The Trusts law introduces a new arsenal of criminal sanctions

One of the many objectives of Law 1.559 of 29 February 2024, adapting the legislative provisions on the fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction, is to bring Monegasque legislation on trusts into line with FATF standards.

The Moneyval report, in its recommendation 25 on transparency and the beneficial owners of legal arrangements, highlighted the non-proportionate and non-dissuasive nature of the penalties previously provided for by the Monegasque law on trusts – Law 214 of 27 February 1936 as amended.

The Principality of Monaco has therefore adopted a new arsenal of criminal sanctions in this area to strengthen the compliance of its legal framework with the content of the Moneyval report and to ensure the effectiveness of the national anti-money laundering strategy.

Thus, several categories of persons are now liable to be criminally sanctioned for not having complied with the obligations arising from the amended Law 214 on trusts.

First of all, the trustee themself and their local representative are liable to fines and/or imprisonment for:

• Failure to have provided all the information and supporting documents on the beneficial owners of each trust set up or transferred to Monaco;
• Having given, in bad faith, inaccurate or incomplete information to the Department of Economic Development when registering on the Register of Trusts;
• Failure to regularize their situation despite the imposition of two administrative penalties in the event of failure to comply with all or part of the following obligations: 
  • Obtain, maintain and keep up to date information and supporting documents relating to the beneficial owners of each trust set up or transferred to Monaco;
  • Obtain, maintain and keep up to date basic information relating to the persons who provide services or advice to the trust set up or transferred in Monaco;
  • Bookkeeping;
  • Registration and entry in the Register of Trusts.

The settlor, protector, beneficiary or any natural person who ultimately exercises effective control over the trust, is also liable to a fine if they fail to provide all necessary information to the trustee and the trustee's local representative.

The co-trustee as well as the local representative of the trustee may be subject to criminal penalties if they:

• Do not communicate to the authorities (AMSF, judicial authorities, judicial police officers, etc.) the information and supporting documents they hold on the trust or the legal arrangement similar to the trust;
• Prevent or attempt to prevent an audit by the Directorate of Economic Development.

Professionals who provide services or advice to a trust set up or transferred in Monaco are also liable to a fine if they do not communicate all the necessary information to the trustee and the local representative of the trustee with whom they are acting.

Finally, persons who fail to report the lack of registration or any discrepancy between the information contained in the Register of Trusts and those available to them shall be liable to a fine and/or imprisonment.

This new arsenal of criminal sanctions will certainly not fail to be used in view of the reproach made several times in the Moneyval report on the failure of the Monegasque authorities to use their power to impose sanctions. It is therefore essential to keep all the information up to date and to ensure that it is consistent with the information recorded.