) of the second paragraph of Article 1-1 ;
3. for any acquisition or disposal of real estate: in addition to a descriptive statement in the case of an acquisition and an indication of the acquisition or disposal price, an extract certified as true and sincere by the declarants of the deliberations, as the case may be, of the administrative body or the general meeting which took the decision subject to declaration;
4. for any decision to voluntarily dissolve the association: an extract certified as true and sincere by the declarants of the deliberations, as the case may be, of the administrative body or the general meeting that took the decision subject to declaration.

The declarations by the federation of associations of the name, object and registered office of the associations which make it up or which are subsequently affiliated (provided for in art. 25 L. 1335), are made in identical form.

— Obtaining, keeping in Monaco, updating and providing access to basic information and information on beneficial owners (and corresponding supporting documents) for the purposes of entry in the special register kept by the Department of the Interior. (art. 12, new art. 12-2 L. 1.355)

• Obligation to obtain and keep adequate, accurate and current information relating to said information as well as the corresponding supporting documents with a view to their registration in a special register.
• Associations are required to keep this information and documents for 10 years after the date on which they cease to be clients of the organizations and persons referred to in articles 1 and 2 of Law No. 1.362 of August 3, 2009, as amended. This information and documents are kept and available, either at the head office of the association, or in another location in Monaco, in particular from one of the persons or organizations referred to in figures 6°), 13°), 19° ) or 20°) of article 1 or in figures 1°) or 3°) of article 2 of Law No. 1.362, amended. The identity and address of the person who keeps said information and documents are communicated to the Department of the Interior.
• The president or liquidators are required to keep basic information on its beneficial owners, and the corresponding supporting documents for 10 years after the date of the dissolution or liquidation of the association. This information and documents must be kept and available in Monaco in a location communicated to the Department of the Interior. They may also be entrusted for the same purposes to one of the persons or organizations referred to in figures 6°), 13°), 19°) or 20°) of article 1 or in figures 1°) or 3°) of Article 2 of Law No. 1.362 of August 3, 2009, amended, whose identity and address are communicated to the Department of the Interior.

Ces informations sont accessibles sur demande aux autorités visées à l'article 12-2, selon les modalités prévues par ledit article :

This information is accessible on request to the authorities referred to in article 12-2, according to the procedures provided for in said article:

• Authorized agents of the Department of the Interior;
• Authorized agents of the Monegasque Financial Security Authority (and through it: Authorized agents of the Financial Activities Control Commission; Council of the Bar Association);
• Authorized personnel of judicial authorities;
• Judicial police officers from the Directorate of Public Security acting at the request of the Prosecutor General or on delegation from an investigating judge;
• Authorized agents of the seized or confiscated assets management service within the Judicial Services Department.
• Police officers with at least the rank of captain, individually and specially authorized by the Director of Public Security;
• Authorized agents of the General Expenditure Control department;
• Authorized agents of the Tax Services Department.

— Maintaining (in paper or electronic format), for each accounting year, a register of members indicating their identity, address and category of membership, indicating the different forms of membership and associated rights of each member. It is updated weekly. (new arts. 12-1 and 12-2 L. 1355; art. 20 OS 10.115)

• The register must be kept and available at the head office of the association, or at any other place in the Principality, from one of the persons or organizations referred to in figures 6°), 13°), 19°) or 20° ) of article 1 or in figures 1°) or 3°) of article 2 of Law No. 1.362, the identity of which is communicated to the Department of the Interior. The place of conservation of the register of members is communicated to the Department of the Interior with a view to its entry in the register referred to in article 13-1.
• The president or liquidators are required to keep the various registers of members for ten years after the date of the dissolution or liquidation of the association. This information and documents must be kept and available in Monaco in a location communicated to the Department of the Interior. They may also be entrusted for the same purposes to one of the persons or organizations referred to in figures 6°), 13°), 19°) or 20°) of article 1 or in figures 1°) or 3°) of Article 2 of Law No. 1.362 as amended, whose identity and address are communicated to the Department of the Interior for registration in the register kept by the Department of the Interior.

This information is available on request to the authorities listed above.

The identification elements of members to be mentioned in the register are as follows:

1. natural person: name, user name, nickname or pseudonym, first names, date and place of birth, professions, nationality and personal home address;
2. legal entity: name or corporate name, corporate purpose, legal form, date of its constitution, its main activity, as well as, where applicable, its secondary activities, address of its registered office, number and place of registration in a public register and the identification elements of the natural person authorized to represent said legal entity as listed above.

