(Moneyval) Law no. 1.559 of 29 February 2024 (PART IV) Preventive and repressive measures

Law no. 1.559 of 29 February 2024 (PART IV) adapting legislative provisions to combat money laundering, the financing of terrorism and the proliferation of weapons of mass destruction (JDM no. 8684 of 1st March 2024) is the result of Bill 1084 (PART IV) of 8 November 2023 (2023-10), received by the Parmiament (Conseil National) on 17 November 2023 and passed on 22 February 2024.

This Part IV follows the Report of the MONEYVAL Committee in December 2022, in addition to Law no. 1.549 (Part I) of 6 July 2023 (central preventive measures), Law no. 1.550 (Part II) of 10 August 2023 (transparency of legal entities) and Bill no. 1080 (Part III) passed on 28 November 2023 (repressive measures).

In principle, the provisions of the law (Part IV) apply immediately from the day after its publication in the Journal de Monaco. Derogations are provided for :

• the provisions relating to trusts, which come into force on the date set by the regulations made for their application, but no later than 1 March 2024 :
• the provisions of Chapter III of Title I of the law adapting various criminal provisions, which apply 30 days after publication of the Law.

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Purpose

In order to comply with (or reinforce) the MONEYVAL Report, the purpose of Law no. 1.559 (Part IV) is twofold:

1. to deal with certain aspects which could not be covered by the previous legislative reforms (trusts, professional secrecy of tax officials as part of the strengthening of cooperation between the competent authorities, criminal law enforcement: Criminal Code, Code of Criminal Procedure, Law no. 629-Undeclared work).
2. to make further amendments to the laws already reformed by Law no. 1.549 (Part I) and Law no. 1.550 (Part II) (laws no. 1.362-general framework, no. 721-commercial companies, no. 797-civil companies, no. 1.355-associations and federations of associations and no. 56-foundations).

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IN DETAIL

1. New provisions in response to international recommendations

¤ TRUST: Amendment of Law 214 of 27 February 1936 revising Law 207 of 12 July 1935 on trusts, as amended concerning, in particular, beneficial owners, basic information, access by the competent authorities to information and documents, accounting obligations, registration in the Register of Trusts, supervision by the Economic Development Directorate and penalties.

See our publication > TRUSTS: changes resulting from Law no. 1.559 of 29 February 2024 (Part IV)

¤ COOPERATION OF OFFICIALS OF THE DIRECTORATE OF TAX SERVICES WITH THE JUDICIAL AUTHORITIES: EXCEPTION TO PROFESSIONAL SECRECY provided for in art. 1 of Sovereign Order 3.085 of 25 September 1945 relating to the rights and duties of tax officials, as amended.

The Legislation Committee adopted the proposed provisions in their entirety, but insisted that they should be set out in Law no. 1.559 (and not incorporated into Sovereign Order no. 3.085) as they fall within the legislative sphere by their very nature.

— Modernisation of the wording of the provisions in force, as well as the procedures for the communication to the Directorate of Tax Services, by the Public Prosecutor, of files likely to give rise to a presumption of tax fraud and likely to be of interest to this Directorate.

— Clarification of the rules of professional secrecy for agents of the Direction des Services Fiscaux in their relations with the criminal justice system.

• Conditions under which tax officials must respond to requests for information from public prosecutors or examining magistrates;
• Hypotheses for lifting professional secrecy outside any legal proceedings.

¤ ADAPTATION OF VARIOUS CRIMINAL PROVISIONS (Criminal Code ("CP"), Code of Criminal Procedure ("CPP"))

The Legislation Committee has deleted the draft article 215-1 CPP concerning the penalty for filing an abusive or dilatory civil action, as it felt that it was disproportionate "following the example of the High Commission for the Protection of Rights, Freedoms and Mediation to impose such a penalty, of up to 50. 000 against a civil party who is already liable for the costs of the proceedings and who may already have been ordered to pay a criminal fine for slanderous denunciation or ordered directly to pay damages for reckless or slanderous denunciation under article 354 CPP.

— Declaration of address: generalisation and reinforcement of the mechanism for declaring the address of the person in police custody, charged or summoned, to improve speed (art. 60-9, 171, 369, 378; new articles 369-1 and 369-2 CPP).

