Freezing of assets in application of international economic sanctions (amendments)
United Nations • European Union • France • Other State • economic sanctions
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Sovereign Order 8.664 of 26 May 2021 on procedures for freezing funds and economic resources pursuant to international economic sanctions (UN, EU, France, other State), was amended twice, in February and April 2022, in particular:
— Definition of frozen assets clarified, including the addition of virtual financial assets;
— Establishment of an Advisory Committee;
— Clarification of the negative obligations common to Monaco professionals who must apply freezing measures;
— Broadening the scope of persons and entities that the Minister of State of the Principality of Monaco may designate in the fight against terrorism, on his own initiative or at the request of another State;
— Overhaul of the regime for authorising the release or use of frozen assets.
These amendments are made in the context of the freezing of assets of Russian oligarchs following the invasion of Ukraine.
As a reminder, Sovereign Order Nr 8.664 replaced Sovereign Orders Nr 15.321 dated April 8th , 2002 on procedures for freezing funds in order to combat terrorism, as amended, and Nr 1.675 dated June 10th , 2008 on procedures for freezing funds implementing economic sanctions, as amended. See in addition our publication > Procedures for freezing funds and economic resources in application of international economic sanctions: new regime resulting from Sovereign Order No. 8.664 of 26 May 2021
Changes in 2022, in detail:
♦ Sovereign Order No. 9.098 of 11th February 2022 amending Sovereign Order No. 8.664 of 26th May 2021
The applicable regime is clarified and extended. An “Advisory Committee on the freezing of funds and economic resources” is also established. Six articles (1, 4, 6, 7, 8, 14) are amended and four new articles (6-1, 7-1, 7-2, 7-3) are created.
Amendments to Sovereign Order No. 8.664:
— Mention in the header of economic sanctions taken by another State (in addition to France), pursuant to which the Minister of State may take measures to freeze funds and economic resources under the conditions set out in Article 7 (amendment of Article 1):
“The Minister of State may take measures to freeze funds and economic resources necessary for the implementation of economic sanctions which are decreed by the United Nations, the European Union, the French Republic or another State and are intended to ensure respect for norms and principles enshrined in public international law, in particular human rights, democracy, international peace and security.”
The Ministerial Decisions in application of international economic sanctions can be consulted on the official website of the Princely Government here.
— Clarification of the wording of the negative obligations common to credit institutions, any other financial institution, insurance undertaking, and any body, entity or person (amendment of Art. 4):
“The persons and entities referred to in Article 3 may not :
– make funds or economic resources available, directly or indirectly, wholly or jointly, in any manner whatsoever, to or for the benefit of one or more natural or legal persons, entities or bodies designated by a decision of the Minister of State taken in the manner provided for in Article 2, or entities owned or controlled directly or indirectly by such natural or legal persons, entities or bodies, or any person acting on their behalf or at their direction.
– provide or continue to provide services to such persons, entities or bodies.
– knowingly and intentionally carrying out or participating in transactions the purpose or effect of which is to circumvent, directly or indirectly, the provisions of Article 3 and the first and second paragraphs of this Article.”
— Correction of consistency in the implementation of the obligations of the above-mentioned persons and entities under the UN lists, which are of two kinds, not only positive (freezing of funds and economic resources, provided for in Art. 3) but also negative (as mentioned above, provided for in Art. 4) (amendment of Art. 6, para. 3):
“The lists of natural or legal persons, groups and entities established or updated by the UN Security Council or its competent Committee shall be automatically included.
Pursuant to the first paragraph, the publication of such lists by the United Nations Security Council or its competent Committee shall give rise to an implicit freezing order by the Minister of State.
Credit and other financial institutions, insurance undertakings and any other body, entity or person shall be obliged, upon such publication, to implement the measures provided for in Articles 3 and 4.
Funds and economic resources shall be frozen for a period of ten working days, or, if earlier, until the date of entry into force of the decision of the Minister of State, taken in the manner provided for in Article 2, designating the natural or legal persons, groups and entities referred to in the first paragraph.”
— Express mention that the EU and French lists are taken over by ministerial decisions (new Art. 6-1):
“In accordance with Articles 1 and 2, the lists relating to natural or legal persons, groups and entities that the European Union or the French Republic have drawn up or updated shall be the subject of decisions by the Minister of State taken in the manner provided for in Article 2, which shall designate the natural or legal persons, groups and entities thus referred to.”
— Expansion of the scope of persons and entities that the Minister of State may designate in the fight against terrorism, on his or her own initiative or at the request of another State (amendment of Article 7):
“The Minister of State may designate, by decision taken in the manner provided for in Article 2, on his own initiative, or after considering and giving effect to the request of another State:
(a) any person or entity that commits or attempts to commit terrorist acts or participates in or facilitates the commission of terrorist acts; or
(b) any entity owned or controlled, directly or indirectly, by any person or entity referred to in subparagraph (a); or
(c) any person or entity acting on behalf of or at the direction of any person or entity referred to in subparagraph (a);
provided that it is satisfied that the proposed designation is supported by reasonable grounds for suspecting that the person or entity concerned meets one of the above criteria for designation.”
