Against the backdrop of the pandemic, the Monaco Association for Financial Activities (AMAF) stepped up its work to support members with information and solutions. Chairman of the Association Etienne Franzi looks back over a turbulent but productive period.
What major actions did the AMAF take to address COVID?
We were working on all fronts during this period. We were in frequent contact with the public authorities, primarily the Ministry of Finance and Economy and the Ministry of Health and Social Affairs, so that we could keep the financial industry informed of the measures the Government was taking to mitigate the impact of the pandemic on businesses.
With regard to State financial support, we worked with the Minister, Jean Castellini, to set out a total budget in advance, and this estimate proved to be within a few percent of the final figure. The AMAF was also heavily involved in distributing this support via the Monegasque Guarantee Fund. We were responsible for administrative management of the Fund and were given the task of reviewing all applications, with valuable support from the Ordre des Experts-Comptables, the Principality’s professional association of chartered accountants.
Our discussions with the Ministry of Health and Social Affairs focused primarily on the strengthened provisions for temporary layoff (CTTR) and home working, thanks to which we did not have to make a choice between providing service to our clients and ensuring the health of our employees.
Just look at what happened. Previously, only one bank had introduced teleworking; within a few days, almost instantaneously, they all adopted it, with some having more than 80% of their staff at home. This huge shift was only possible thanks to the IT and telecommunication resources available in the Principality.
How is the financial industry holding up?
Things are looking very positive. On 31 March 2021, total assets under management (AUM) reached €140 billion for the first time, and this trend continued into the second quarter, with total AUM of €143.5 billion on 30 June 2021. This means that an increase of more than 10% was recorded in a single year, and that assets have doubled in a little over a decade. There was even stronger growth in loans which, at 30 billion, have never been so high, having more than doubled over the last ten years.
Are clients increasing their deposits in Monegasque banks, or have there simply been more new clients?
Both! In this respect, it’s important to note that the increase in AUM is not solely linked to market trends. Studies conducted by the Banque de France show that there was a significant net inflow, also coming from abroad, confirming the international nature of the Monegasque financial industry, where total assets are largely denominated in foreign currencies.
The appeal of our domestic industry can also be seen in the growth – both quantitative and qualitative – of our financial community. There are now more than 60 management companies, compared with just 40 a decade ago, and a distinguished banking brand joined us in 2020, and may be followed by another with an equally solid reputation in the coming months.
Are there any projects in the works?
Lots of them, including two major projects which are particularly important to us and which should come to fruition in the fourth quarter.
First, Compliance Certification.
To further boost professionalism and the reputation of the Monegasque financial industry, the AMAF has already implemented two key training initiatives.
The Professional Certification is an exam which must be passed by everyone in the industry who is involved in front activities (client relations, trading, etc.).
The Confidentiality Certification gives the nearly 3,000 members of our financial community a quick refresher course on regulations and best practices in protecting client privacy. The training is undertaken every three years in small groups.
The aim of the new Compliance Certification will be to check that each of our members has the appropriate skills to avoid any reputational risk – to themselves or, by contagion, to the industry – arising from inadequacies in their internal control and compliance mechanisms.
It will cover all staff responsible for these issues within our firms.
To sum up, the Professional Certification validates knowledge, the Confidentiality Certification validates an approach, and the Compliance Certification will confirm the efforts of the entire industry, standing behind the Monegasque authorities, notably SICCFIN, to combat money laundering and terrorist financing.
And the second project?
The second project relates to legislation on various economic and legal provisions, drawn up with a group of experts. It sweeps up a broad range of issues: inheritance tax for trusts, international private law, commercial debt financing with the introduction of an equivalent to France’s Dailly Act, pledging of business assets, etc.
It will also complement the legislation on pledges, which our Association was behind, too.
I would describe this legislation as “impressionistic”. It doesn’t “take on” any major principle, but makes small amendments and additions to existing provisions that will facilitate or better support our activities in all of these areas through a kind of “butterfly effect”.
The bill is ready, and we hope that it can be submitted to the National Council by the end of the year.
We have also contributed to the work being done by the Government and the National Council on incorporating the fifth directive, and on the draft amendment to Act 1338 on financial activities, the key objective of which is to enable Monaco to join the International Organization of Securities Commissions (IOSCO).
We are involved in a working group set up by Minister Jean Castellini on sustainable finance, as part of which we have already drawn up an initial report on green finance in Monaco, and have also expanded our Professional Certification programme to cover these issues.
Finally, we recently signed, within the space of a few days, two agreements on improving the security of the industry.
The first, with SICCFIN, seeks to update the procedures for site checks to make them more efficient, since the previous version dates from June 2012. The AMAF is also fully engaged with the second National Risk Assessment (NRA2), which is being conducted by SICCFIN.
The second agreement has been reached with the Police Department as part of the “Monaco, a safe city” project, and aims to strengthen our operational partnership. A VIGIBANQUE Charter has been put in place and a Banking Security in Monaco Committee set up to ensure that our businesses can benefit from all of the Police Department’s prevention and intervention measures.
