Ethics and governance in the European Financial centers

On July 2004, The Monaco Bankers Association published its recommandations to implement the forty recommendations published by the Financial Action Task Force (FATF) on 20 June 2003 and the eight special recommendations adopted by the FATF on terrorist financing in October 2001.

The Monaco Bankers Association recommanded as follow :

A - Customer due diligence

Financial institutions should verify a permanent customer’s identity before establishing a business relationship.
Financial institutions should only carry out transactions for occasional customers on an exceptional basis. Their identity should be verified in the case of all transactions involving a unitary or aggregate sum equal to or more than 15,000 euros. Regardless of the amount of a transaction, financial institutions should verify the identity of an occasional customer if they suspect the sums concerned may have originated from drug trafficking, organised crime or financing of terrorism

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B - Knowledge of the customer and his transactions

In accordance with the “know your customer” principle and the due diligence requirement referred to in Article 16 of Law No. 1162, financial institutions should familiarise themselves with the nature of a customer’s or beneficial owner’s business activities, in addition to verifying their identity. This includes knowing the origin of funds and the purpose of banking transactions carried out.
Financial institutions should pay close attention to any complex or unusual transaction involving sums which individually or in aggregate exceed €150,000 and which have no apparent economic purpose

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C - Record keeping

In addition to requirements of ordinary law and in accordance with Article 14 of Law No. 1162, financial institutions should keep records relating to the identity of their permanent and occasional customers or any beneficial owners for five years after the account has been closed or the business relationship ended. They should also, for five years, keep records of all transactions carried out by customers, together with statements, written information and the documents referred to in recommendations 4, 5, 18 and 19, including those relating to any suspicious transactions which they have refused to perform

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D - Reporting of suspicious transactions

Financial institutions should promptly report the following to the SICFIN (information service and check on financial circuits):
- All sums recorded on their books and all transactions involving sums which might have originated from drug trafficking or organised crime, together with the full reasons for their suspicions.
- All sums recorded on their books and all transactions involving sums which might be connected with terrorism, terrorist acts or terrorist organisations, or which might be used to finance them, together with the full reasons for their suspicions

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E - Internal control

The internal control system established pursuant to Article 16 of Law No. 1162 should, in addition to the criteria referred to in recommendation 28 regarding the reporting of suspicious transactions, include the following :

a) A duty of vigilance and due diligence.
b) Strict compliance with obligations imposed by law on financial institutions.
c ) Supervision of ongoing and systematic compliance with the internal control system.

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F - Staff training

Financial institutions should provide appropriate training for staff directly or indirectly involved in the prevention of money laundering. Such training should be renewed periodically and adapted to new developments in combating money laundering.

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