— Allowing the statute of limitations to be interrupted by the attempted enforcement of the sentence (art. 633 CPP), on the grounds that "the enforcement of sentences can be particularly complex in Monaco, insofar as a large number of convictions concern people who do not live in the Principality. It is therefore necessary to have sufficient time, in particular to find the convicted persons and identify their assets when they are abroad".

— Amendments relating to the penalty of confiscation (art. 12 CP).

• guaranteeing, in any event, of the preservation of the right of ownership of the third party, owner in good faith, who has not been convicted;
• reminder of the complementary nature of the confiscation penalty so that it remains at the discretion of the judge when it does not relate to the body, instrument or proceeds of the offence;
• definition of property liable to confiscation in accordance with the G.A.F.I. terminology.

— Creation of a sanction for non-compliance with additional penalties, "the aim of which is to make these penalties effective immediately and to avoid postponing their execution" (new art. 37-3-1 CP).

• Following the creation of this autonomous penalty, the penalties currently provided for certain specific additional penalties will be repealed.
  

— Clarification of the starting point of the 5-year period for applying repeat offences (art. 40 CP).

— Increasing the criminal penalty for undeclared work: 6 to 18 months' imprisonment and the fine provided for in point 4 of article 26 CP, or one of these two penalties. In the event of a repeat offence: 1 to 3 years' imprisonment and double the fine provided for in point 4 of article 26 CP, or one of these two penalties only. The aim "is to be able to punish money laundering when the underlying offence is concealed work" (art. 10 Law no. 629).

— Acts of terrorism: better alignment of the internal legislative definitions of terrorism with the terminology of the G.A.F.I. and clearer statement that the definitions of acts of terrorism used in Title III of Book III of the Criminal Code and the various international conventions ratified by the Principality are each applicable, as far as necessary, to qualify the elements of the offences of terrorism punishable by the Criminal Code (art. 391-7 CP).

— Inclusion of the financing of terrorism in the Criminal Code, which was covered by Sovereign Order 15.320 of 8 April 2002 on the suppression of the financing of terrorism (new art. 391-7-3 to 391-7-5 CP).

— Increased penalties for natural or legal persons convicted of acts of terrorism or terrorist financing (new art. 391-7-5 and art. 391-9 CP).

— Inclusion of offences relating to procedures for freezing funds and economic resources in application of international economic sanctions in the Criminal Code (art. 219-1 to 219-4 CP).

— Grounds for refusal of extradition / mutual assistance inserted: explicit provision is made for extradition or mutual assistance to be refused where the request is intended to prosecute or punish the person concerned on grounds of his or her sex or sexual orientation (amendment of Article 596-8(2) CPP and Article 4(1) of Law No 1.22 on extradition).

— Preliminary investigation acts: strengthening the effectiveness of the system (art. 81-6-1, 81-7, 81-8-1 CPP)

Art. 81-6-1 CPP

• in the context of a home visit, provision is made for the handing over of any information or documents and copies thereof that may be useful to the Public Prosecutor in ascertaining the truth ;
• it is specified that any refusal is immediately brought to the attention of the Public Prosecutor;
• the Public Prosecutor may make the requisitions provided for in the second paragraph of this article for any felony or misdemeanour punishable by at least 1 year's imprisonment, instead of 3 years.

Art. 81-7 CPP

• clarification that a normally enclosed place may or may not be a private individual's home ;
• in addition to the search of the premises, home visits include the search of the persons in the premises, provided that the person concerned gives his or her consent to the search, which is separate from the consent to the search of the premises.

Art. 81-8-1 CPP

• clarification that the inspection of ships concerns any ship present on the quays of ports and their outbuildings, so that this inspection may concern ships in port but not afloat;
• this visit will take place in the presence of two witnesses requested by the judicial police officer, in the same way as a search.

— Special investigative techniques: allow undercover operations for offences that do not fall within the scope of organised crime and delinquency (art. 106-17 CPP).

— Judicial supervision: clarification of the court that will have jurisdiction in matters of judicial supervision when the investigating judge has transferred or withdrawn jurisdiction in a case involving a misdemeanour, a felony or a misdemeanour by a decision that may or may not have become final (art. 189-1 CPP).

