Law No.1.537 of 9 December 2022: subjection of the activity of domiciliation exercised on a principal basis to the anti-money laundering and terrorism financing provisions
18.12.2022
#International #FATF #GAFI #EuropeanUnion
Law No. 1.537 of 9 December 2022 supplementing the law No. 1.362 of 3 August 2009 as amended, received by the National Council on November 24, 2022, intends to subject to the anti-money laundering, antiterrorist financing and anti-corruption provisions, the activity of domiciliation carried out on a principal basis, i.e. independently of the activity consisting in carrying out “operations of creation, management and administration of legal persons, legal entities or trusts”.
Thus, Law no. 1.362 (article 1) newly subjects:
“30°) persons who, on a regular basis, carry out the activity of domiciliation consisting of providing third parties with a registered office, a business address or premises, an administrative or postal address to a capital company, a partnership or any legal person or entity, in addition to the ancillary services of renting offices or meeting rooms, administrative assistance related to the activity of domiciliation, with the exception of carrying out any regulated activities.”
This reform is motivated by the compliance with the FATF and EU standards, requested by the MONEYVAL Committee representatives after their on-site visit (from 21 February to 4 March 2022), namely:
— the definition of “Designated Non-Financial Businesses and Professions” in the Glossary of the FATF Recommendations, where (f) refers to “Trust and company service providers, i.e. persons and undertakings that do not fall under other categories referred to in these Recommendations and that, on a commercial basis, provide to third parties (…) – a registered office, business address or premises, administrative or mailing address to a company, partnership or other legal entity or arrangement”.
— Article 2, 1. 3) c) of the Directive (EU) 2015/849 of 20 May 2015, as consolidated, which refers to “trust or company service providers not already covered under point (a) [auditors, external accountants and tax advisors] or (b) [notaries and other independent legal professionals];”.
More details:
As a reminder, Article 7 of Bill No. 1037 (2021-11, 6 May 2021) [which became Law No. 1,520 of 11 February 2022] had already envisaged to subject the “27°) persons who carry out the activity of domiciliation;”.
The Government had motivated this insertion by reference to Article 2 1.3) c) of Directive (EU) 2015/849, and to the fact that “the activity of domiciliation is considered likely to facilitate the anonymity and opacity of companies, in particular in the context of fraudulent legal arrangements with the interposition of shell companies”. (Legislative File, pp. 6-7)
It was noted that :
— the activity of domiciliation was already partly subject to the anti-money laundering provisions, since it was among the activities offered by “persons habitually carrying out operations of creation, management and administration of legal persons, legal entities or trusts, in favour of third parties” referred to in point 6°) of Article 1 of Law No. 1.362 of 3 August2009, as amended
— the submission was to be extended to professionals who carry out the activity of domiciliation independently of the aforementioned activities consisting in carrying out “on a regular basis, operations of creation, management and administration of legal persons, legal entities or trusts, in favour of third parties”.
The parliamentary commission considered that it was not necessary to make the proposed addition, noting that in practice “this activity, which is already referred to in point 6°) of Article 1 of the law, presents a low exposure to the risk of money laundering in the Principality, insofar as Monegasque law subjects the formation of commercial companies to a strict authorisation regime” (Legislative File, p. 16.)
Finally, the legislator did not introduce the new number 27°) dedicated exclusively to the activity of domiciliation, basing this position on “the search for the right balance between the efficient apprehension of risks and the preservation of the attractiveness of the financial centre” (Legislative File, p. 25.)
Taking into account the objective of Directive (EU) 2015/849 “to limit the proliferation of mailboxes in the countries”, the Government had indicated “to raise awareness among business centre managers in order to ensure that the entities hosted are actually carrying out an activity in the Principality. On the other hand, it will continue its reflections on the subject of a possible increase in the rates linked to domiciliation within these centres for civil companies.”
See Legislative File – Preparatory work for Law n° 1.520 > https://www.conseil-national.mc/wp-content/uploads/2022/02/PL-1520-Dossier-legislatif.pdf
It remains to be noted that Law No. 1.528 of 7 July 2022 has recently made providers of services on digital assets or on crypto-assets as a whole subject to compliance with Law No. 1.362, taking into account the FATF Guidelines of the risk-based approach applied to virtual assets and providers of services related to virtual assets.
Related publications:
Reform of the legislation on the fight against money laundering, terrorist financing and corruption
MONACO: MONEYVAL evaluation of measures to combat money laundering and terrorist financing