PREVENTION OF MONEY LAUNDERING, THE FINANCING OF TERRORISM AND CORRUPTION
INFORMATION THAT BANKS ARE REQUIRED TO ASK THEIR CLIENTS
In the framework of the prevention of money laundering, the financing of terrorism and corruption (ACT Nº 1.362 AND SOVEREIGN DECREE Nº 2.318 OF AUGUST 3, 2009), every banking establishment must, at the beginning of the relationship and throughout the business relationship:
- identify all the stakeholders of an account by collecting and keeping track of the proof of identity of each of them,
- collect any information or documentary evidence to document the characteristics of the business relationship.
I. Customer identification
a) Proof of identity:
By law, the bank is obliged to know its relations and therefore first of all to identify them.
To open an account for an individual, they must ask the person to identify themselves (surname, first name, date of birth, address, etc.) and request that they produce a valid official document as proof of identity (essentially an identity document), with a photo and a signature. The bank retains a record of this (photocopy, scanned image of the document presented). There is no list of supporting documents applicable to all banks. Valid originals of an identity card or a passport are commonly accepted by banks. Any other identity documents may be refused if they are considered too easy to falsify or too old.
To open an account for a legal entity, the identification documents must relate to the company name, the registered office, the legal form, the list of directors and the provisions governing the power to bind the legal person. To this must be added the imperative obligation to identify the natural person(s) who ultimately own or control the legal entity (also called the beneficial owner(s)).
b) Proof of address:
In terms of identification, banks are also required to check their client’s residential address. For example, they usually accept a water, gas, electricity or fixed line telephone bill for their private customers, but also a certificate of home insurance, or a proof of residence from social organisations. A recent original will have to be presented which will be returned after being photocopied by the bank. The list of documents accepted as proof of address may differ from one institution to another, and from one country of residence to another. Evidence that does not appear to be reliable enough (for example a mobile phone bill) may be excluded.
c) Purpose and nature of the relationship:
The obligation of identification also extends to the obligation for the bank to know and understand the object, the goal and the nature of the business relationship envisaged with them (see section ‘d’ below).
d) Any relevant information:
The bank collects all information it deems relevant to knowing its Clientèle, particularly regarding the professional and financial situation of the latter, their economic background, the origin, extent and composition of the client’s fortune as well as the origin of the funds to be entrusted to the bank. Likewise, the bank needs to know and understand the nature, goal and purpose of the relationship envisaged with them, as well as the type, nature and volume of transactions contemplated by the client.
These provisions are mandatory by the Law relating to the fight against money laundering, the financing of terrorism and corruption.
II. Account and transaction monitoring
The bank has a constant duty of care throughout the duration of the business relationship with its clients.
They are thus required to ensure that the transactions completed with them are legitimate and consistent with the knowledge they have of their customers, their socio-economic environment and their risk profile.
The effectiveness of this monitoring relies heavily on a permanent, systematic and automated monitoring of customer transactions and, secondly, on the updating and maintenance of customer information. In this context, all business relationships are, at least, subject to periodic reviews whose frequency depends on the level of risk assigned to the customer. Therefore, if they deem it relevant for the exercise of their vigilance, the bank may be required to request, at any time during a transaction, and in any event on the occasion of a periodic review of the relationship, an update of personal data and any component of the client’s socio-economic documentation.
Moreover, in the event of a complex or unusual transaction, especially for cash transactions, the regulations require any banking establishment to obtain from their customers relevant information and supporting documents on this operation, as well as the origin and destination of the funds. This type of transaction will be the subject of a specific and thorough examination by the bank.
The refusal to provide supporting documents relating to the financial and socio-economic situation, the identity, the home and/or the characteristics of a transaction may give rise to a suspicion of the reality of the information previously communicated, the real motivations of the business relationship, or the legitimacy of a transaction. Such situations may lead the bank to send a suspicious transaction report to its relevant supervisory authority. If the bank is unable to fulfil its due diligence obligations, it may be required to refuse to perform the requested transaction and/or to challenge the established business relationship.
The competent Monegasque supervisory authority for the fight against money laundering, the financing of terrorism and corruption is the Service d’Information et de Contrôle sur les Circuits Financiers (SICCFIN – see above “Regulatory Framework and Supervisory Authorities in Monaco”).