2. Reinforcing compliance of recently passed legal provisions with international recommendations

¤ Amendment to Law 1.362 of 3 August 2009 on the fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction and corruption

— Explicitly require regulated professionals to consider filing a suspicious transaction report if they have been unable to fulfil the due diligence obligations set out in Articles 4-1 and 4-3 (art. 7 L. 1.362).

— Provide that the implementation of simplified due diligence measures is subject to a "satisfactory" risk analysis (art. 10 L. 1.362).

— Consistency with the provisions relating to information on beneficial owners and basic information set out in Act 56 of 29 January 1922 on foundations, Act 721 of 27 December 1961 on the Trade and Industry Register ("RCI"), Act 797 of 18 February 1966 on non-trading companies ("sociétés civiles"), and Act 1.355 of 23 December 2008 on associations and federations of associations. In particular, to make the rules on the retention of information and documents consistent and clear; on regularisation; on sanction procedures; to clarify the powers of the competent authorities to obtain information and documents on beneficial owners directly from companies and economic interest groupings; and to ensure that the exemptions relating to restrictions on access to information on beneficial owners do not apply to all providers of services linked to virtual assets (Art. 21, 22-1, 22-2, 22-2-1, 22-4-1, 22-8 L. 1.362).

— Penalties provided for in the event of failure to comply with the obligations set out in article 21, the first paragraph of article 22 and articles 22-1 and 22-2 of Act no. 1.362 with regard to commercial companies, economic interest groupings and non-trading companies (article 22-2-1 L. 1.362)

• clarification that the amount of the administrative fine will be determined according to the seriousness or repetition of the various breaches;
• clarification that the penalty of 20,000 euros applicable in the event of failure to regularise to non-trading companies other than Monegasque limited companies with a civil object will also apply, from now on, to non-trading companies whose object is the exercise of a professional activity.
• clarification that when the Director of Economic Development implements a sanction procedure pursuant to this article and at the same time a sanction procedure pursuant to article 22-2-1 of law no. 1.362, he may only impose a single administrative fine and the maximum amount incurred will be the highest amount applicable to the taxable person.

— Obligation to keep the results of any analysis carried out (art. 23 L. 1.362).

— Insertions on the proposal of the Monegasque Financial Security Authority (AMSF):

• to impose the penalties provided for in article 73 of the same law on the persons referred to in article 1 and in points 1°) and 2°) of article 2 who inform their clients or third parties of the information sent to the AMSF (art. 50 L. 1.362);
• to specify that checks on good repute carried out by the department exercising the AMSF's supervisory function must be carried out both when the application for authorisation or approval is being considered and when the bodies and persons referred to in Article 1 of Law 1.362 make their declaration (art. 53-2 L. 1.362);
• to specify that the administrative penalties published by the AMSF remain available for a period of at least five years from their initial publication. However, the Legislation Committe deemed it appropriate for the personal data contained in the decision published on digital media to be deleted at the end of a period that may not exceed five years, in order to guarantee the right to be forgotten for those subject to the law without, however, causing the anonymised recitals of the penalty imposed to disappear (art. 69 L. 1.362).
• the persons referred to in article 1 and in points 1°) and 2°) of article 2 of Law no. 1.362 who bring to the attention of their customers or third parties the information transmitted to the AMSF shall be punished by a fourfold fine as provided for in point 4 of article 26 of the Criminal Code (art. 73 L. 1.362).

— Punishment for disclosing a request for the identification of goods to the person concerned without a legitimate reason, prior to the transmission of the required information a request for identification of goods to the person concerned by the request: new criminal penalty. (art. 75-1 L. 1.362).

¤ Amendment to Law no. 721 of 27 December 1961 repealing and replacing Law no. 598 of 2 June 1955 establishing a Trade and Industry Register

See our publication > Trade and Industry Register (RCI): updated changes to Law no. 1.559 of 29 February 2024 (PART IV)

¤ Amendment to Law no. 797 of 18 February 1966 on civil companies

See our publication > Civil companies: changes up to date with Law no. 1.559 of 29 February 2024 (PART IV)

¤ Amendment to Law no. 1.355 of 23 December 2008 on associations and federations of associations, as amended

See our publication > Associations: changes up to date with Law no. 1.559 of 29 February 2024 (PART IV)

¤ Amendment to law no. 56 of 29 January 1922 on foundations, as amended

See our publication > Foundations: changes up to date with Law no. 1.559 of 29 February 2024 (PART IV)

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