In line with the European trend, the Principality of Monaco has established administrative authorities whose role is to assess breaches of certain financial laws committed by professionals and, when applicable, to propose or impose administrative sanctions. Those authorities include (i) the Audit Report Review Commission (“CERC”), created by Act N°1.462 of June 28, 2018 (for AML/CFT matters) and (ii) the Financial Activities Supervisory Commission (“CCAF”), created by Act N°1.338 of September 7, 2007 (for financial matters) but recently subject to reforms.
These authorities are an increasingly important part of the Monegasque legal landscape, especially for stakeholders in Monaco’s financial sector. It is now essential to take them into account in any risk management approach. The arsenal of administrative sanctions at their disposal ranges from a formal reprimand to heavy fines (10% of the group’s annual turnover) and goes far beyond the maximum fine provided by the Criminal Code (900,000 euros). They are even able to order the withdrawal of official operating approval, thereby effectively ending a company’s activity. This sanction was imposed by the CCAF in a ruling handed down on December 17, 2021. Following the “blame and shame” principle applied in English-speaking countries, these decisions can also be made public, generating a significant reputational risk.
As a corollary of these sanctions, the framework of these disciplinary administrative procedures has been developing gradually since 2018, to consolidate the rights of the defence (notification of complaints, assistance by counsel, access to the case file, right of recusal, etc.).
Compared with European standards, however, there is still room for improvement in the exercise of the rights of defence, particularly in proceedings before the CERC.
For example, in proceedings before the CCAF, the accused has the right (i) to be heard by the rapporteur (whose role in this type of proceeding is analogous to that of the investigating judge), in order to state their observations, and also (ii) to see the report prepared by the rapporteur before the ‘session’ of the CCAF (equivalent to a court hearing). Strangely, although the accused has these two possibilities in proceedings before the CCAF, they are not available in proceedings before the CERC under the existing rules.
Of course, the accused may subsequently make their observations known before the CERC or the CCAF at a ‘session’ (similar to a court hearing). However, there is one notable difference: after this session, in disciplinary proceedings regarding financial matters, it is the CCAF itself which makes a decision on sanctions, whereas in cases involving breaches of AML/CFT offences, the CERC will merely propose sanctions, with the final decision lying with the Minister of State. In other words, in AML/CFT proceedings, the accused is not heard by the true authority with power to impose sanctions.
Ideally, the rights of the defence should be aligned between these two administrative procedures, bringing them into line with European standards. Notwithstanding, it is essential that any professional concerned by such proceedings takes advantage of every step in this disciplinary administrative process, to clearly document and state their observations.