In addition, this register must indicate, for each member:

• a) the date of its accession; And
• b) his status as a member; And
• c) whether he is responsible for the administration or management of the association and in what capacity.

Communication to foreign authorities

The basic information of the association, and that on its beneficial owners, may be communicated to foreign authorities by the authorities referred to in numbers 2°) to 5°) of paragraph I, under the conditions provided for in article 51-1 and in Chapter VIII of Law No. 1.362 amended, or through international mutual legal assistance. (art. 12-2 IV L. 1.355).

¤ Association accounting

— The report of the annual general meeting which approved the accounts must be made available to the Department of the Interior as well as the moral report, the financial report and the certificate of the Treasurer or the auditor if applicable. (art. 20-1, new art. 20-6 L. 1.355; arts. 21 and 23 OS 10.115)

The association must inform the Department of the Interior of the holding of this general meeting.

The association's accounts must be certified by an auditor if its annual budget (all expenses including tax for the accounting year or excluding tax for those subject to VAT) exceeds the amount of 500,000 euros.

The moral and financial reports for the closed financial year contain a visa from the president of the association or an administrator specially designated for this purpose.

The moral report also includes:

1. a presentation of the activities of the exercise with the strong points;
2. the number of members at the end of the previous financial year;
3. the status of achievements of the missions entrusted at the last general meeting.
   

The financial report also includes:

1. the income statement showing the breakdown of revenue and expenses;
2. the balance sheet at the end of the accounting year.

The certificate from the Treasurer or the auditor, if applicable (referred to in the third paragraph of article 20-1 of law no. 1.355) indicates that the Treasurer or the auditor, as the case may be, certifies:

1. the sincerity and regularity of the accounts; And
2. that expenses and revenues are consistent with the purpose of the association and its missions; And
3. that the various operations were carried out while ensuring compliance with Articles 20-1, 20-2 and 20-3 of Law No. 1.355.

— Register of donations and subsidies received kept at the disposal of the competent authorities (art. 20-2 L. 1.355; OS 10.115, ANNEX I - Model register of donations and subsidies received)

The association must take the necessary measures to establish and verify the identity of its donors while respecting the confidentiality of the data concerning them and keep a register listing all donations and subsidies received with a value greater than 200 euros, following the model annexed to Sovereign Order No. 10.115. The association must keep all receipts and supporting documents relating to all donations and grants received.

Any act of the association intended to conceal the identity of the true donor for the purpose of making the donation or grant is prohibited.

— Register of donations and subsidies paid kept at the disposal of the competent authorities (art. 20-3 L. 1.355; OS 10.115, ANNEX II - Model register of donations and subsidies paid)

The association must keep a register of donations and subsidies paid to individuals or entities and final beneficiaries with all civil status information concerning them according to the model annexed to Sovereign Order No. 10.115.

The association must therefore take the necessary measures to establish, verify and document the identity of natural persons or representatives of legal entities to whom it grants donations or subsidies with a value greater than 200 euros.

When the beneficiaries of these donations and subsidies are not the final beneficiaries, the association puts in place suitable mechanisms allowing it to monitor the correct destination of the allocated funds and to verify the identity, references and the good reputation of the partner organization and the final beneficiaries, for the purposes of ensuring that they are not involved in or using the association's funds for the purposes of supporting the financing of terrorism or proliferation of weapons of mass destruction.

— Associations considered to present a particular risk of exploitation for terrorist financing purposes, based on the national risk assessment, are required, upon request from the Department of the Interior, to apply additional measures. (art. 31-2-1 L. 1.355, art. 24 OS 10.115)

1. Donations can only be received by check or bank transfer;
2. Donations can only be made by check or bank transfer;
3. The accounting documents and registers of donations and subsidies must be sent to the Department of the Interior within the month following each end of the association's financial year;
4. The associations identify all donors and keep a register of donations received regardless of the amount;
5. The associations condition the payment of their donations on the production of proof of the intended use of these by the beneficiaries and record these elements in the register of donations paid which mentions all the donations paid, regardless of the amount of these.

— Conservation of the accounts, all statements and supporting documents relating to any incoming or outgoing national or international transaction for a period of 10 years (instead of 5 years) from the closing date of the accounting year of the year during which the transaction took place and at the association's headquarters in Monaco or by the person responsible for basic information and on the beneficial owners (art. 20-5 L. 1.335).

