Ethics and governance in the European Financial centers

A very interesting conference about links between money laundering and crime took place on Friday 2nd February at the Law Courts of Monaco, before an audience of jurists and financial professionals. It was led by Gilles Duteil, PhD in Management Science, a member of the European research group on financial crime and organised crime and a legal expert at the Court of Appeal in Aix-en-Provence.
As Philippe Narmino, the Director of Judicial Services pointed out to introduce the conference, the Principality of Monaco was welcoming Gilles Duteil within the context of the strategy to combat economic and organised crime.
Gilles Duteil concluded his talk by stating that, despite of the will of the international community to seek to stop the progression of organised trans-national crime, the methods implemented up until now remain insufficient considering the amplitude of the phenomenon.

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A MONEYVAL team of examiners went to Monaco from 5 to 11 November 2006.
The team had an exchange of views with Mr. Jean-Paul PROUST, Minister of State, and with Mr. Gilles TONELLI, Counselor for Finance and Economy, Mr. Paul MASSERON, Counselor for Internal Affairs, Mr. Henri FISSORE Counselor for Foreign relations and Mr. Philippe NARMINO, Director of the Department of Legal Services.
The institutions/services met during the visit included: the Financial Intelligence Unit SICCFIN, the Department of Finance and Economy, the Department of Legal Services, the Prosecutor General’s Office, Monaco representatives to the Banking Commission, the Department of Economic Growth, the Direction of Public Safety, Customs, the Department for External Relations, Gaming Control, Real Estate Chamber, representatives from the association of banks, insurance sector, company service providers, casinos, notaries, lawyers and counsels, accountants, etc.
The draft report will be prepared for review and adoption by the MONEYVAL Committee in the second semester of 2007. This evaluation is based on the Forty Recommendations of the FATF and the 9 Special Recommendations of the FATF, together with the 2 Directives of the European Commission (91/308 EEC and 2001/97/EC).

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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