Strengthening the effectiveness of the right to a bank account: adoption of the draft law no. 263 amending law no. 1.492 of 8 July 2020

Draft law no. 263 amending Law no. 1.492 of 8 July 2020 on the introduction of a right to a bank account (5 articles), tabled in Public Session on 27 June 2024 and referred to the Parliament's Finance and National Economy Committee (CFEN), was adopted on 17 October 2024.

NB: a draft law adopted by the Parliament is then forwarded to the Government, which has the option of either transforming it into a bill or suspending the legislative procedure.

* * *

SUMMARY

The right to open a deposit and payment account with a Monegasque credit institution, in force since 17 October 2020, was established by Law no. 1.492 of 8 July 2020, supplemented by Ministerial Order no. 2020-664 of 5 October 2020 (list of documents to be provided).

If the account is refused, the Direction du Budget et du Trésor (Budget and Treasury Department) may be asked to designate a credit institution to open the account.

Law no. 1.492 provides for an appeal to the Monegasque courts under the ordinary procedure.

Draft law no. 263 aims to make the right to a bank account more effective for everyone:

• Insertion of a system of implicit refusal giving the right to refer the matter to the Direction du Budget et du Trésor;
• Extension of the right to a bank account to the specific situations of collective accounts and termination of deposit accounts;
• Establishment of an exceptional appeal in the absence of a response from banking establishments (president of the court of first instance ruling in summary proceedings), so that "judicial time responds with a celerity commensurate with the issues surrounding the right to an account" (Explanatory memorandum, p. 10).

Bill 263 also provides for an addition concerning the obligation of any natural person or legal entity to open and hold a bank account in the Principality for the purposes of carrying out their professional activity:

• Provisional measures to safeguard economic activity in the event of difficulties concerning this obligation likely to arise in the context of the right to a bank account: the natural person or legal entity concerned will not lose its authorisation to carry on business, while an appeal is lodged against the banking establishment designated by the Direction du Budget et du Trésor (suspension of the obligation).

* * *

Maintaining the balance between AML/CFT and financial inclusion:

Draft law no. 263 is based on the work of MONEYVAL and the FATF:

• MONEYVAL: the right balance between a robust anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the development of inclusion policies and procedures (MONEYVAL Committee Report, "Strengthening financial integrity through financial inclusion", Council of Europe, 2014).
• FATF: ensure that AML/CFT compliance controls do not prevent access to formal financial services, defining AML/CFT measures consistent with financial inclusion objectives, while respecting global anti-crime rules (FATF, revised "Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion", FATF/OECD, February 2013; between February 2021 and March 2022, work to identify and analyse the unintended consequences of the FATF recommendations).

* * *

IN DETAIL

Draft law no. 263 amends articles 3, 4, 6, 8 and 9 of Law no. 1.492 ("L."):

¤ Opening a deposit account on request (art. 3 L.)

• Details concerning the starting point of the opening period: subject to compliance with the provisions of Law no. 1. 362 of 3 August 2009 AML/CFT, as amended, and its implementing regulations, the institution shall open the account requested at the latest within 15 working days "from the date of the notice of receipt, or the handing in by the applicant, at the counter, of which a receipt shall be issued" of all the documents required for this purpose, the list of which is determined by ministerial order.
• Addition of obligations on the part of the institution: "within the same time limit, to give reasons for any decision to refuse to open an account"; "shall request, by any means that leaves a written record, at the latest within 15 working days of the date of the notice of receipt, or of the hand-delivery by the applicant, at the counter, any missing document from a file that does not provide proof of all the documents required".
• Addition of implicit refusal to open an account: "Silence on the part of a credit institution for a period of 15 working days from the date of the notice of receipt, or the hand-delivery by the applicant, at the counter, of an application to open an account, shall be deemed to be an implicit refusal to open the account".

¤ Implicit refusal to open an account or failure to give express reasons (art. 4 L.)

• Addition of the case of implicit refusal to open an account by the chosen credit institution: "the applicant may refer the matter to the Direction du Budget et du Trésor, on expiry of the period [of 15 days mentioned above], for the purpose of designating a credit institution to open a deposit and payment account for him/her".
• Addition concerning the designation of a credit institution: possibility for the Direction du Budget et du Trésor to designate as a priority "the institution that has implicitly refused or has not expressly justified its refusal to open an account".

¤ Extension of the right to an account to specific situations (art. 6 L.)

• Holding of a collective account by a natural person: "does not preclude the right to open an individual account under the conditions laid down in this Law". Inspired by French legislation.
• Natural and legal persons who have been notified of the termination of their deposit account: "the right to open a deposit account, under the conditions provided for by this law, before the expiry of the notice period". "In other words, these people will not have to wait until they have no account and have to suffer payment defaults before they can finally benefit from this scheme."(Explanatory memorandum, p. 9)

¤ Creation of an emergency appeal procedure (art. 8 et 9 L.)

The ordinary procedure currently provided for "involves procedural deadlines that are often incompatible with the requirement, on the one hand, of urgency linked to the economic and social needs arising from the right to an account, and on the other hand, of promptness and reasonable deadlines enshrined in Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms". (Explanatory memorandum, p. 10)

Right of appeal in the event of failure to comply with the grounds for refusal of the application to open an account (set out in article 8 L., or in the event of unilateral termination by the designated credit institution of a deposit account opened pursuant to the right to a bank account (in accordance with article 4 L.):

• Referral to the president of the court of first instance ruling in summary proceedings ("président du tribunal de première instance statuant en la forme des référés") who would have the power, if necessary, to order the opening or reopening of an account, subject to a fine.
• Professional secrecy could not be invoked against the judge.
• The applicant for the account would be able to produce any additional evidence in the course of the court proceedings, enabling to have the claim upheld.
• Where the reason for termination is that no transactions have been carried out on the account for a period of more than 24 consecutive months (referred to in number 5°) of article 8 L.), the judge may consider that the guarantees offered by the applicant are reasonably sufficient to meet the AML/CFT requirements laid down by law no. 1.362 of 3 August 2009, as amended.

¤ Provisional measures to safeguard economic activity in the event of difficulties concerning the obligation of any natural person or legal entity to open and hold a bank account in the Principality for the purposes of carrying on their professional activity, likely to arise in the context of the right to a bank account (art. 13 L.)

• Suspension of this obligation in the event of appeal by the person concerned against the banking establishment designated by the Direction du Budget et du Trésor which has either rejected his/her application to open an account or unilaterally terminated his/her account;
• Extension of the suspension until an irrevocable decision is made.
• The applicant for this suspension should justify his/her claim by providing the administration with any useful document on the status of the proceedings concerning him/her, in particular on the fact that his/her case is pending before the competent Monegasque court, the hearing date that could be set or the exercise of any means of appeal.

* * *