¤ Voluntary dissolution of the association and judicial dissolution procedure

— When the conditions for voluntary dissolution provided for by the statutes of an association cannot be met due to the insufficient number of members present at the general meeting, the latter may implement a judicial dissolution procedure. (art. 22 L. 1.335; art. 25 OS 10.115)

When, at the end of a general meeting convened with a view to the voluntary dissolution of the association, the statutory conditions for dissolution cannot be met due to the insufficient number of members present, the President or a member of the Council of directors convenes a second general meeting on the same subject. In the absence of a sufficient quorum to proceed with the dissolution, the President or a member of the Board of Directors may initiate judicial dissolution proceedings.

— When the Department of the Interior notes the inactivity of an association for more than two years, it can implement a judicial dissolution procedure. (art. 23, 31-15 L. 1.335; art. 26 OS 10.115)

The observation of the inactivity of the association results from the lack of response by it, to a request from the Department of the Interior addressed by LRAR, to have to communicate to it within a fixed deadline, its basic information and its report morale, followed by a relaunch in the same form, which also remained without effect.

¤ Federation of associations

— Clarification of the definition of association federation (art. 24 L. 1.355)

The federation of associations is the agreement by which they decide to come together to organize the practice of an activity identical or related to their activity for a purpose other than sharing profits:

1. two or more associations duly declared and made public in the Principality or;
2. two or more associations regularly constituted abroad, at least one of which must be duly declared in the Principality or;
3. an association duly declared and made public in the Principality and one or more natural persons.

¤ Conditions of affiliation with approved federations (art. 27 L. 1.335; art. 19-1 OS 10.115)

The association wishing to be affiliated with the approved federation in its field of activity must to this effect explicitly formulate its request to the president of the federation concerned.

In support of its application for affiliation, it must provide the following documents:

• a copy of the association’s up-to-date statutes;
• the copy of the ministerial order authorizing the association and the decrees which would have approved the successive modifications for the groups formed prior to the promulgation of Law No. 1.355 of December 23, 2008, modified,, as well as the insertions in the Journal de Monaco relating thereto;
• the copy of the initial declaration receipt as well as that of the insertion in the Journal de Monaco provided for in the eighth paragraph of article 7 of law no. 1.355 of December 23, 2008, amended;
• a copy of acknowledgments of receipt of declarations of statutory modifications that may have subsequently occurred;
• information on the composition of the current board of directors; a document presenting the activities of the association, its mode of operation and specifying the number of members.

Refusal of affiliation may be motivated by the conflict between the statutes of the applicant association and those of the federation..

¤ Supervision of associations and association federations by the Department of the Interior

— Documentary and on-site inspections (art. 31-3, 31-4 L. 1.355; art. 27, 28 OS 10.115)

Professional secrecy cannot be invoked with regard to information and documents relating to the controlled association or federation of associations.

Authorised agents of the Department of the Interior, specially commissioned and sworn for this purpose, can carry out checks, depending on the risks, on documents and in particular:

1. carry out all necessary verification operations;
2. be provided with all documents necessary for the exercise of the mission provided for in this article, whatever the medium, and of which they can take a copy by any means;
3. collect from any person in charge of its administration or management, members as well as any person, all information, documents or supporting documents necessary for the accomplishment of their mission;
4. hear any person likely to provide them with information if necessary by a videoconferencing or audioconferencing system.

In the event that the documentary check proves impossible or unsuccessful, the said agents may access all the premises assigned to the activity of the association or the federation of associations located in Monaco, after prior information of the association, the federation of associations, or their representative, excluding the parts thereof assigned to the private home, in order to carry out the operations provided for in figures 1°) to 4°). Access to the premises or to the part of the premises which are not accessible to the public must be subject to the prior consent of the association, the federation of associations or their representative.

At the end of the inspection, the authorized agents of the Department of the Interior who participated in it draw up a report, following contradictory exchanges, under the conditions provided for by sovereign order.

As part of the controls, visits to the premises of the association or federation of associations can only be carried out between 9 a.m. and 6 p.m., or, outside these hours, when public access is authorized or when a professional activity is in progress.

Authorized agents are subject to professional secrecy under penalty of the sanctions provided for in article 308 of the Penal Code.

¤ New sanctions

The new provisions implement the recommendations of the Moneyval report which considered that the sanctions applicable to associations and their leaders or to people involved in their administration were insufficient and not dissuasive in the event of failure to fulfill their obligations in terms of combating against money laundering and the financing of terrorism.

— Administrative sanctions (art. 31-6 à 31-15 L. 1.355)

— Criminal sanctions (art. 32 à, 32-1 à -7, 34, 34-1 L. 1.355)

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