Financial entities not licensed in Monaco that are currently servicing Monaco clients are recommended to conduct a review of how they service and approach their Monaco client base.
Monaco law on financial activities has recently been modified by Law 1.515 dated 23 December 2021 which was published in the Monaco legal gazette on 7 January 2022. One of the main changes is the introduction of a general prohibition for entities not duly licensed in Monaco to conduct solicitation for financial services and products even on a cross-border basis.
Initially, the draft bill contained restrictions on cross-border solicitation from non-licensed entities that were limited to natural persons acting outside the scope of their financial activities.
At a late stage in the legislative process, this reference to “natural persons acting outside the scope of their financial activities” was deleted and the prohibition to solicit now applies irrespective of the category of investors.
Such prohibition is supplemented with criminal sanctions (potential fines and jail sentences).
The broad scope of this new prohibition and the absence of any of the habitual exemptions (e.g. private placement, offer reserved to institutional and professional investors, etc.) carries its load of legal uncertainty. This situation is detrimental to the local private banking sector which rely on offshore issuers of financial products to service their local client base.
We have received a significant number of queries from global financial institutions servicing Monaco players of the private banking and asset management sectors, including external asset managers to ascertain the risk level in relation to this new unfavourable legal framework.
For entities not licensed in Monaco that are currently servicing Monaco clients, we recommend to conduct a review of how they service and approach their Monaco client base to ascertain whether any adjustments are necessary.
Our Firm has a strong expertise in providing legal and regulatory assistance in relation to financial activities and is regularly involved in structuring cross-border and local activities in compliance with Monaco law.