— New provisions allowing Monaco, on the one hand, to propose to the Sanctions Committees of the United Nations Security Council the designation of persons or entities financing terrorism in support of Al Qaeda and the Taliban and, on the other hand, to request another State to give effect to a Monegasque freezing measure (new Article 7-1):
“1°) The Minister of State may decide to propose to the competent Committees of the United Nations Security Council the designation of :
a) any person or entity participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of Al Qaeda or any cell, member, splinter group or derivative thereof; supplying, selling or transferring arms and related materiel to; recruiting for; or otherwise supporting the acts or activities of ;
(b) any enterprise owned or controlled, directly or indirectly, by any person or entity referred to in subparagraph (a) or by persons acting on their behalf or at their direction; or
(c) any person or entity participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of, designated persons or other persons, groups, undertakings or entities associated with the Taliban in that they constitute a threat to the peace, stability and security of Afghanistan; supplying, selling or transferring arms and related materiel to them; recruiting for them; or otherwise supporting their acts or activities; or
(d) any enterprise owned or controlled, directly or indirectly, by any person or entity referred to in subparagraph (c) or by persons acting on their behalf or at their direction;
if he considers that he has sufficient evidence to consider that they meet one of the above-mentioned designation criteria.
2°) The Minister of State may decide to request another State to give effect to a national freezing order issued in accordance with Article 7.”
— Establishment of an Advisory Committee on the Freezing of Funds and Economic Resources (new Art. 7-2) :
— Clarification of the procedures for monitoring the application of the provisions of Sovereign Order Nr 8.664 by regulated professionals referred to in Article 2 of Law No. 1.362 of 3 August 2009 on the fight against money laundering, terrorist financing and corruption (new Art. 7-3):
“The monitoring of the application of the provisions of this Order by the bodies and persons referred to in Articles 1 and 2 of Law No. 1. 362 of 3 August 2009, as amended, shall be exercised, as the case may be, by the agents of the Service d’Information et de Contrôle sur les Circuits Financiers [SICCFIN], under the conditions set out in Articles 54 to 56, and 58-1 of the said law, by the Public Prosecutor who may be assisted by agents of the Service d’Information et de Contrôle sur les Circuits Financiers, under the conditions provided for by Articles 57, 58 and 58-1 of the said law, or by the President of the Bar Association, under the conditions provided for by Articles 57-1 and 58 of the said law.
When the investigations carried out by the Service d’Information et de Contrôle sur les Circuits Financiers or the President of the Ordre des Avocats-défenseurs et Avocats reveal serious evidence of the commission of the offence provided for in Article 12, they shall refer the matter to the Public Prosecutor.”
— Definition of “funds” clarified with regard to the “economic benefits of every kind” referred to, with the addition of “virtual financial assets” (amendment of Art. 14 letter a.)
“For the purposes of this Ordinance, the following shall be deemed to be :
a. “Funds” means financial assets and economic benefits of every kind, whether tangible or intangible, movable or immovable, however acquired, as well as legal documents or instruments in any form, including electronic or digital, evidencing title to or interest in such assets, and in particular, but not exclusively :
– cash, cheques, claims on cash, drafts, payment orders and other payment instruments or means ;
– deposits of funds with credit and payment institutions such as funds repayable from the public held in or paid into deposit accounts, funds paid into a payment account, funds invested in savings products or paid into individual or collective asset management contracts, the balances of such accounts or contracts
– funds paid into life insurance or capitalisation contracts as well as the surrender value of these contracts
– claims;
– debt securities, ownership and debt instruments, such as shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts, whether publicly traded or privately placed;
– interest, dividends or other income on or value accruing from assets
– credit, right of set-off, guarantees, performance bonds or other financial commitments;
– letters of credit, bills of lading, contracts of sale
– any document evidencing the holding of shares in a fund or financial resources;
– any other export financing instrument;
– virtual financial assets.”
♦ Sovereign Order No. 8.664 was further amended by Sovereign Order n° 9.171 of 4th April 2022 (JDM n° 8585 of 8th April 2022).
Sovereign Order Nr 9.171 specifies the regime of authorisation for the release or use of frozen funds or economic resources, which may be issued by decision of the Minister of State, in compliance with the conditions provided for by economic sanctions decreed by the United Nations, the European Union or the French Republic.
Article 9 of Sovereign Ordinance No 8.644 as amended:
The second paragraph of Article 9 is replaced by the following three new paragraphs, as follows:
“The decision of the Minister of State shall come into force as from its publication in a dedicated section accessible from the Government of Monaco’s website.
This authorisation may be granted by the Minister of State on his own initiative or at the request of any natural or legal person or other entity covered by the freezing order or of any third party having a claim to the funds and economic resources that have been the subject of a freezing order.
This authorisation may be granted if the petitioner establishes that his or her request meets the conditions laid down by the economic sanctions decreed by the United Nations, the European Union or the French Republic.
The Minister of State shall notify, by any means capable of acknowledging receipt, the decision to authorise the release or use of funds or economic resources to the person who is the subject of the freezing order, as well as to the persons and entities referred to in Article 3* who implement this decision and, where appropriate, to the third party who submitted the request.”
* Credit and other financial institutions, insurance companies and any other body, entity or person.