The deputy secretary general of the French Prudential Supervision and Resolution Authority (ACPR), Mr Frédéric Visnovsky, spoke during the recent AMAF business lunch on the theme of the challenges facing the Monaco banking system and the role of the ACPR.
First of all, he outlined the five missions of the ACPR, of which only three are applied to the Monaco banking system. The ACPR is not involved with the fight against money laundering or client protection. Therefore, the ACPR's three areas of action lie in supervising viability, prudential supervision rules and how they are applied within a company, thus supporting the organisation's three main missions in Monaco: authorisation, prudential control and resolution.
Next, Mr Visnovsky moved on to the challenges facing the Principality's financial system. Despite the fact that the number of banking establishments has shrunk from 40 in 2006 to 32 in 2016, over the same 10-year period, there has also been an increase in the number of companies operating within the financial sector (and which are not supervised by the ACPR) and in particular a strong growth of asset management companies, with funds increasing from around 70 billion euros in 2006 to 120 billion in a decade. Monaco's banking establishments are solvent, even though the return on equity may be weak. Thus, the ACPR focuses on three main risk areas: the economic model and the financial viability of Monaco banks, their internal control and risk management systems and their operational risk.
So what is the role of the ACPR? In order to make a realistic assessment of banks' viability in the context of low interest rates and important changes to the rules and regulations, individual controls need to be carried out, establishment by establishment, as well as management guidelines so that they are better able to integrate risk management into the way they are run.
Another major risk area, cyber security, is also a concern of the ACPR. The IT systems of companies are more and more at risk from hacker attacks, with important financial risks at stake, which can have an impact on a firm's reputation. Finally, should a micro- or macro-economic crisis occur within one company, a recovery plan must be outlined – and this has now become essential. The contents of a recovery plan includes many details which will need to be adapted according to the nature, scale and complexity of the risk inherent in different activities.
To sum up, Mr Visnovsky highlighted two particularly important points: conformity, which is essential in order to uphold Monaco banks' reputations in the international arena; and the need for a comprehensive plan for the fight against money laundering. A solid supervision system needs to be put into place for all establishments. In Monaco the SICCFIN oversees Monaco firms, co-operating with the ACPR in a totally satisfactory manner so that the ACPR has all the necessary information to carry out checks. There remained one point in particular which needs attention and which is linked to the current rules of Monaco bankers' professional secret, which puts very strict limits on how far a French parent company is able permanently to control its subsidiaries in the Principality.
